Guides

Deductibles, copays, coinsurance, and out-of-pocket maximums, explained

A BND guide

A health plan’s price isn’t just the monthly premium. Here’s how the pieces fit together.

The five terms to know

  • Premium: what you pay every month to keep your coverage, whether or not you use any care.
  • Deductible: what you pay for covered care each year before the plan starts sharing the cost of most services.
  • Copay: a flat amount you pay for a service, such as a set fee for a doctor visit or a prescription.
  • Coinsurance: a percentage of the cost you pay after meeting your deductible, such as 20%.
  • Out-of-pocket maximum: the most you’ll pay for covered, in-network care in a plan year. Once you reach it, the plan pays 100% of covered in-network services for the rest of the year. Premiums don’t count toward it.

A simple example

Say your plan has a $2,000 deductible, 20% coinsurance, and a $6,000 out-of-pocket maximum, and you have a $10,000 covered hospital bill:

  1. You pay the first $2,000 (your deductible).
  2. On the remaining $8,000, you pay 20%, which is $1,600, and the plan pays $6,400.
  3. Your total for that bill is $3,600, which is under your $6,000 out-of-pocket maximum.

If more covered bills came in that year, you’d keep paying your share only until your total reached $6,000. After that, the plan would pay the rest of covered in-network care.

The numbers above are for illustration only. Your plan’s amounts will be different.

Preventive care

Many plans, including those that meet Affordable Care Act standards, cover recommended preventive services, such as annual checkups and certain screenings and vaccines, at no cost to you when you use an in-network provider, even before you meet your deductible.

Choosing the right balance

Plans with lower premiums usually have higher deductibles, and the reverse. If you expect to need regular care, a higher premium with lower costs per visit may save money. If you rarely see a doctor, a lower premium with a higher deductible may fit, as long as you could cover the deductible if something happened.

We can compare these numbers for your situation. Book a consultation.

This guide is general information, not advice about a specific plan. Cost-sharing rules vary by plan. Always review the plan’s Summary of Benefits and Coverage before enrolling.