What is the primary function of a copayment in health insurance?

The primary function of a copayment in health insurance is to serve as a fixed dollar amount that the insured pays when receiving specific medical services, such as doctor visits or prescription medications. This out-of-pocket expense is predetermined and outlined in the health insurance policy, providing clarity on the costs that will be incurred for various services. By requiring the insured to pay this amount, copayments help reduce over-utilization of healthcare services, as individuals may think twice before seeking non-essential medical care when they know they will need to pay a specific fee.

This mechanism also illustrates cost-sharing between the insurer and the insured, making it easier for policyholders to budget their healthcare expenses while still gaining access to necessary services. Overall, copayments are an essential feature of many health insurance plans, contributing to both cost management and access to care.