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Deductible vs. Copay

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

In this lesson, you'll see the differences between a deductible and a copay and how they relate to the costs people pay for insurance. Learn why it is possible to pay a deductible in full, but copays aren't ever lifted.

Deductibles

When it comes to health insurance plans, some include both a deductible and a copay. These are two of the ways in which you pay directly for your health care while insurance picks up some of the other costs.

A deductible is an amount that you have to pay before your insurance will begin to help you pay for services in a calendar year. For example, if your health insurance plan has a deductible of $3,000, you first have to pay $3,000 of medical expenses with your own money before your insurance will begin to help you pay for any amount beyond that. So, if you have lab work or hospitalizations, you are responsible for paying the first $3,000, and then your insurance will help you pay some of the amount that remains.

Health insurance will help you pay after your deductible is paid
deductible copay

Copays

A copay, on the other hand, is a fee that you pay for each doctor visit or each time you fill a prescription.

For example, your health insurance plan may have a deductible of $3,000 in addition to a doctor visit copay of $20 and a prescription copay of $5. What these copays means is that each time you visit a doctor, you pay $20 for the visit, and each time you fill a prescription, you pay $5, no matter how much the medicine costs. Because you have this copay, your insurance covers remaining cost of your visit and prescription medicine. However, if you get additional services done, such as lab work, then you may need to pay directly for these services as these are not included in a typical doctor visit. The exception could be if you've already met your deductible, meaning you've already paid $3,000 toward your medical expenses.

Deductibles Reset Annually

The major difference between a deductible and a copay is that you can pay the full amount of your deductible in a calendar year. Sometimes people say they've 'met' their deductible.

For example, say you had several major tests performed in March. These ended up costing you $5,000. You paid the first $3,000 to cover your deductible. Then your insurance helped you pay a portion of the remaining balance of $2,000. Since you've paid your full $3,000 deductible, any additional hospitalizations and such that you'll have during the same calendar year will be covered by your insurance plan and they'll help you pay for it. Most insurance plans will only pay a portion of your costs after you've met your deductible. The next calendar year though, you'll start new with another $3,000 deductible that you have to pay first, before the insurance company will help cover your medical costs.

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