What does "co-payment" mean in a health insurance policy?

In a health insurance policy, "co-payment," often referred to as "copay," is a fixed amount that a policyholder pays for a specific covered service at the time the service is rendered. This means that when an individual visits a healthcare provider or uses a specific health service, they are required to pay a predetermined fee, while the insurance company covers the remainder of the costs associated with that service.

The purpose of co-payments is to share the financial responsibility between the insurer and the insured, making health services more accessible and incentivizing users to seek necessary care without overwhelming costs. For example, a policy may stipulate that a doctor's visit carries a co-payment of $20, which the insured pays upfront, while the insurance company handles the rest of the bill.

Understanding co-payments is crucial for policyholders, as they impact out-of-pocket costs and dictate how much individuals can expect to pay for various medical services, contributing to their overall healthcare expenses.