It is possible to get a health insurance plan without copay. However, it usually comes with a trade-off.
An insurance plan's associated costs (deductibles, premiums, copay, etc.) usually share an inverse relationship. This means a decrease in a certain cost leads to an increase in the remainder. The truth is insurance carriers purposely do this to maintain an expected profit/loss ratio. Here's an example: insurance may increase your monthly premiums when there is little to no copay built into your plan, or vice versa. Very few insurance carriers offer plans which pay 100% of medical expenses.
To understand how a copay works, it is important to understand a deductible, as that usually applies first.
What is a copay?
After your deductible is met, you still have to pay a partial amount of the medical expense. This is a copay. Let's say you have a copay of $50, deductible of $100, and medical cost of $200. This means you must pay the $100 deductible first. With the remaining $100, $50 (copay) will be paid by you and the rest by the insurer ($50). Generally, a copay is negotiated when entering into a plan. It can apply to certain items or under set terms. Co-insurance works in a similar way. Instead of a set number, it is a percentage (ex. 80/20). In the 80/20 example, you will pay 20% of the remaining medical expense, after the deductible is met.
How should I structure my plan?
It depends on your lifestyle and well being. Those in good health may choose a high copay or deductible to avoid expensive premiums. However, if you require medical attention often, then a low copay may be right for you. It is best to consult with a specialist to determine your preferences and plan structure.
How can I save more?
If you have an insurance plan, you should consider turning these after-tax insurance costs into before-tax expenses through a Health Spending Account (HSA).
Unsatisfied with your current insurance plan?
Although an HSA can be combined with insurance, many Canadian small business owners prefer to only use an HSA. The two products offer the same solution but the HSA has one distinct advantage; it has no premiums, deductibles, co-insurance or co-pay.
Get an in-depth comparison between an HSA and traditional health insurance.
For an owner / operator business with no arm's length employees, click below:
If you own a business with arm's length employee, check out this guide instead: