This fall, I had the opportunity to represent Guidepost Rx at health fairs in my local area. I thought it would be an interesting idea to test the knowledge of the public, and see how much they knew about basic health insurance terms. One important pattern that I noticed from the brave souls that took the quiz, was that a lot of people got tripped up on the difference between co-pay and co-insurance. They both mean you have to pay something out-of-pocket for the health care services that you use, but what does each one mean specifically? Let’s take a closer look.

Co-pay basically means that you “know ahead what you are going to pay.” A co-pay is a set amount that you pay for health services. Your health insurance plan may provide co-pay information during open enrollment or in your benefits guide, and some insurance cards list the co-pay amounts for basic services like physician visits and prescriptions. Costs are fairly predictable with a co-pay structured plan.

Co-insurance, on the other hand, is less predictable than a co-pay. Co-insurance is a percentage of the total cost for a health care service that you are responsible for paying. In this situation, the only thing that stays the same is the percentage you must pay out-of-pocket. Depending on where you go to receive your health services, the amount you have to pay can vary significantly. This is why it is very important to shop around for health services if possible when you have a co-insurance cost structure.

How does co-pay differ from co-insurance in real life?

For co-pay, let’s use the example of a patient named Susie. Under Susie’s insurance plan, she has a $10 co-pay for a 30-day supply of all generic drugs that are covered by her plan. That means Susie can visit any pharmacy in her insurance plan’s network, and pay a flat $10 fee for her generic drug prescriptions.

In contrast, let’s take a look at Sam, whose health insurance plan has a co-insurance structure. Under Sam’s plan, he is responsible for paying 30% of the total cost of generic drugs. Sam is prescribed a cholesterol drug, and he decides to call around to a few local pharmacies to find out the total price of the drug. He is quoted $50, $100, and $200 from three different pharmacies for the exact same drug. This translates to a co-insurance of $15, $30 or $60 for Sam’s prescription. Had Sam not called around, he could have been paying four times more than he needed to for his prescription!

Sam’s example above is not an exaggeration. Drug prices can differ from one pharmacy to the next, even when they are located close to one another. The same goes for the prices of other health care services, such as physician visits and procedures. Therefore, if you have a co-insurance structured plan, you should call more than one pharmacy to get prices when you are prescribed a new medication. It may be a little more difficult to get price quotes from physician practices and other health care facilities, but it does not hurt to ask. You are the customer after all, and they want your business.

Hopefully this has cleared up some of the confusion surrounding co-pay and co-insurance. As you can see from these examples, an insurance plan with a co-insurance structure encourages health care consumers to be more actively involved and cost-conscious about the health care services they receive.

Ready to learn how to become a savvier health care consumer? Connect with Guidepost Rx, and let us help you navigate your pharmacy benefits.

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