Deductible, Coinsurance, Out-of-Pocket Maximum: Which One Actually Caps Your Costs

A health plan quotes several numbers, and they do different jobs. Working out which one limits your exposure is the difference between comparing plans properly and comparing premiums.

The four terms

Premium. What you pay to hold the plan, every month, whether you use it or not. It is not affected by anything below.

Deductible. What you pay for covered services before the plan starts sharing costs. A $2,000 deductible means the first $2,000 of covered care is yours.

Copayment and coinsurance. How costs are split after the deductible. A copay is a fixed amount per service, say $30 for a visit. Coinsurance is a percentage, say 20% of the cost, with the plan paying the other 80%.

Out-of-pocket maximum. The most you can pay for covered services in a plan year. Once you reach it, the plan pays 100% of covered care for the rest of the year.

The out-of-pocket maximum is the number that matters

The deductible tells you when cost-sharing starts. The out-of-pocket maximum tells you where it stops, and that is the figure that describes your worst case.

Work an example through. Suppose a plan has a $2,000 deductible, 20% coinsurance, and a $7,000 out-of-pocket maximum, and you incur $50,000 in covered care.

• You pay the first $2,000 as the deductible
• Coinsurance then applies at 20%. On the next $25,000 of care, your 20% share is $5,000
• At that point you have paid $2,000 plus $5,000, which is $7,000, your maximum
• You reached it after about $27,000 of covered care
• The remaining $23,000 is paid entirely by the plan

Your total for the year is $7,000 plus premiums, not $50,000 and not the $10,000 that 20% of everything would suggest. