What does copayment (copay) refer to?

Copayment, commonly referred to as copay, specifically denotes a fixed fee that an insured individual is required to pay at the time they receive a healthcare service. This fee is usually indicated on the individual's insurance card and varies based on the type of service received, such as a visit to a specialist or a primary care provider. It serves as a cost-sharing tool between the insurer and the insured, allowing patients to have some financial responsibility for their healthcare while ensuring that insurance covers the majority of the cost.

Understanding this concept is vital in the context of health insurance because copayments lower the overall burden on insurance providers by encouraging patients to use services judiciously and reducing the number of claims filed. It is important to note that this is distinctly different from other key terms in healthcare financing, such as a subscription fee or deductible, which operate under different principles and structures within health insurance policies.