Deductible and out-of-pocket maximum, explained with examples
How the deductible and out-of-pocket maximum work together in health insurance — what you pay, when you pay it, and why a low premium can mean a high total yearly cost.
Three numbers that determine your true yearly cost
When comparing health plans, most people look at the monthly premium. But three cost-sharing numbers determine how much you actually pay in a year:
- Deductible — you pay all covered costs until you reach this amount.
- Coinsurance — after the deductible, you pay a percentage (e.g. 20%) and the insurer pays the rest.
- Out-of-pocket maximum (OOP max) — once your total payments reach this figure, the insurer pays 100% for the rest of the year.
The HealthCare.gov plan categories page shows how these three figures vary across Bronze, Silver, Gold and Platinum tiers in the US marketplace.
Worked example: a $4,000 claim
Suppose your plan has:
- Monthly premium: $350
- Annual deductible: $2,000
- Coinsurance after deductible: 20% (you) / 80% (insurer)
- Out-of-pocket maximum: $6,000
For a $4,000 covered claim
| Stage | You pay | Insurer pays |
|---|---|---|
| First $2,000 (deductible) | $2,000 | $0 |
| Next $2,000 at 20/80 split | $400 | $1,600 |
| Total | $2,400 | $1,600 |
Your OOP max is $6,000. You have used $2,400 of it. Further claims this year would first go through coinsurance until you reach $6,000 total, then the insurer pays 100%.
Why a low premium can mean a high yearly cost
Plans with low premiums almost always have high deductibles. In a year where you need significant care, you could end up paying far more than a higher-premium plan with a lower deductible. Use the yearly cost calculator to model your expected total cost at different claim levels.
The KFF analysis of health insurance costs consistently shows that deductibles and coinsurance make up a significant share of total out-of-pocket spending for many households.
What about copays?
Some services — particularly GP visits and prescription drugs — may have a fixed copay instead of, or in addition to, coinsurance. Copays may or may not count towards your deductible depending on your plan. Our companion guide coinsurance and copays: who pays what, and when explains the difference.
Where to find these figures in your policy
Policy sections
- The Declarations page (or Summary of Benefits and Coverage in the US) lists your deductible, OOP max and coinsurance rate.
- The Schedule of Benefits shows copay amounts by service type.
- Look for the heading "Your costs for covered services" in the Summary of Benefits document.
Questions about this topic
Frequently asked questions
- No. Some plans — often called "first-dollar" or "zero-deductible" plans — begin paying immediately. Preventive care is also often exempt from the deductible even on plans that have one. The HealthCare.gov glossary entry on deductibles explains the US rules.
- Yes, in almost all plans the deductible resets at the start of each plan year. Some plans allow mid-year enrolment, which can mean a shortened first year. Check your declarations page for your specific reset date.
- Typically: your deductible payments, copays, and coinsurance for covered in-network services. Premiums, out-of-network costs (on many plans), and services not covered by the plan generally do not count. The official HealthCare.gov definition explains what is included under ACA rules.
- No — the deductible is the amount you pay before insurance starts sharing costs. The out-of-pocket maximum is the most you will pay in a year for all covered costs combined (deductible + coinsurance + copays). Once you hit the OOP max, the insurer pays 100%. Use our yearly cost calculator to model both figures.
- Plans covering more than one person often have both an individual deductible (which applies to each member) and a family deductible (an aggregate that, once hit, waives the deductible for all remaining members). The KFF Health Costs research has data on typical family vs individual deductible levels.