Deductibles and co-pays are two types of out-of-pocket costs associated with insurance plans. Health, vision and dental insurance may have co-pays — shorthand for co-payment. Most types of insurance, including auto and homeowner’s insurance, may have deductibles, and some plans have both. Your insurance policy outlines what out-of-pocket costs are associated with your coverage.
A deductible is the dollar amount of covered services you’re responsible for before your insurance plan begins coverage. Most deductibles cover a calendar year, which means each January 1 your deductible starts over. For example, your dental insurance has a $150 annual deductible. You’ve met your deductible as of June 2010, and your plan begins to cover services. On January 1, 2011, you need to pay the $150 again.
Your deductible may be different for different services under your plan, and if the plan covers your family, there may be a deductible for each member as well as a family deductible. For example, your plan may have a $25 deductible for each member of your household and a $75 deductible for your family.
A co-pay is a set amount that you pay out of pocket to see a health, dental or vision provider. For example, your plan may have a $15 co-pay for you to see a primary care physician and a $30 co-pay for a specialist. Your co-pay may also be based on the services you receive. Your co-pay for an annual physical, for example, may be $0, but other primary care doctor visits may be $15.
Deductible vs. Co-pay
Deductibles are typically a larger dollar amount than a co-pay. Some insurance plans may have a deductible of $500 or more, while co-pays are typically under $50. Your insurance plan will specify whether you need to pay the deductible before your co-pays apply or whether you can pay your co-pay amount for some services, even if your deductible isn’t met. Your health insurance plan, for example, may have a $250 deductible but all primary doctor visits have a $10 co-pay, even if your deductible hasn’t been met.
Your health, dental or vision insurance may also have coinsurance — a percentage of covered services that you are responsible for paying. For example, your plan may have a 20 percent coinsurance for specialist visits, so if your specialist visit cost $400, you would pay $80. Your insurance plan may have coinsurance, co-pays, a deductible or all three.