Copays and Deductibles are Very Different

The features and benefits of health plans are confusing. Many people think that they have to hit their deductible before they can use their copays. They do not have to hit your deductible before you can use your copays.

There are two separate buckets. One bucket is a hospitalization and out-patient bucket. The second bucket is a copay bucket. They are completely separate buckets. Let's look at the first bucket - the deductible and coInsurance bucket:

For example: If you need to have your appendix removed, you will go to the Hospital. Perhaps it will cost $30,000 for the operation. What do you pay? You will pay your deductible and your coinsurance. The remainder that is due is paid by the insurance company.

Coinsurance? What is that? You have never heard of that! You and Blue Cross co-insure the first $10,000 of the $30,000 operation. If you have a 70/30 plan, you will pay 30% of the first $10,000 or $3,000 and Blue Cross will pay $7,000. After you have paid your deductible, of let's say $2,500 and your $3000 coinsurance, you are home free. It doesn't matter if it was a $1,200,000 operation, you don't have to pay any more than the $5,500, ($2,500 + $3000). Since you have reached your deductible and coinsurance, you don't pay anything more for the rest of the year. You may have copays to pay if you visit a doctor.

Now, let's look at the copay bucket:

For example, you wake up with a head cold that is really hurting you. You know that you have to see a doctor, because last year you didn't and this progressed into pneumonia. When you go to the doctor, you will have to pay the copay typically $30. Who pays the rest? The insurance company pays the doctor the difference between the copay you paid and the total charge.

They are separate:

The (copays) and (deductibles and coinsurance) are separate. If you are hospitalized, copays do not apply. You will pay your deductible and coinsurance.

On the other hand, if you go to see the doctor for a sick visit, you only pay a copay no deductible and coinsurance involved here.

So, you can see that copays are very different from deductibles and coinsurance. Copays are available to use immediately, and that probably makes you happy.