California Health Insurance Co-Pay - A Fixed Dollar Amount vs. A Percentage

Although you may be paying a hefty monthly premium for your health insurance (or a percent of what your employer pays), your health plan most likely does not cover 100% of the cost of your healthcare. Additional costs (or out-of-pocket expenses) that you may be responsible for include an annual deductible, copayments, and co-insurance.

Copayments
A copayment (or copay) is a fixed-dollar amount that you pay each time for certain services.  Most commonly, you will be responsible for a copayment each time you have a doctor's visit and for each prescription medication you fill. For example, with my health insurance, I pay a $15 copayment for each primary care physician visit, $25 copayment for a specialist visit, and $20 for each brand-name prescription.

Coinsurance
Coinsurance is a percent of the cost of your care. You are responsible for paying the co-insurance amount. For example, if a doctor's visit is $100 and you have a 20% coinsurance, you will pay the doctor $20 and your health plan will pay the doctor $80.

Copayments are most often used in HMOs and for services you receive from a network provider in a PPO. Coinsurance is often used when you get services from an out-of-network provider in a PPO. This can be quite costly, especially if you use an out-of-network hospital for a surgical procedure.

Office Visit Co-pays

They are different depending on the type of health insurance plan you are on. A PPO co-pay works differently than an HMO co-pay. Most California health insurance companies offer PPO's with office visit co-pays, while some companies do not even offer HMO plans at all. 

So, what is the difference? Take a Blue Cross of California HMO plan with a $20 office visit co-pay. Generally when you go to a physician or specialists office, whatever is performed in the office the physician charges will be covered by the plan co-pay, including if you are sent for lab work or an X-ray. When you go on an appointment whether it is for the flu, an annual check up, or you sprained your knee hiking. You can be certain your costs will not be much higher than the co-pay itself. 

Now, for the PPO co-pay. For example, your plan has a $1,500 annual deductible with a $30 office visit co-pay. When you visit the doctors office, as a rule of thumb, you will pay everything towards your deductible except for the opportunity to meet with the doctor. If you need an immunization, or a blood test, or even an X-ray, these costs will most likely be out of pocket expenses which you will pay towards your deductible. 

If a physician charges $120 for an office visit that means you will be charged $120 just to make the appointment. If you have an office visit co-pay, the $120 charge will be knocked down to whatever the co-pay benefit amount is. 

So why choose a PPO style plan? A couple reasons; first of all the monthly premium will most likely be much less. PPO plans offer freedom of choice with physicians, specialists and hospitals. If you see a provider within the specified network your costs and coverage will improve. Anthem Blue Cross of California and Blue Shield of California for example, have close to 50,000 providers in their PPO networks. 

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Prescription Co-pays

Prescription coverage is one of the most-often used health benefits. Most prescriptions require a copay at the time of purchase - often ranging from $10 to $200 or even more - depending on the plan and the kind of medication it is.

Some insurance plans have "tiered copayment levels." With tiered copays, each prescription drug is in one of several levels. And there's a different copayment for each level. You can find out the amount you pay per prescription in your Plan Document.

For example:

    Tier-one prescription drugs may include low-cost generics

    Tier-two prescription drugs may include higher-cost generics and lower-cost brand drugs

    Tier-three prescription drugs may include higher-cost brand drugs

    Tier-four prescription drugs may include much higher-cost medications - such as some cancer drugs - and instead of a copay, you may pay a percentage of the actual cost of the drug

Some insurance companies set the copay percentage for non-generic drugs higher than for generic drugs. Occasionally if a non-generic drug is reduced in price insurers will agree to classify it as generic for copayment purposes (as occurred with simvastatin). Pharmaceutical companies have a very long term (frequently 20 years or longer) lock on a drug as a brand name drug which for patent reasons cannot be produced as a generic drug.

To cushion the high copay costs of brand name drugs, some pharmaceutical companies offer drug coupons or temporary subsidized copayment reduction programs lasting from two months to twelve months. Thereafter, if a patient is still taking the brand name medication, the pharmaceutical companies might remove the option and require full payments. If no similar drug is available, the patient is "locked in" to either using the drug with the high copays, or a patient takes no drugs and lives with the consequences of non-treatment.

Co-pays for out of network Providers

If you go to a doctor, facility, therapist, pharmacy, hospital or other provider that's not in network for your insurance company, you'll pay a copayment amount for out-of-network providers that's often significantly higher than an in-network provider. That's because the provider doesn't have a network agreement with your insurance company. Some plans, however, don't have a network and allow you to vist any healthcare provider.