What does "copayment" mean in health insurance?

A copayment is a specific, fixed amount that a policyholder is required to pay for certain covered services at the time of receiving care. This is part of a cost-sharing mechanism that is designed to reduce the overall cost of health insurance by involving the insured in the expense of healthcare, thus encouraging the efficient use of services. For instance, if you visit a doctor and your plan specifies a copayment of $20, you'll pay that amount directly to the provider, while the insurance covers the remainder of the service's cost.

The other options do not accurately define copayment. The total amount covered by insurance pertains to the overall coverage limits rather than the patient’s out-of-pocket expenses. The entire cost of the insurance premium refers to the amount paid for the health insurance policy itself and not related to individual services. Lastly, the percentage of the bill paid by the insurer describes a different mechanism known as coinsurance, which involves splitting costs rather than a fixed payment made by the policyholder at the time of service.