Health Insurance

What’s the Difference Between a Deductible vs. Copay?

Ashley Brooks26 Oct 2021

A deductible and copay are terms used to describe the costs associated with maintaining your health insurance. A deductible is the amount of money you are required to pay out-of-pocket before your insurance takes over and covers the costs. A copay is a fixed amount you must pay for medical care at the point of service. 

Deductibles can be thousands of dollars but with Mira, you don’t need to meet a deductible. You pay a standard monthly membership fee of $45 per month and get access to affordable lab tests, urgent care services, and prescriptions. 

Difference Between a Deductible vs. Copay

Deductibles and copays are two important parts of your health insurance plan. Below we explain the difference between a copay and deductible: 

  • Deductible: A deductible is the amount of money you are required to pay out-of-pocket before your insurance begins to pick up the cost of your health services. Deductibles can range anywhere from $0 to over $8,000 for an individual.
  • Copay: Your copay is the amount you are responsible for paying at the time of your health service, typically with an in-network provider. A copay is a flat fee that differs depending on what type of doctor you see.

Additional Health Insurance Terms

In addition to copay and deductible, it is important to know a few additional terms to help you fully understand your health insurance. Below we define these terms and explain how they affect the cost of your health insurance. 

  • Premium: A premium is the monthly fee you are required to pay to maintain your coverage throughout the year. You need to pay your monthly premium both before and after you have met your deductible.
  • Coinsurance: Once you meet your deductible, you will only be responsible for paying a percentage of the total cost of your medical expenses. The percent of costs that you are responsible for is known as your coinsurance. Most plans have a coinsurance of about 20%.
  • In-network provider: An in-network provider typically accepts your insurance plan. As a result, you will likely be able to pay your copay when you go to these doctors.
  • Out-of-network providers: An out-of-network provider may not accept your health insurance. Before you meet your deductible, you will likely need to pay the full price of service with an out-of-network provider. Depending on your plan type, after you meet your deductible, you may be able to pay your coinsurance at out-of-network providers.
  • Out of pocket annual limits: An out-of-pocket limit is the maximum amount of money you can pay for the total costs of your healthcare throughout the year. These limits include the cost of your deductible, copayments, and coinsurance, but not your monthly premium. After you have reached your maximum, the insurance provider will pick up 100 percent of the costs of your covered care. However, you will still be responsible for paying your monthly premium.

Understanding Your Deductible

The average deductible for an individual in 2020 was $4,364, but deductibles can range from $0 to over $8,000. In general, the higher your monthly premium is, the lower your deductible is. Plans that have lower monthly premiums tend to have higher deductibles. 

While paying thousands of dollars out-of-pocket before having insurance may sound daunting, many health insurance plans still cover the costs of certain primary and preventative care services before you meet your deductible. 

All Marketplace health plans pay the full cost of certain preventive health services before meeting your deductible. Your insurance plan may also have a separate deductible for prescriptions. Some examples of preventative services covered prior to meeting your deductible include: 

  • Immunizations
  • STI Screening
  • Blood pressure screening
  • Cholesterol screening
  • Tuberculosis screening
  • Tobacco and alcohol screening and counseling

If you need access to health services that are not covered before you meet your deductible, Mira may be an excellent option for you. For only $45 per month, you can get access to low-cost urgent care, prescriptions, and more. You do not need to meet a deductible to start seeking care. 

Get Mira - Health Benefits You Can Afford.

$45/month. Get doctor visits, lab tests, prescription, and more. Affordable copays. Available 35+ states.

Understanding Your Copay

Your copay, or the amount you will need to pay at the time of care, varies based on your plan and what type of services you receive. Below are typical ranges your copay can cost for different services: 

  • Routine in-network doctor’s visit: $15 - $25
  • Specialist: $30 - $50
  • Urgent care: $75 - $100
  • Emergency room: $200 - $300

Generally, plans with lower monthly premiums have higher copayments, while plans with higher monthly premiums have lower copayments. 

While some plans allow your copay to apply immediately for in-network providers, the copay on other plans will not kick in until you have met your deductible. In these cases, you will have to pay the full price of the service until you meet your deductible. 

How Health Insurance Plan Types Affect Your Deductible and Copay

Insurance providers have many different types of health plans available. When searching for health plans, you may see plan types identified by metal tier, such as Bronze, Silver, Gold, or Platinum, as well as HMO, PPO, or POS. Metal tiers determine the cost-sharing of your health services between you and the insurance provider. The type of plans such as HMO or PPO determines the flexibility in choosing your physicians.

Metal Tiers 

Plans with higher premiums, such as gold and platinum, pay more of your total costs of healthcare. The categories with lower premiums, such as bronze and silver plans, pay less of your total costs. As a result, higher metal tier plans typically have lower deductibles and lower copays, while lower metal tier plans have higher deductibles to meet and higher copays. 

Plan Type 

The type of health plan you have, such as an HMO or PPO, will affect your deductible and copay as well. 

