Choosing health insurance isn't just a matter of finding the plan with the lowest monthly premium. Rather, you'll want to see what that plan actually gives you. If you find a plan whose premiums are on the low side, but whose additional out-of-pocket costs are high, you could end up spending above what you would with a more expensive plan.

One such element of a health insurance plan to consider is its copayment. Also known as a copay for short, a copayment is the fixed amount you'll pay for services such as doctor visits and prescription drugs every time you use these services. Different plans come with different copayments, so it pays to shop around and see what makes the most sense for you.

Patient checking out at the doctor's office


How copayments work

Most of the time, copayments won't kick in until your health insurance deductible is met. A deductible is the amount you're required to pay before your insurer starts covering the cost of your care. Say your plan comes with a $1,000 deductible. Once you spend that amount out of pocket, your insurance company will start paying for your services. At that point, however, you'll generally be required to share in that cost via your copayments. So if your plan comes with a $20 copayment for office visits, and you've already met your deductible, you'll pay $20 the next time you go to the doctor.

Just as you'll face a copayment for doctor visits, so too will you typically pay a copay for prescription drugs. Furthermore, your copayment might vary based on the type of doctor or medication at hand. For example, you might pay $20 to visit your primary care physician, but if you see a specialist, like a gastroenterologist, that copay might climb to $40. Similarly, you might pay a $10 copay for lower-tier drugs under your plan, but some medications might cost you $50 if they fall under a different tier.

Keep in mind that some insurance plans offer certain services that don't require a copay. For example, you may be entitled to one well visit with your doctor each year that your insurance company will pay for in full, and waive the copay for.

Finding the right plan

It's often the case that insurance plans with lower-cost premiums come with higher copays, and vice versa. It therefore pays to evaluate your medical spending and decide which type of scenario is most likely to help you come out ahead. If you tend to see the doctor often, or have a condition that requires a fair amount of monitoring, it might pay to choose a plan with a more expensive premium but a less expensive copayment. Ultimately, it's really a numbers game, so you'll need to do the math and see which type of plan makes the most sense.

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