These four words show up on every plan. They sound technical, but the underlying idea is simple. You and the insurance company are splitting the cost of your care, and these four numbers spell out how the split works.
The premium is the cost of having the plan
The premium is your monthly bill. It does not depend on whether you use care. You pay it to keep the plan active. If you skip a premium payment for too long, the plan can drop you.
The premium does not count toward any of the other limits. It does not chip away at your deductible, and it does not count toward the out-of-pocket maximum.
The deductible is what you spend first
The deductible is the amount you pay for covered services before the plan starts paying. If your deductible is $2,000, you pay the first $2,000 of covered services out of pocket. The plan starts paying after that.
Two important exceptions.
Preventive care. The ACA requires certain preventive services to be free even before you meet the deductible. That includes annual checkups, recommended screenings (mammogram, colonoscopy, blood pressure), most vaccines, and contraception methods on the federal list. The full list is on CMS.gov and updates as recommendations change.
Some plans cover certain services with a copay before the deductible. The Summary of Benefits and Coverage document will tell you which.
A common surprise. The deductible resets every year. If you hit it in December, you start over in January.
The copay is a flat amount per service
A copay is a fixed dollar amount you pay each time you use a service. A $25 copay for a primary care visit means you pay $25 at the visit. The plan pays the rest.
Copays make some services predictable. They are common for primary care, specialist visits, urgent care, prescription drugs by tier, and emergency room visits.
On many plans, copays apply only after the deductible is met. On other plans, especially Silver and Gold, copays apply from day one for certain services. Check your specific plan SBC.
Coinsurance is a percentage
Coinsurance is your share of a service cost expressed as a percentage. If your coinsurance is 20 percent and a service costs $1,000, you pay $200 and the plan pays $800.
Coinsurance usually kicks in after the deductible is met. Coinsurance can also apply on top of a copay for certain services like specialty drugs.
A common pattern on Bronze plans: high deductible, then 20 or 30 percent coinsurance for most services. On Gold plans: lower deductible, lower coinsurance.
The out-of-pocket maximum is your safety net
The out-of-pocket maximum is the most you can be charged for in-network covered care in a calendar year, excluding premiums. Once you reach it, the plan pays 100 percent of covered in-network services for the rest of the year.
The deductible, copays, and coinsurance all count toward the out-of-pocket maximum. Premiums do not. Out-of-network costs usually do not count toward the in-network maximum.
The federal government caps how high a plan can set the out-of-pocket maximum. The cap moves each year. Most plans set their maximum at or below the federal ceiling. Silver plans with cost-sharing reductions have a substantially lower maximum.
How the four numbers interact over a year
Here is a year for someone with a $2,000 deductible, $40 primary care copay, 20 percent coinsurance, and $7,000 out-of-pocket maximum.
January. Annual checkup. Free because preventive care is fully covered.
March. Strep throat. Primary care visit ($40 copay applies after deductible on this plan, so the full $150 visit goes toward deductible). Antibiotic at the generic tier with a $10 copay. Running total: $160 out of pocket, $1,840 left on the deductible.
July. Tendonitis. Three physical therapy visits at $120 each. All go toward the deductible. Running total: $520 out of pocket, $1,480 left on the deductible.
October. Outpatient surgery. The bill is $14,500. The remaining $1,480 on the deductible is paid first. Then coinsurance starts. 20 percent of the next portion ($14,500 minus $1,480 = $13,020) is $2,604. Running total: $5,124 out of pocket, deductible met.
November. Recovery visits and one ER visit for an unrelated injury. The 20 percent coinsurance keeps applying. Total reaches $7,000.
December. Anything more during December costs nothing for covered in-network services, because the out-of-pocket maximum is met.
January 1. Everything resets.
Why this matters when picking a plan
When you compare two plans, the premium difference is small compared to the cost-share difference in a heavy year.
A Bronze plan with a low premium can save $50 to $200 per month. That is real money in a quiet year.
If you have one major medical event, the Bronze plan can cost thousands more than a Gold or Silver-CSR plan because the deductible and out-of-pocket maximum are so much higher.
For a deeper walkthrough, see how to compare health insurance plans.
What to do next
Read your plan Summary of Benefits and Coverage. It has a section called "Coverage Examples" that walks through three sample scenarios with that plan numbers.
Track your spending. Most insurers show your year-to-date deductible and out-of-pocket totals on the member portal.
If you are choosing between plans, our marketplace overview and HSA-compatible plans cover the trade-offs.
Sources
Frequently asked questions
Does the premium count toward the deductible?
No. The premium is the monthly bill to keep the plan active. Only what you pay for covered services counts toward the deductible.
Does the deductible count toward the out-of-pocket maximum?
Yes. The deductible, copays, and coinsurance for covered in-network services all count toward the annual out-of-pocket maximum.
Are preventive services free?
Required preventive services are free in network even before you meet the deductible. The full list of covered preventive services is on CMS.gov.
What if I see an out-of-network provider?
Out-of-network spending does not count toward the in-network out-of-pocket maximum on most plans. PPO plans usually have a separate, higher out-of-network maximum. HMO and EPO plans usually do not cover out-of-network care at all except emergencies.