  • Health Maintenance Organization (HMO): With an HMO, you can only receive coverage for in-network providers. In order to see a specialist, you must first go to a primary care provider to get a referral. HMOs typically have lower monthly premiums than PPOs and do not have deductibles. You will have to pay a copay at in-network providers.
  • Preferred Provider Organization (PPO): While you will have access to in-network providers with a PPO, you can visit out-of-network providers as well. In addition, you do not need a referral to see a specialist. Since PPO plans offer more flexibility in which providers you can see, they typically have higher monthly premiums than HMO plans and have deductibles. Depending on your exact plan, you may also have copays and coinsurance for out-of-network providers.

How To Save Money on Health Insurance

Health insurance can be pricey, but there are several options that can help you lower the cost of your health care expenses. Below we outline some options to help you save money on health insurance.  

Premium Tax Credits

Premium Tax Credits are a type of tax credit that you can use to lower your monthly insurance premium. When you enroll in a health insurance plan through the Marketplace, you will find out whether you are eligible for this credit. The premium tax credit is based on the income estimate and your household when you complete your application. If your income is between 100 to 400 percent of the federal poverty level (FPL) in all states, then you would qualify for tax credits. 

Cost-Sharing Reductions

Cost-Sharing Reductions are discounts that lower your cost for deductibles, copayments, and coinsurance. When you fill out a Marketplace application, you’ll find out if you qualify for premium tax credits and extra savings. In the Health Insurance Marketplace, cost-sharing reductions (CSR) are often called “extra savings” and are a provision of the Affordable Care Act that reduces out-of-pocket costs for eligible enrollees who select Silver health insurance plans in the marketplace.

Those eligible for CSR include individuals and families with incomes up to 250 percent of the poverty line. If they are eligible for a premium tax credit and purchase a silver plan through the Health Insurance Marketplace in their state they would likely receive CSR.

Healthcare for 80% less

Get affordable copays. Plans start at $45/month.

HSA and FSA 

Health savings accounts (HSA) and flexible spending accounts (FSA) are great options to help you save money to use on your health-related expenses. Both accounts allow you to allocate tax-free money that can be used to pay for health care costs, such as copays or monthly premiums. Check out our article to see if you are eligible for an HSA or FSA. 

Alternatives to Health Insurance 

There are several health care plans that you can use in replacement or in addition to a traditional health insurance plan. A plan with Mira can help you access affordable urgent care, prescriptions, lab tests, and more. You can use Mira to cover your health care costs before you meet your deductible or instead of health insurance. 

Health Insurance Cost-Sharing Frequently Asked Questions (FAQs)

Below are some frequently asked questions you may have when getting acclimated with health insurance.

What is the difference between coinsurance and copayments?

Copayments and coinsurance are both forms of cost-sharing when it comes to paying for your healthcare services. A copayment is the fixed rate you are required to pay when you receive medical care but varies depending on whether you receive primary care, specialty care, or emergency services. 

A coinsurance is a percentage you are responsible for paying for your healthcare services, often between 10-30 percent of the cost of an office visit. Your coinsurance only applies after you meet your deductible. These rates can often be found on your insurance card.

How do you decide what deductible amount is right for you?

You may come across different payment plans for health insurance that have higher deductibles and lower premiums, or higher premiums and lower deductibles. Generally. If you're healthy and are unlikely to need costly medical services throughout the year, opting for a plan with a higher deductible and lower premium may be a good choice for you.

You may want to consider a plan with a lower deductible and higher monthly premium if you have a medical condition requiring more frequent care and services.

How do you enroll in health insurance?

To enroll in health insurance, you can apply through the Marketplace, but you must wait until the Open Enrollment Period. Open enrollment periods vary by state but typically range from November to mid-January.

If you have a qualifying life event, you may be eligible for a Special Enrollment Period and able to purchase health insurance outside of the open enrollment period. Events such as marriage, job loss, moving, or turning 26 are all examples of qualifying life events that make you eligible for a special enrollment period. 

What services are not covered by health insurance?

Healthcare services such as dental and vision care often require their own insurance plan for coverage, and certain prescriptions may not be covered by your health insurance. Below is a list of additional healthcare services traditionally not covered by insurance providers: 

  • Acupuncture and alternative therapies
  • Weight loss programs and weight loss surgery
  • Cosmetic surgery
  • Infertility treatment
  • Sterilization reversal
  • Private nursing
  • Travel vaccines
  • LASIK surgery

Bottom Line

When applying for health insurance, you will notice many costs associated with maintaining your coverage such as deductibles, premiums, copayments, and coinsurance. A deductible is an amount you are required to pay out-of-pocket before your insurance contributes to the cost of care. A premium is a monthly payment you will continue to pay to maintain your coverage, while copayments or coinsurance is the amount you are required to pay at the time of health service. 

If you are looking for an alternative to health insurance or a way to supplement a high deductible health plan, Mira may be a great option for you. Sign up and get care today.