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What is a Copay under Obamacare?

A lot of people on Obamacare consider copays, or copayments, to be confusing. This article helps to explain what a copay is under Obamacare, provides some examples of copays, and describes limits or restrictions that may apply to copays.

Definition of copay under Obamacare

A copay is a set dollar amount (determined by your insurance plan) that you may be required to pay in order to receive a specific medical service, such as office visit when you’re feeling sick or a prescription drug.

You may be familiar with copays if you have dental insurance, or if you’ve had employer-sponsored health insurance in the past. Under Obamacare, copays work in the same way. As with other insurance products, Obamacare plans come with a premium that you must pay each month to maintain your coverage. This is not a copay. But when you actually receive medical care from a doctor or pick up a prescription drug at the pharmacy, that’s when a copay may apply.

In other words, a copay is a form of “cost-sharing” under your health insurance plan.

Copays are a form of cost-sharing under Obamacare

“Cost-sharing” is when the insurance company and the insurance policy holder share the cost of a covered medical service or supply. There are different forms of cost-sharing that can apply under different Obamacare health insurance plans. Some plans – especially platinum-level or gold-level plans – may have fewer cost-sharing requirements than others. Most, however, will have copays. Many will also have an annual deductible and many will have coinsurance – up to a maximum out-of-pocket limit for the year.

When copays apply and when they don’t under Obamacare

Under Obamacare (which is a nickname for the law known as the Affordable Care Act, or ACA), copays may apply in various situations. Read through your plan benefits or contact your agent or insurance company to learn when copays apply under your plan.

It’s important to note, however, that Obamacare introduced health reforms that made many kinds of preventative care services available with no out-of-pocket costs to you – that is, with no copayments, deductibles, or coinsurance. For example, if you go to the doctor for an annual checkup, a well-woman visit, immunizations, or for various other preventive health screenings, you will generally not be required to make a copayment.

Pay attention to copays when shopping for Obamacare coverage

When the Obamacare open enrollment period comes around, or anytime you’re shopping for a new health insurance plan, pay special attention to the coverage details of the health insurance plans you’re considering. Make sure you understand when you may be on the hook for a copayment, and how much that copayment might be.

When shopping for a new plan it’s tempting to pay attention only to the premium that you’ll pay each month. If you want to truly understand the cost of coverage under any new plan, however, you need to understand the burden of cost-sharing that may be placed on you when you seek medical care. That’s why you should pay close attention to the copayments, annual deductible, and coinsurance you may face under any new plan. Copay amounts can differ greatly between one plan and another. Copays may also apply in different circumstances for different Obamacare plans.

Examples of Copays under Obamacare

Since copays are so different between plans, it is important to know exactly when your plan may require a copay from you, and how much it may cost. You can contact your insurance agent or the insurance company to learn more about your personal plan, but here are some examples of copays:

  • If Joe has an Obamacare plan with a $20 copay for a doctor’s visit, and Joe gets sick, he can expect to pay at least a $20 copay for that doctor’s visit. If Joe’s plan also has an annual deductible, he may pay a lot more than just the copay for that visit, but once his annual deductible is met, the $20 copay may cover the full cost of his visit, unless coinsurance also applies.
  • If Sally’s Obamacare plan has a $25 prescription drug copayment for a brand-name drug, and her annual deductible is already met, she may only be required to pay $25 when she picks up the drug at her local pharmacy. Her Obamacare health insurance plan may cover the rest of the cost.
  • Some Obamacare plans also charge copays for ER services and ambulance trips that may range from $50 to $250 (or more). Each time you visit the ER or use an ambulance, you may be required to pay the copay amount. Remember, money collected for your copay will not count toward your annual deductible.

If your Obamacare plan does not require a copay for a covered medical service, then your health insurance carrier will generally pay for the service, so long as you have already met your annual deductible for the year and assuming coinsurance does not apply under your plan.

Copays and your annual deductible under Obamacare

We’ve mentioned annual deductibles already. It’s important to understand the ways that copays and deductibles work together, and how they sometimes don’t. If you’re familiar with the idea of an annual deductible, you may imagine that once you hit that deductible for the year, you will no longer be required to pay copays. This is not necessarily the case. In fact, copays generally DO NOT apply towards your annual deductible. Even if you have reached your deductible limit, you may still be responsible for copays.

What is your Copay limit under Obamacare?

Is there no end to copayments under Obamacare plans? In fact, there is a limit. It’s known as your health insurance plan’s maximum out-of-pocket limit, or out-of-pocket max. This is the most you can be asked by your insurance company to contribute toward the cost of your own covered medical care within a single year.

Once you have reached your maximum out-of-pocket limit for the year, you will not have to pay copayments (or deductibles or coinsurance) on any additional covered medical services, office visits, and prescription drugs covered by your Obamacare plan. Since the coverage year under most plans begins on January 1st and ends on December 31st, your cost-sharing will usually reset every new year.

It is important to note that regardless of the cost sharing payments (copays, coinsurance, and deductibles) you face, you will have to continue paying the monthly premium on your Obamacare plan. This is true even if you have reached your out-of-pocket maximum for the year. If you plan on using a lot of medical services in the future, and you can afford a plan with less cost-sharing, then you may want to consider Obamacare plans with lower copays and cost-sharing requirements.