A copayment (or co-payment) is a payment defined in an insurance policy and paid by the insured each time a medical service is accessed. For example, some plans will charge a $4 copayment for a prescription medication, or $20 for an office visit. Copayments do not typically count against an out-of-pocket maximum. While copayments can be used to make sure the insured does not needlessly access medical service, copayments that constitute a cost-burden (the exact amount of which may vary tremendously across populations) can prevent the insured from accessing needed health care.
Insurance companies may use tiered copayment systems to encourage the insured to access lower-cost drugs, such as generic alternatives to name-brand medications, by charging lower (or zero) copayments for preferred medications.
Copayments are similar but distinct from coinsurance, another form of cost-sharing.