Co-Pay

A co-pay or co-payment is the contractual amount you must pay for your use of a specific medical service covered by your policy. In our sample policy, there is no co-pay required for doctor office visits or other outpatient treatment and services that sometimes require a co-pay on other policies. But there are significant co-pays required in this policy for inpatient confinement (when you are in the hospital), and for surgery, and there is an inpatient provider visit co-pay, which means that you have a co-pay when your doctor comes to see you in the hospital. You can choose the size of your inpatient confinement co-pay and your surgery co-pay, ranging from $1,000 to $5,000. The provider visit co-pay is $50 per visit. None of these three co-pays may be used to satisfy another.

The following is typical introductory wording for co-payments due when you are being treated by a health provider in your insurance company’s network, also referred to as a participating provider. A participating provider is one with whom the insurance company has contracted to provide services to its insureds at a discounted rate. The introductory wording is the same for a non-participating provider, one outside your insurer’s network:

(Typically wording:*) Participating Provider Services Subject to Co-Pay: Subject to all applicable definitions, exclusions, limitations, waiting periods and other provisions contained in this Policy, as well as any riders, endorsements or amendments attached hereto, and satisfaction and payment by each insured of the Failure to Pre-Certify Treatment Deductible, if applicable, as well as each applicable Surgery Co-Pay and Inpatient confinement Co-Pay amount, We promise to pay to or on behalf of each Insured the applicable Company Insurance Percentage of the remaining amount of professional fees and other applicable medical, diagnostic or treatment expenses and charges of Participating Providers that constitute Covered Expenses incurred by each Insured for the following described Inpatient and Outpatient services, which in each instance was Medically Necessary:

This is basically the insurance company’s promise to pay what they owe (when you use a participating provider) subject to all the provisions, exclusions, limitations, etc. outlined in the policy. The various services are then listed, which we will discuss individually in other articles.

Note all of the potential ways listed that either qualify or limit your benefits. One should not purchase a health insurance policy with the expectation that just because you are paying a hefty premium for your insurance coverage, all of your medical expense financial worries are over.

Even though the cost of the insurance policy is expensive, you need to look carefully at the details of your policy to be sure what is and is not covered so that you are sure you have the best possible policy benefit plan for your specific situation. With group insurance you pretty much have to take what is being offered through the group. There may be some options, but there won’t be too many. But if you are purchasing an individual policy, you do have more of an opportunity to design the coverage to fit your needs. You have a number of companies to choose from and each of those companies will have various options.

Example of how co-pays work: If you have elected the $2,500 inpatient confinement co-pay and the $3,000 surgery co-pay and you are in the hospital for surgery and your doctor visits you three times a day, before the insurance company will think about paying each of these benefits, you must demonstrate to them that you have incurred a hospital bill of at least $2,500 and a surgery bill of at least $3,000 and that the doctor charges you more than $50 for each of his visits. If you can’t, the hospital stay, surgery and doctor visits are on you.

Deductibles: The second requirement that must be satisfied before the insurance company will consider paying any insurance benefits is the deductible. The deductible is an amount you must pay for your medical bills in addition to your copayment before the insurance company will begin paying benefits. In our sample policy, the deductible is a calendar year deductible, which is the case for most policies. The calendar year deductible is the amount of covered expenses each insured person must incur within a calendar year before the insurance company will pay any benefits. “Calendar year” is typically defined as the period beginning on the issue date of the policy and ending on December 31 of that year. In subsequent years, it is the period from January 1 through December 31. Co-pays may not be used to satisfy the calendar year deductible.

Graphic illustration: If you make the choices in red text for your co-pays and your calendar year deductible, you will have to incur $2500 in hospital bills, $3,000 in surgical expenses and $5,000 more in medical expenses before this sample policy will pay anything for your medical bills after a stay in the hospital. If you choose lower deductible and lower copays, your premium will be higher. Choose a higher deductible and co-pays, and your premium will be lower. The choice is yours. The provider visit co-pay and failure to pre-certify treatment deductible are set and you are not given a choice. (See below.) And you thought you had comprehensive coverage!

Co-pay Choices for Inpatient Confinement	$1,000	2,500	$5,000
Co-pay Choices for Surgery	$1,000	$2,000	$3,000	$4,000	$5,000
Calendar Year Deductible Choices	$2,500	$5000	$7,500	$10,000
Provider Visit Co-pay	$50 (no choice)
Failure to Pre-certify Treatment Deductible	$1,000 (no choice)

Pre-certification

Another type of deductible often used by insurance companies is a Failure to Pre-Certify Treatment Deductible. This deductible, in addition to the calendar year deductible, is another amount of covered expenses you must incur before any benefits are payable under the policy, but this is only triggered when you fail to get the insurance company’s approval prior to treatment. This certification is required prior to all hospital inpatient admissions, except in an emergency situation. In essence, you are asking the insurance company for permission before you get the treatment you need. In some cases, the insurance company may even ask you to get a second opinion as to the appropriateness or medical necessity of the surgery. If they do, it will be at their expense.

Pre-certification is a requirement, but not a guarantee of payment of benefits. All of the other policy provisions still apply, some of which may have the affect of limiting the amount of benefits payable, even thought the treatment was pre-certified. The failure to pre-certify treatment deductible in the sample policy is $1,000. So, if you were to fail to pre-certify, you can tack another $1,000 onto the above expenses you must incur before the insurance company is required to consider any payment of benefits. So far, that makes a total of $11,500 in out-of-pocket expenses you must pay before the insurance company begins to look at what it must pay.

*Wording may vary from contract to contract and from state to state.