How do co-payments generally function in health insurance?

Co-payments function in health insurance as a flat rate paid at the time of service. This means that when an insured individual receives medical care or fills a prescription, they are required to pay a predetermined amount out of pocket. This co-payment is typically designed to be a fixed fee, such as $20 for a doctor's visit or $10 for a prescription, and it helps to share the cost of healthcare between the insurer and the insured.

By having co-payments, health insurance plans encourage patients to seek medical care while also controlling costs for the insurer. The predictable, fixed nature of co-payments makes it easier for insured individuals to budget for healthcare expenses. This structure contrasts with other payment arrangements, such as percentages of total costs or annual fees, which do not provide the same straightforward transaction at the time of receiving services.