What is meant by the term "co-payment" in healthcare?

The term "co-payment" refers specifically to a fixed amount that a patient pays for a covered healthcare service. This is typically designated by health insurance plans and is a part of the cost-sharing structure between the patient and insurance provider. When a patient visits a healthcare provider or receives certain services, they are required to pay this predetermined amount at the time of service.

This concept is important in understanding how insurance plans manage costs. Co-payments serve both to limit the insurance company's exposure to high costs by sharing expenses with patients and to encourage patients to seek medical care when necessary without facing insurmountable expenses.

The notion of co-payment should not be confused with payments made directly to providers by facilities or advanced payments for services, as these do not reflect the typical arrangement where the patient has a defined, out-of-pocket expense for each visit or service. Additionally, co-payments differ from the total cost of services before insurance is applied, which encompasses the entire expense without factoring in the insurance discounts or contributions.