Health insurance terms that actually matter
Premium, deductible, copay, coinsurance and out-of-pocket maximum, explained so you can compare plans with confidence.
By the AllSet team · Updated · 4 min read
The five numbers to compare
- Premium: what you pay each month to keep the plan, whether or not you use it.
- Deductible: what you pay for covered care each year before the plan starts sharing costs. Some services, like many preventive visits, may be covered before you meet it.
- Copay: a fixed amount you pay for a specific service, such as a doctor visit or prescription.
- Coinsurance: your percentage share of a covered cost after the deductible, for example 20%.
- Out-of-pocket maximum: the most you'd pay for covered, in-network care in a plan year. After you reach it, the plan pays 100% of covered costs.
Why the cheapest premium isn't always the cheapest plan
A low monthly premium often comes with a higher deductible and out-of-pocket maximum. If you rarely see a doctor, that trade can make sense. If you expect regular care, prescriptions or a planned procedure, a higher-premium plan can cost less over the year.
Illustration only: a plan with a lower premium but a much higher deductible can cost more in total for someone who reaches that deductible. Compare the premium for the whole year plus what you'd realistically spend on care.
Networks and prescriptions
Plans have networks of doctors and hospitals. HMO and EPO plans generally cover only in-network care except in emergencies. PPO plans usually cover some out-of-network care at a higher cost. Before choosing, check that your doctors are in network and that your prescriptions are on the plan's drug list (the formulary).
General information, not advice