What is the difference between a copayment and a deductible?

A copayment is defined as a fixed amount that a policyholder pays for specific services at the time of care, such as a doctor's visit or a prescription. This payment structure helps to share the cost of healthcare between the insurer and the insured. On the other hand, a deductible is the total amount that the insured must pay out-of-pocket for healthcare expenses before the insurance company begins to cover the costs. This means that until the insured individual meets their deductible, they are responsible for the full cost of their medical services.

Understanding these definitions is crucial for managing healthcare expenses effectively. The copayment structure helps provide predictable costs for certain services, while the deductible is a threshold that ensures the insured contributes a certain amount toward their healthcare before benefits are accessed. This distinction allows individuals to organize their healthcare financing depending on their expected services and expenses.