Definition
Copay
Copay is the fixed percentage of a medical claim that the policyholder must pay out of pocket, with the insurer covering the rest.
A copay clause requires you to bear a fixed percentage of every admissible claim, with the insurer paying the balance. For example, a 10% copay means you pay a tenth of the bill and the insurer pays the rest. Copays are common in senior-citizen health plans and some policies for treatment in high-cost cities.
Policies with a copay charge lower premiums because you share the cost of every claim, but they reduce your effective payout. People who expect frequent claims may prefer plans without copay despite higher premiums.
Copay is different from a deductible, which is a one-time threshold per year before cover starts; copay applies to each claim regardless of amount.
Related terms
- DeductibleA deductible is the amount you must pay yourself before your insurance starts covering a claim.
- Waiting PeriodA waiting period is the time after a health policy starts during which claims for specified conditions or treatments are not payable.
- Health InsuranceHealth insurance covers medical and hospitalisation expenses in exchange for an annual premium.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.