Health insurance terms, explained
Deductible, copay, coinsurance, out-of-pocket max — decode the jargon so you can pick the plan that's actually cheapest for you.
Comparing health plans is hard mostly because of the vocabulary. Once you understand five terms, you can tell which plan is genuinely cheapest for how you use care — not just which has the lowest premium.
The five terms that matter
- Premium — what you pay each month to have the plan, whether you use it or not.
- Deductible — what you pay out of pocket before the plan starts sharing most costs.
- Copay — a fixed fee for a service (e.g., $30 for a doctor visit).
- Coinsurance — your percentage share of a cost after the deductible (e.g., you pay 20%).
- Out-of-pocket maximum — the most you'll pay in a year; after this, the plan covers 100% of covered care.
How they work together
You pay the premium monthly. When you get care, you pay toward the deductible until it's met; after that you pay copays or coinsurance until you hit the out-of-pocket maximum — then the plan pays 100% of covered services for the rest of the year.
Why low premium ≠ cheapest
A plan with a low premium often has a high deductible. If you expect regular care, a higher-premium plan with a lower deductible can cost less overall. Estimate your year's care and compare the total: premium + likely deductible/copays, capped by the out-of-pocket max.
Frequently asked questions
A copay is a fixed dollar amount for a service (like $30 a visit). Coinsurance is a percentage of the cost you pay after meeting your deductible (like 20%). Plans use one or both.
It's the most you'll pay for covered care in a plan year. Once you reach it (through deductible, copays and coinsurance), the plan pays 100% of covered services for the rest of the year.
No. Low-premium plans usually carry higher deductibles. If you use a lot of care, a higher-premium, lower-deductible plan can be cheaper overall. Compare total expected cost, not just the premium.
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