Wik: What are Co-pays? I'm a humble Canadian, so I'm not familiar with the American system; also not entirely understanding of how insurance works even here... (and a good point for this thread, I would say, imho, so good on ya)
A co-pay is the amount that a person with insurance pays out-of-pocket for their healthcare.
People usually have health insurance through their job, or in some cases the government if they are impoverished or elderly, although it is possible to purchase health insurance privately, but it was seldom done because it generally pretty expensive and historically they could refuse to insure you if they thought it would be too expensive (such as being in poor health via "pre-existing conditions"). This is all changing due to the recent healthcare legislation, but we'll see just how much actually gets implemented.
Insurance tends to be pretty expensive, so companies find paying for insurance for their employees to be a major expense. About 6 years ago, while unemployed and getting some financial assistance from my parents, I tried to get private insurance. To get a basic health insurance policy for a 26 year old male in perfect health would be a little over $100 a month, and apparently it would be about three times that for a female of my age (women are more expensive to insure because of pregnancy/childbirth related expenses).
When you go to the doctor, you present the clerk with your insurance information (typically on a card kept in your wallet) and pay a co-pay up front (or are billed for it separately by the doctors office), which is a relatively small percent of the total cost (the co-pay is outlined in the insurance policy). The insurance company is billed by the doctor's office for the rest. Insurance companies can be slow to pay, leading to frustration in doctor's offices. Some plans which are notoriously slow to pay or difficult to deal with are actually refused by some offices.
When getting prescription medicine, it works much the same way. You bring your prescription to the pharmacy (or the doctor's office directly sends the prescription to a requested pharmacy). You pay a fairly small amount, comparable to over-the-counter drugs, and take your medicine home. The insurance company gets the bill for the rest.
