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Premium, deductible, copay and coinsurance explained

Four terms decide most of what you pay for health care. Once you can see how they fit together, comparing plans gets much easier.

5 min read · Last reviewed 2026-10 · 3 cited sources · Published by Simple Insurance Guide · How we verify

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Key takeaways

  • The premium is what you pay to keep the plan. The deductible is what you pay before the plan starts sharing costs.
  • Coinsurance is a percentage you pay after the deductible. A copay is a fixed amount for a service.
  • The out-of-pocket maximum caps what you pay in a plan year for covered, in-network care.
  • Compare the premium and the deductible together, not the premium alone.
Table
TermWhat it means
PremiumWhat you pay to keep the plan active, usually monthly
DeductibleWhat you pay for covered services before the plan starts to pay its share. Some services may be covered earlier.
CopaymentA fixed amount you pay for a specific service or prescription
CoinsuranceYour percentage share of a covered cost, usually after you meet the deductible
Out-of-pocket maximumThe most you pay in a plan year for covered, in-network care. Premiums do not count toward it.

How they work together

HealthCare.gov describes coinsurance as the percentage of a covered cost you pay after you have paid your deductible. It also notes that the allowed amount is the maximum the plan will pay for a covered service.

Your total yearly cost is your premiums plus what you pay in deductible, copayments and coinsurance, up to the out-of-pocket maximum.

What to compare

  • Premium and deductible together, not the premium alone.
  • Out-of-pocket maximum, and what counts toward it.
  • Copayments for the services and prescriptions you use most.
  • Whether your doctors and hospitals are in the plan's network.

Questions

Do premiums count toward the out-of-pocket maximum?

No. Premiums are separate from out-of-pocket costs for covered services.

Is a lower premium always cheaper?

Not always. A lower premium often comes with a higher deductible or coinsurance, which can cost more when you use care.

Sources

Informational only. Rules and policy terms change and differ by state and insurer. Confirm details with your policy, your insurer or your state insurance department.

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