What is a "copayment"?

A copayment, commonly referred to as a copay, is a predetermined and fixed amount that an insured individual must pay out-of-pocket at the time of receiving a particular medical service or treatment. This cost-sharing mechanism is a part of many health insurance plans and is intended to encourage responsible use of healthcare services by requiring the insured to share in the cost. For example, a health plan may set a copayment of $20 for a visit to a primary care physician. This means that during the visit, the patient would pay $20, while the insurance covers the remaining expenses associated with that visit.

In addition to promoting responsible usage of healthcare, copayments help lower the overall cost of insurance by discouraging unnecessary utilization of services.

The other choices do not accurately define a copayment: the total amount charged by a hospital for one visit pertains to the entire cost of care, not a fixed contribution by the insured; a type of insurance policy that covers only emergency services does not encompass copayments; and an additional cost added to premiums for special services describes a different aspect of health insurance costs.