Ask Al - What is a Co-Pay?
by Al Knight

What is a co-pay?  The term co-pay is the percentage of a claim that you pay after your deductible has been met.  A typical PPO plan might be a 70/30 plan, this means after the deductible is met the insurance will pay 70% of the claim and the client pays 30%.  A good plan will have a co-insurance maximum which is your stop loss. 

Here is an example of how it works:  Lets say you have a 70/30 plan with a $5000 deductible and a co-insurance maximum of $4500.  You are admitted to a hospital for a surgery or illness and the bill is $100,000.  A good PPO policy will first negotiate a discount off your bill, lets say they get it reduced to $80,000.  If your insurance paid 70% that would be $56,000 which leaves you with a balance at 30% or $24,000.  But, remember the co-insurance maximum of $4500, this means you would pay your deductible of $5000 and your co-insurance maximum of $4500 and be done.

Some policies may require you to meet your deductible before it will pay claims.  I personally look for a policy that will pay claims first then let me deal with the remaining portion of the bill.  You may even be able to further negotiate a discount on your liability with the hospital administrator. 

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