What is a copayment in health insurance?

A copayment, often referred to as a copay, is a specific dollar amount that a policyholder is required to pay at the time of receiving a particular healthcare service, such as a doctor's visit or prescription medication. It is designed to share the costs of healthcare between the insurer and the insured, ensuring that the insured contributes a fixed amount towards the service rendered.

This concept allows for predictable out-of-pocket expenses for the insured, making it easier to plan healthcare costs. For example, an insurance policy might stipulate that a visit to a primary care physician requires a $20 copayment, where the insurance company will cover the remainder of the cost.

The other options do not capture the essence of a copayment. A percentage of the total medical bill refers to coinsurance, which is different from a fixed amount copayment. The total amount covered by the insurance is not relevant to the definition of a copayment, as it does not specify the patient's responsibility. Lastly, the annual deductible is the amount an insured must pay before the insurance company starts paying for covered services, which is distinct from the concept of copayments made at the point of service.