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Health Insurance

Premiums, Deductibles, Copays and Coinsurance

Five words describe almost every cost in a health plan. Each applies at a different moment, and the arithmetic only makes sense once they are kept apart.

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Premiums, Deductibles, Copays and Coinsurance at a glance

Premium
Paid to keep the coverage, whether or not you use care.
Deductible
What you may pay for covered services before the plan starts sharing costs.
Copay and coinsurance
Your share of a covered service: a fixed amount, or a percentage.
Out-of-pocket maximum
The yearly cap on your share of in-network covered care.

What is premiums, deductibles, copays and coinsurance?

A plan description lists several different kinds of cost, and most confusion about health insurance comes from reading them as one. The premium is the price of having coverage. The deductible, copays and coinsurance are how you share the cost of care once you use it. The out-of-pocket maximum is the limit on that sharing for the year.

None of them tells you on its own what a plan will cost you. A plan with a low premium may carry a high deductible; a plan with a high deductible may cover some services — preventive care, for example — before it is met. Reading the terms together, against the care you expect to use, is what turns a plan description into an estimate you can compare.

The five costs, and when each one applies

These are the words every plan description uses. The amounts change from plan to plan and year to year; what each term means does not.

Premium
What you pay to have the coverage, usually every month, whether or not you use any care.It does not count toward the out-of-pocket maximum.
Deductible
An amount you may pay for covered services before the plan starts paying its share of them.Not every service is subject to it — some are covered before the deductible is met, and the plan's own documents say which.
Copay
A fixed amount you pay for a particular covered service, such as an office visit or a prescription.Whether a copay applies before or after the deductible depends on the plan and the service.
Coinsurance
Your share of the cost of a covered service, stated as a percentage of the allowed amount.It usually applies after the deductible. Which services use coinsurance rather than a copay varies by plan.
Out-of-pocket maximum
The most you have to pay for covered services in a plan year. After you spend that amount on deductibles, copayments and coinsurance for in-network care, the plan pays the full cost of covered benefits.Four things do not count toward it: your premiums, services the plan does not cover, out-of-network care, and amounts a provider charges above the allowed amount.
The allowed amount sits underneath all of these: it is the most a plan will pay for a covered service, and your coinsurance is calculated on it rather than on whatever a provider bills.

How the costs add up over a year

A useful way to read any plan is to picture a year in two parts: the premiums you pay no matter what, and the share of care you pay as you use it.

  • The fixed partTwelve months of premiums. This is the least you will pay for the year.
  • The variable partDeductible, copays and coinsurance, depending on how much care you use.
  • The ceiling on the variable partThe out-of-pocket maximum, for in-network covered care — plus anything outside it, such as out-of-network care or services the plan does not cover.
Comparing plans only by premium compares the fixed part and ignores the rest. Comparing the worst realistic year — premiums plus the out-of-pocket maximum — is one way to see the full range a plan exposes you to.

The federal ceiling on out-of-pocket costs

Federal rules set a ceiling on how high a Marketplace plan's out-of-pocket maximum can be. The ceiling is adjusted each plan year, and a plan's own maximum can be lower. HealthCare.gov publishes the current limit, and a plan's Summary of Benefits and Coverage states its own.

Preventive care and the deductible

Marketplace plans cover certain preventive services with no copayment or coinsurance, even before the deductible is met, when an in-network provider delivers them. HealthCare.gov notes that no cost is not guaranteed in every case, so how a visit is billed is worth confirming.

How provider networks work

Common misconceptions

Each of these is repeated often enough to be worth answering directly.

  • Often heard

    Nothing is covered until I meet my deductible.

    In practice: Some services, including certain preventive care from in-network providers, are covered before the deductible is met. The plan's documents list which.

  • Often heard

    My premiums count toward my out-of-pocket maximum.

    In practice: They do not. The maximum applies to deductibles, copays and coinsurance for in-network covered care.

Common questions

Where do I find a specific plan's numbers?
In its Summary of Benefits and Coverage, a standard document every plan provides, and on HealthCare.gov or your state's Marketplace when you compare plans there.

Sources

  1. 1.Premium (glossary) — Centers for Medicare & Medicaid Services (accessed Sep 2026)
  2. 2.Deductible (glossary) — Centers for Medicare & Medicaid Services (accessed Sep 2026)
  3. 3.Copayment (glossary) — Centers for Medicare & Medicaid Services (accessed Sep 2026)
  4. 4.Coinsurance (glossary) — Centers for Medicare & Medicaid Services (accessed Sep 2026)
  5. 5.Out-of-pocket maximum / limit (glossary) — Centers for Medicare & Medicaid Services (accessed Sep 2026)
  6. 6.Allowed amount (glossary) — Centers for Medicare & Medicaid Services (accessed Sep 2026)
  7. 7.Preventive health services — Centers for Medicare & Medicaid Services (accessed Sep 2026)

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