Health Insurance Basics: Deductibles, Copays and Out-of-Pocket Maximums
Four numbers decide what a health plan costs you in a bad year. Premium is only one of them, and it is rarely the one that matters most.
At a glance
Figures checked 1 Sep 2026
What to take away
- Your worst-case cost in a year is the annual premium plus the out-of-pocket maximum, not the deductible.
- For 2026 the ACA caps in-network out-of-pocket costs at $10,600 for self-only and $21,200 for other coverage.
- Out-of-network care is usually outside that cap entirely.
- A low premium with a high out-of-pocket maximum is a bet that you will stay healthy.
A US health plan splits costs in stages. You pay the premium regardless. Then you pay everything until you hit the deductible. After that you and the insurer share costs through coinsurance, until your spending reaches the out-of-pocket maximum, at which point the plan covers the rest of the year in full.
| Term | What it means | Why it matters |
|---|---|---|
| Premium | Fixed monthly cost | The only number you pay even in a healthy year |
| Deductible | What you pay before sharing starts | Determines when the plan starts helping |
| Coinsurance / copay | Your share after the deductible | Drives cost during ongoing treatment |
| Out-of-pocket maximum | Annual ceiling on your share | Your actual worst case |
Comparing plans properly
Work out two figures for each plan: the cost in a healthy year, which is twelve premiums, and the cost in a bad year, which is twelve premiums plus the out-of-pocket maximum. Then ask which of those two scenarios you can absorb.
A bronze plan with a low premium and a high maximum wins comfortably in a healthy year and loses badly in a year with surgery. A gold plan reverses it. Neither is universally right — it depends on your cash reserves and your known medical needs.
Check that your doctors and your regular prescriptions are in the plan’s network and formulary before enrolling. Out-of-network care usually does not count toward the out-of-pocket maximum, which means the cap you were relying on does not apply.
Where coverage comes from
- Employer plans, where the employer pays a large share and your premium comes out pre-tax.
- The ACA Marketplace, where premium tax credits are based on household income.
- Medicaid, for households below the income threshold in states that expanded it.
- Medicare, from 65 or earlier with qualifying disability.
- COBRA, which continues an employer plan after you leave, at the full unsubsidised cost.
Common questions
Only if you use almost no care. Add the out-of-pocket maximum to the annual premium to see what a bad year costs, then compare plans on both scenarios.
In-network covered services, generally. Premiums never count. Many plans cover preventive care before the deductible at no cost to you.
Only with a qualifying life event — marriage, birth, moving, or losing other coverage. Otherwise you wait for open enrolment.