Copays and Deductibles: Do Copays Count?

Whether you're covered by a group health insurance plan provided by your employer or a policy you purchased on the open market, you probably will have copayments -- flat fees you pay out-of-pocket for specific services like visits to the doctor's office. Most policies also have an annual deductible, a dollar amount you must pay for some procedures or services before the insurance company will make any payments. Some companies will count your copays toward satisfaction of the deductible, but most don't.

Your Health Insurance Costs

The best way to understand the relationship between your copays and deductibles is to understand the five main costs involved in health insurance coverage that determine how much you'll actually spend on health care.

• Your premium is the amount paid to the insurance company, generally on a monthly basis, to maintain your coverage. Your health care costs only will be covered while your premiums are up-to-date. If you are covered by a group health insurance policy provided by your employer, your premium contributions most likely are deducted from your paycheck. If you're covered by a policy you purchased yourself on the open market, you're responsible for keeping the premium payments up to date.
  
• The annual deductible is the amount you must pay to health care providers out-of-pocket for many covered services before the insurance company pays anything. Not all health care services are subject to the annual deductible. Routine office visits, preventive services, and prescription drugs generally will be paid by the insurance company, for example, but you may have to pay a copay.
• Copays or copayments are flat fees charged for some routine services and prescription drugs. Copays are a flat-rate dollar amount, often around $25 to $50 for an office visit and from $10 to $50 for prescription drugs, depending on the medication.
• Coinsurance is the percentage of the charge for covered medical services that you pay out of pocket after you've paid the annual deductible. It's often expressed as two figures that add up to 100 percent. For instance, if a policy's coinsurance rate is expressed as 80/20. That means the insurance company will pay 80 percent of a covered charge, and you're responsible for the remaining 20 percent.
  
• The out-of-pocket annual maximum is the most you can expect to pay out of pocket in a single year, and generally includes all deductibles, copays and coinsurance. Once you've reached this amount, the insurance company pays for all covered health care costs.
  

Health Care Reform

The Affordable Care Act, also known as Obamacare, requires all insurance policies to include an annual out-of-pocket maximum. All copays are counted toward that amount, together with amounts paid for deductibles and coinsurance. This can mean saving hundreds of dollars a year for people with chronic conditions and who must regularly visit the doctor, or purchase medications, or both.

The law left it up to the insurance companies, however, to determine whether to count copays toward the annual deductible or not, and most do not.