Health insurance terms, explained: deductible, copay and out-of-pocket max

Health plans use five words to describe what you’ll pay. Once you know them, you can compare plans and predict a bill before it arrives.

6 minute read · Written for the US · Last reviewed November 12, 2026

The five terms

Premium

What you pay to have the plan, usually monthly, whether or not you use any care. If you get insurance through work, it’s often taken out of your paycheck. Premiums don’t count toward your deductible or out-of-pocket maximum.

Deductible

How much you pay for covered care each year before the plan starts paying its share for most services. With a $1,500 deductible, you pay the first $1,500 of covered costs yourself. Many plans cover some things, like preventive care, before you’ve met the deductible.

Copay (copayment)

A fixed amount you pay for a specific service, such as $30 for a doctor’s visit or $10 for a prescription. Depending on the plan, copays may apply before or after the deductible.

Coinsurance

Your percentage share of a cost after you’ve met the deductible. With 20% coinsurance, the plan pays 80% of a covered bill and you pay 20%.

Out-of-pocket maximum

The most you’ll pay for covered, in-network care in a plan year. Deductibles, copays and coinsurance count toward it. Once you reach it, the plan pays 100% of covered in-network care for the rest of the year. This is your worst-case number.

How they work together: an example

Say your plan has a $1,500 deductible, 20% coinsurance and a $5,000 out-of-pocket maximum, and you have a covered, in-network hospital bill of $10,000:

You pay the first $1,500 (the deductible).
That leaves $8,500. You pay 20% of it, which is $1,700, and the plan pays the rest.
You’ve paid $3,200 in total, which is under the $5,000 maximum.

If the bill had been $30,000, the 20% share would have pushed you past the maximum. You’d have paid $5,000, and the plan would have paid everything else.

Why “in-network” matters

Plans negotiate prices with a network of doctors and hospitals. Going out of network can mean higher costs, no coverage at all, and costs that don’t count toward your out-of-pocket maximum. Federal law protects you from many surprise out-of-network bills. See What to do before you pay a medical bill.

Comparing two plans

A low premium usually means a high deductible, and the reverse. A rough way to compare:

If you rarely need care, look at premiums × 12 plus a little for routine visits.
If you expect a lot of care, look at premiums × 12 + the out-of-pocket maximum. That’s the most you could pay in a year.

Do this today

Find your plan’s Summary of Benefits and Coverage (SBC) in your insurer’s portal or benefits site.
Write down your premium, deductible, copays, coinsurance and out-of-pocket maximum.
Check how much of this year’s deductible you’ve already met.
Confirm that your regular doctors are in your plan’s network.

Sources

This guide is general information, not insurance advice. Plans differ in what counts toward each limit and in which services are covered before the deductible. Your plan documents are the final word.