Health Insurance Copay vs Deductible is a topic I would like to briefly explain.

More times than not, these words are used interchangeably and they should actually be considered different. They are 2 levels, if you will, of out of pocket expenses that you pay on a plan.

If you have a  PPO plan, then chances are you have a copay for services such as Office visit and prescriptions.  The word Copay is fixed amount that you pay for these types of services.  The copay will continue even after you have met your annual deductible.  More and more these days health insurance plans come with and without the copay component attached.  If there is no copay on your plan then services are most likely applied to the deductible.  Meaning each time your see a doctor or get a prescription you will be paying towards that deductible.

The deductible is what typically you will need to pay for any services related to the hospital (in/out) or high dollar procedures (ie cat scans, MRI, etc.).  You will want to refer to your specific plan documents for additional services that your deductible may apply to.

PPO plans that do not have a copay component are typically less expensive because you are paying for the first dollar amounts until you reach your deductible.   Here’s an example I would like to explain:

Lets say Bob Smith has a PPO plan with a copay…  Every time he goes to the doctor he has a $35 office visit copay.  Now Bob only went to the doctor maybe twice per year.  His monthly premium is $350.  So annually he’s paying $4,200 for premium for health insurance.  Now lets say he elected a health care savings account, which does not have copays and the monthly premium is $245 which annually totals $2940.  So he is paying an extra $1260 in premiums but has only went to the doctor 2x which is $70. 

My question to you.. which would you prefer?

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