How health insurance costs work — deductibles, copays, coinsurance, and out-of-pocket max.

1. Premium — what you pay every month

Your premium is the monthly bill to keep the policy active. You pay it whether you see a doctor or not. Premium is the number most people focus on when comparing plans, but it's only one of five — and the cheapest premium often means the most expensive everything else.

2. Deductible — what you pay before the plan pays

Your deductible is the amount you pay out of pocket for covered services in a plan year before the insurance starts paying its share. If your deductible is $3,000 and you have $1,200 in covered care so far this year, you've met $1,200 of your deductible and still owe $1,800 before the plan chips in.

A big exception: most ACA-compliant plans cover preventive care (annual physicals, screenings, immunizations) at 100% before the deductible, in-network. See HealthCare.gov's preventive services list.

3. Copay — flat fee per visit

A copay is a fixed dollar amount for a specific service — $30 for a primary care visit, $50 for a specialist, $15 for a generic prescription. Many plans charge copays for common services even before you've met the deductible.

4. Coinsurance — the percentage split after the deductible

Coinsurance kicks in after you've met the deductible. If your plan has 20% coinsurance and you get a $5,000 covered MRI, you pay $1,000 (20%) and the plan pays $4,000 (80%). Coinsurance keeps applying until you hit the out-of-pocket max.

5. Out-of-pocket maximum — the ceiling

The out-of-pocket maximum (OOP max) is the most you can spend on covered in-network care in a plan year. Deductible, copays, and coinsurance all count toward it — premiums do not. Once you hit the ceiling, the plan pays 100% of covered in-network care for the rest of the year.

For 2026, federal law caps in-network out-of-pocket maximums at $9,200 for individuals and $18,400 for families on ACA-compliant plans (per CMS; see CMS.gov). Many plans set theirs lower.

A worked example

Say your plan looks like this:

• Premium: $500/month ($6,000/year)
• Deductible: $3,000
• Coinsurance after deductible: 20%
• Out-of-pocket max: $7,000
• Copays: $30 PCP, $60 specialist

You have surgery costing $30,000 (in-network, covered). Here's how the math runs:

1. You pay the first $3,000 to meet the deductible.
2. Of the remaining $27,000, you pay 20% ($5,400) — but that alone would push you over the OOP max.
3. You hit the $7,000 OOP max after $4,000 of coinsurance is added to the $3,000 deductible.
4. The plan pays 100% of everything above that for the rest of the year.

Total you pay for the surgery: $7,000. Plus your $6,000 in annual premiums = $13,000 for the year — a fraction of the $30,000 sticker price.

Comparing plans by total cost

The right question isn't "which plan has the lowest premium?" — it's "given how much care I expect to use, which plan has the lowest total annual cost?" Here's the framework:

HSA-eligible plans — the tax angle

High-deductible health plans (HDHPs) paired with a Health Savings Account let you save pre-tax money for medical expenses. Contribution limits for 2026 are set annually by the IRS — see IRS Publication 969. The HSA tax deduction can offset a higher deductible, but the plan has to be certified HSA-eligible — not every high-deductible plan qualifies.

FAQ

Do copays count toward the deductible?

It depends on the plan. Many plans apply copays toward the OOP max but not the deductible; others count both. Read the Summary of Benefits.

Does my monthly premium count toward the out-of-pocket max?

No. Only cost-sharing for covered services (deductible, copays, coinsurance) counts.

Does out-of-network care count toward the same OOP max?

Usually no. Plans often have a separate (higher) out-of-network deductible and OOP max, and some plans (HMOs, EPOs) don't cover out-of-network at all except in emergencies.

What resets each year?

Deductible and OOP max reset on the plan-year renewal date (typically January 1 on individual plans).