What is the difference between a “deductible” and a “co-payment”?

The distinction between a deductible and a co-payment is fundamental to understanding how health insurance benefits work. A deductible refers to the amount that a policyholder must pay out-of-pocket for healthcare services before their insurance company begins to cover costs. Typically, once the deductible is met, the insurance company will then start to pay for eligible expenses, often requiring the insured to still contribute a co-payment for specific services.

In contrast, a co-payment is a predetermined fixed amount that a policyholder pays at the time they receive a service, such as a doctor's visit or a prescription. This fee typically does not contribute toward the deductible; it is a cost-sharing mechanism that remains in effect even after the deductible has been satisfied.

This relationship allows policyholders to understand their financial responsibilities better and plan accordingly for healthcare expenses. By recognizing that the deductible must be satisfied before insurance coverage kicks in, individuals can see how this can impact their overall healthcare costs compared to co-payments, which are paid per visit or service. Understanding these definitions is crucial for navigating health insurance policies effectively.