Deductibles and Coinsurance: How Health Insurance Cost-Sharing Works

Health plans use deductibles and coinsurance to share costs between you and the insurer.

Deductible

Fixed annual amount you pay for covered services before the plan pays. Example: $2,000 deductible → you pay first $2,000 of covered care.

• May be separate for medical vs. pharmacy.
• Preventive services (ACA) often covered at $0 before deductible.

Coinsurance

After meeting the deductible, you pay a percentage of each covered service; plan pays the rest. Example: 20% coinsurance → you pay $20 of a $100 visit.

Out-of-Pocket Maximum (OOPM)

Cap on total annual cost-sharing (deductible + coinsurance + copays). Once reached, plan pays 100% of covered services.

Illustrative Scenario

$2,000 deductible, 20% coinsurance, $5,000 OOPM.
$10,000 covered claim → You pay $2,000 (deductible) + $1,600 (20% of next $8,000) = $3,600. Plan pays $6,400.

Why It Matters

Cost-sharing reduces premiums by discouraging overuse and aligning incentives. Understand your plan’s numbers to budget healthcare expenses.