Understanding health insurance terms can feel overwhelming. Deductibles, copays, coinsurance, and out-of-pocket maximums all affect what you pay and when. Let’s break down each term, explain how they work, and clarify when they reset.
What Is a Deductible?
You pay the deductible before your insurance starts covering most services. For example, if your deductible is $1,500, you pay that amount for covered services before your plan shares the cost. Deductibles usually reset every plan year, often January 1.
What Is a Copay?
A copay is a fixed amount you pay for specific services, like $25 for a doctor visit or $10 for a prescription. Copays apply immediately, even before you meet your deductible. They do not count toward your deductible but do count toward your out-of-pocket maximum. Copays reset annually with your plan year.
What Is Coinsurance?
Coinsurance is the percentage you pay for covered services after meeting your deductible. For example, if your plan has 20% coinsurance, you pay 20% of the bill while your insurer pays 80%. Coinsurance applies until you reach your out-of-pocket maximum. It resets with your plan year.
What Is an Out-of-Pocket Maximum?
The out-of-pocket maximum is the most you pay in a plan year for covered services. Once you hit this limit, your insurance pays 100% of covered costs. This amount includes deductibles, copays, and coinsurance. It resets annually.