California Health Insurance Co-Pay - A Fixed Dollar Amount vs. A Percentage

The portion of charges you pay to your provider for covered health care services in addition to any deductible. For example, $20 for an office visit or $15 for a prescription drug. It is similar to coinsurance, but it is a dollar amount instead of a percentage of the charges.
 
So it is a fixed amount that you will pay for a particular service. There are two main areas that copays are traditionally used in health policies broken out separately from the main deductible of the policy. This means you get the copay benefit immediately. Please see below for how HSA or Health Savings Account plans treat this.

Office Copay

This is a main component of the benefit summaries you will see when you receive an instant health quote. With most plans on the market, you will pay a fixed copay for the office consultation. For example, you may see "$10" under the office visit column. This usually means that you will pay $10 when you see a doctor. One important item...the copay only covers the consultation itself. If the doctor requests labs or performs other procedures (such as a dermatologist performing a skin biopsy), that procedure is usually not covered under the office copay. It will either have a separate copay (typical with HMO's); be subject to a plan deductible; or subject to co-insurance percentage sharing. Labs are also in addition to the copay amount you pay. Usually there is a flat copay amount for general physicians and specialists on the California health insurance market.

Prescription Copays

This is also a main component of the health benefit summary you will view when requesting an instant quote. Most plans on the market make a distinction between three types of prescription costs. They typically will have a lesser amount (generally $10) for Generic drugs. Generic drugs are less expensive than the second category, Brand Name Formulary. Most plans have a higher copay amount for Brand Name Formulary and these days, many plans also have a separate deductible for Brand Name Formulary. This means you will need to pay for the drug out of pocket until you meet your calendar year deductible; after which, you will then have the Brand name copay (usually $30-40 for a monthly supply). There is also a separate Brand Name Non-formulary category. These are Brand-name drugs which are deemed by the health insurance carrier to be equally effective but much more expensive than a comparable Brand Name Formulary drug. Formulary just means a list of drugs that the health insurance carriers deems to be both effective and cost-effective. For Brand Name non-formulary, you may have to pay a percentage of the cost and not have a copay at all.

Other services Copays

Usually, you only have copays for other services on HMO plans. That is a major benefit of HMO plans and also a reason why they have become so expensive. If you can get an $800 MRI for a $10 copay....well eventually the premium will go up significantly. It's common to also have a copay amount for ER visits. Emergency room care is especially expensive so the copay which can range from $75 and up offsets this costs and hopefully adds an incentive for members to address issues before they become emergencies.

Health Savings Account HSA and copays

HSA plans are different from traditional PPO or HMO plans in that most if not all services are subject to the main deductible. With traditional PPO or HMO plans, the office visit and RX copays are typically broken out separately from the main plan's deductible. Even though the HSA plan summaries might show copays, these copays are not available until the higher deductible is met so it's best to assume you do not have the copays when comparing the plans.

Understanding California Health Plan Co-Insurance

First, what is the official definition of co-insurance?
 
Co-insurance
 
Once you have met your deductible, you pay coinsurance for additional medical care. It is a percentage of the billed charge. For example, your insurance company might pay 80%, and then you would pay 20%. It is similar to a co-pay, but is a percentage instead of a dollar amount. 
 
Now, let's dig a little deeper. With California health insurance, it is common to speak of their plan as an 80/20 plan or a 70/30 plan. They are essentially referring to the co-insurance part of it. With the 80/20 example, the health carrier is picking up 80% of the charges and you are picking up the remaining 20%. If there is any kind of deductible, you must pay that first at 100% until met.
 
Let's take an example and see how California health insurance plans essentially break down into three main stages.
 
Stage 1 - The deductible YOU PAY 100% 
Let's say you have a $500 deductible. Except for services that are separate from the deductible (usually office visits and prescriptions...see COPAYS), you will pay the discounted charges at 100% until you meet your deductible. You can find more information on deductibles.
 
Stage 2 - The co-insurance YOU SHARE A PERCENTAGE 
Once the deductible is met, you then start sharing the cost with the carrier. Let's say our plan is 70/30 and the charge is $1000. You pay the first $500 (deductible) and then you pay 30% of the remaining $500...or $150. Of the first $1000 charge, you would pay $650 out of it. If you have another $1000 charge in that same calendar year, you would pay 30% of the 1000 (or $300) since your deductible was already met. When do you stop paying the 30%?
 
