Deductible, Copay, and Coinsurance: What They Mean and How They Work Together
These three terms determine how much you pay for healthcare — but most people don't understand how they interact. Here's a plain-language breakdown with examples.
Deductible. Copay. Coinsurance. Out-of-pocket maximum. These four terms govern how much you actually pay when you use healthcare. They appear on every insurance card and every EOB — and they're almost never explained in plain language.
Deductible
Your deductible is the amount you pay for covered healthcare services before your insurance starts sharing the cost. If your deductible is $1,500, you pay the first $1,500 of covered medical expenses each year out of your own pocket. After that, your insurance kicks in.
Example: You have a $1,500 deductible. You break your arm — the ER bill (after the insurance discount) is $2,000. You pay $1,500. Your insurance pays the remaining $500.
Not all services count toward your deductible. Many plans cover preventive care at no cost even before you've met it.
Copay
A copay is a fixed amount you pay for a specific service, regardless of where you are in your deductible. For example: $25 for a primary care visit, $50 for a specialist, $15 for a generic prescription.
Example: You visit your primary care doctor. Your plan has a $30 PCP copay. You pay $30 at the visit — even if you haven't met your deductible yet.
Some plans require you to meet your deductible before copays apply. Others apply copays immediately. Check your Summary of Benefits.
Coinsurance
Coinsurance is a percentage of costs you pay after you've met your deductible. If your plan has 20% coinsurance, you pay 20% of covered costs and your insurance pays 80%.
Example: You've met your $1,500 deductible. You have surgery that costs $10,000. With 20% coinsurance, you pay $2,000 and your insurance pays $8,000.
Out-of-pocket maximum
This is the most you'll ever pay in a single year. Once you've spent this amount — through your deductible, copays, and coinsurance combined — your insurance covers 100% of covered services for the rest of the year.
In 2025, the ACA caps out-of-pocket maximums at $9,200 for individuals and $18,400 for families on marketplace plans.
How they work together: a full example
Your plan has a $1,000 deductible, $30 PCP copay, 20% coinsurance after the deductible, and a $5,000 out-of-pocket maximum.
- January: PCP visit — you pay $30 copay. Deductible remaining: $1,000.
- March: MRI costs $800 — you pay $800 toward deductible. Remaining: $200.
- June: Minor surgery costs $3,000 — you pay $200 (rest of deductible) + 20% of $2,800 = $760 total.
- Later in the year you hit your $5,000 out-of-pocket max — insurance pays 100% of covered services after that.
Key things to remember
- Deductibles and out-of-pocket maximums reset every January 1
- Out-of-network costs may not count toward your in-network deductible
- Premiums (your monthly payment) do not count toward your deductible or out-of-pocket maximum
Sources: Healthcare.gov — Deductible, Healthcare.gov — Out-of-Pocket Maximum
