Deductible, copay, coinsurance: how to read a health plan before you pick one

Why these words matter

Two health plans can have the same monthly price and leave you with very different bills. The difference is in a handful of terms: deductible, copay, coinsurance and out-of-pocket maximum. Once you know what each one means, you can compare plans by what you'd actually pay in a year, not just by the premium.

This guide uses the definitions from HealthCare.gov and the federal uniform glossary that insurers must use. The details of any one plan are set by its own documents, so always check those before you enroll.

Premium: the price of having coverage

The premium is what you pay every month to keep your plan, whether or not you see a doctor. If you get a premium tax credit through the Marketplace, or your employer pays part of the cost, your share of the premium is lower.

The premium does not count toward your deductible or your out-of-pocket maximum. Think of it as a fixed cost. Everything else in this guide is about what you pay when you actually use care.

Deductible, copay and coinsurance

These three terms describe how you and your plan split the cost of covered care.

• Deductible: the amount you pay for covered services before your plan starts paying. If your deductible is $3,000, you generally pay the full allowed price for covered care until you've spent $3,000. Many preventive services, like certain screenings and vaccines, are covered with no charge even before you meet the deductible.
• Copay (copayment): a flat dollar amount you pay for a service, such as $30 for a doctor visit or $15 for a generic prescription. Some plans charge copays even before the deductible is met. Others only start copays after it. The plan documents say which.
• Coinsurance: your percentage share of a covered service, usually after you've met your deductible. With 20% coinsurance on a visit with a $100 allowed amount, you pay $20 and the plan pays $80.

The out-of-pocket maximum: your yearly ceiling

The out-of-pocket maximum is the most you'll pay for covered, in-network services in a plan year. Your deductible, copays and coinsurance all count toward it. Once you reach it, the plan pays 100% of covered in-network care for the rest of that year.

Federal law caps how high this limit can be. For Marketplace plans, the out-of-pocket maximum can be no more than $10,600 for one person and $21,200 for a family in 2026. For 2027, the cap rises to $12,000 for one person and $24,000 for a family. Many plans set their own limit lower than the federal cap.

Some costs never count toward the out-of-pocket maximum:

• Your monthly premiums.
• Care your plan doesn't cover.
• Out-of-network care, in most cases.
• Amounts an out-of-network provider bills above what your plan allows.

Networks: where your plan pays

Most plans have a network: the doctors, hospitals and pharmacies that have agreed to the plan's prices. Staying in network keeps your costs lower and counts toward your out-of-pocket maximum. Some plan types, such as many HMOs and EPOs, pay nothing for out-of-network care except in emergencies. PPOs usually cover some out-of-network care, but at a higher share for you.

Before you enroll, search the plan's provider directory for your doctors, specialists, preferred hospital and pharmacy. Then check the plan's drug list, called a formulary, for each of your prescriptions.

A worked example

Imagine a plan with a $3,000 deductible, 20% coinsurance and an $8,000 out-of-pocket maximum. You need surgery with an in-network allowed amount of $20,000.

• You pay the first $3,000 to meet your deductible.
• On the remaining $17,000, you pay 20% coinsurance, which is $3,400. The plan pays $13,600.
• Your total for the surgery is $6,400. You now have $1,600 left before you hit your $8,000 maximum.
• Later that year, you need another $15,000 of covered in-network care. Your 20% share would be $3,000, but you only pay $1,600 because that's when you reach the maximum. The plan pays everything else for covered in-network care for the rest of the year.

Metal levels and the trade-off

Marketplace plans come in metal levels that show, on average, how costs are split. A Bronze plan pays about 60% of covered costs and you pay about 40%. Silver is about 70/30, Gold about 80/20 and Platinum about 90/10. Lower metal levels usually have lower premiums but higher deductibles.

If you rarely see a doctor, a lower premium may make sense. If you take regular prescriptions, see specialists or expect a procedure, a plan with a higher premium and lower deductible may cost less over the year. People with lower incomes may qualify for cost-sharing reductions, which lower deductibles and copays, but only on Silver plans.

Use the Summary of Benefits and Coverage

Every plan must give you a Summary of Benefits and Coverage, or SBC. It uses the same format for every insurer, so you can lay two plans side by side. It lists the deductible, copays, coinsurance, out-of-pocket limit, and what's not covered. It also includes coverage examples showing what you might pay for having a baby, managing type 2 diabetes, and treating a simple fracture.

You can ask for an SBC for free, and the insurer or plan must provide it within seven business days. Remember that the SBC is a summary. The full plan documents control what's covered.

Where to get free help

If you're shopping on the Marketplace, HealthCare.gov shows an estimated total yearly cost for each plan. You can also get free help from a trained Navigator at localhelp.healthcare.gov or by calling 1-800-318-2596. If you have job-based coverage, your employer's benefits office can answer plan questions. People on Medicare can get free counseling from their State Health Insurance Assistance Program (SHIP).