When a Copay is not really a Copay; the ER copay is misleading

Last time I explained how copays work, focusing on doctor office visits. But there are times when the word “copay” is misused – and frankly it’s misleading. Many policies indicate that they have a copay for a visit to the emergency room (usually $100 or $200), but this is not a true copay. I know what you’re thinking: “Wait a minute, Alex, I just simply can’t believe an insurance company would mislead people!” Well, perhaps it’s just poor choice in terminology or simple miscommunication.

But the ER copay is really a fee. If you have a $100 ER copay, what this usually means is that you’re going to pay $100 before you start paying towards your deductible. In other words, it’s an extra $100 they charge you, and you’re still going to have to pay for the service (at the discounted rate if the hospital is in network) until you’ve reached your annual deductible. This “copay” is essentially a disincentive designed to make you think twice before going to the ER.

The good news, though, is that if you are admitted to the hospital, this “copay” (fee) is waived. To cut to the chase, there is not a more expensive place to receive medical care than in an American hospital emergency room. The insurance companies want to avoid them in situations that aren’t genuine emergencies. So they charge this extra fee. I have heard one insurance company use the more honest term “facility fee” or “facility surcharge” to describe it.
Not all plans have this “ER copay” – HSA-qualified plans, for example, generally don’t. But just realize that if your plan tells you there is an “ER copay,” it is almost certainly an extra facility fee. Now you know.