Stage 3 - The Max Out of Pocket THE CARRIER PAYS 100%
Once you have met your Max out of Pocket (sometimes called the Copay Maximum), the carrier will then pay 100% of covered benefits, in-network. For our plan example, let's say we have a $500 deductible, 70/30 co-insurance, and $5000 max out of pocket. If we get a $50,000 bill in a calendar year, you pay the first $500, then 30% until you reached another $5000 out of pocket. For that $50K, you would pay $5500 and the carrier would pay $45,500. Co-insurance is nice but the real reason to have health insurance is the max out of pocket.
 
Co-insurance usually applies to services outside of the office visit and prescriptions. You will typically see the same co-insurance percentage for hospital, lab, surgery, emergency (sometimes has separate additional copay) and physician services.
 
It's important to stay in network for PPO plans. Let's say you have 70/30 plan and you see a doctor out of the PPO network on a non-emergency basis for $1000 of services and your deductible is already met (you're in Stage 2). Two things will probably happen. The health insurance plan will probably have a separate percentage for out of network...let's say 50/50 instead of 70/30. Also, the carrier will apply this lesser percentage to what they would pay an in-network provider. 
 
For example with the $1000 charge, perhaps the contracted PPO rate is $600 (discount is usually 30-60%). The carrier would then pay 50% of the $600 or $300 of the total $1000. You pay $700. Compare this with the 30% of 600 you would pay for an in-network provider. $700 versus $180 out of your pocket. Use in-network providers!

California health insurance Max out of Pocket

The official definition:
 
Out-of-Pocket Maximum
 
The most you will have to pay in a year for deductibles and coinsurance for covered benefits.
 
You will sometimes see this referred as Out-of-Pocket Maximum, Copay Maximum, or Max out of Pocket depending on the health carrier. They all mean the same thing. They let you know how much you will have to pay in a catastrophic health situation up to your lifetime max (which is usually in the millions...or should be if you are dealing with a reputable carrier).
 
The max out of pocket is probably the most important part of your policy and hopefully you'll never see it. It essentially caps out your liability for the Big "What If." Health care costs have risen at significant rates for the past decade and will likely continue. Simple procedures such as an ACL repair (very common knee surgery) can run $15K to $20K. Cancer treatment can runs 10's to 100's of thousands. This is really the reason to have health insurance. Let's dig a little deeper to understand how it works and make sure you choose a California health plan that addresses this need well.
 
First, with most health plans, you pay a deductible first, after which you then start to share costs with the carrier until you hit your max out of pocket. It's important to use in-network PPO providers with a PPO plan otherwise you can actually pay more out of pocket. For example, let's say your Max out of pocket is $5000 and you have a $20,000 elective surgery (covered benefit) at a non-participating hospital on a non-emergency basis. The contracted PPO rate for that procedure may be $12,000. In this case, you will pay your $5000 (max out of pocket) and the difference of $8000 between the allowed negotiated PPO rate and your hospital's charge. So you will be looking at $13K out of pocket in stead of the $5K. Stay in-network to keep your max out of pocket down.
 
The out of pocket max is per person for a policy with multiple family members except for HSA (Health Savings Account) plans. You will typically see a "2 member max" clause by the max out of pocket amount. This means that if two people on a family policy meet their max out of pocket, the other family members do not need to. This protects from catastrophic situations in which many family members have significant bills in one year. The HSA's have a cumulative max out of pocket. The entire family is all working towards one family max.
 
Once your max out of pocket is met, you should have very little out of pocket for covered benefits, in-network. You also have a lifetime max which is usually around $5 million for PPO plans and typically unlimited for HMO plans. Be careful of plans where they cap benefits such as hospital daily charges or annual benefits. You will not find those types of plans on this site because they can create enormous financial consequences for a subscriber with large medical bills. 
 
Some carrier include the deductible as part of the max out of pocket, while others apply the deductible in addition to the max out of pocket. Officially, the Max should cap copays and co-insurance but the inclusive type works much better.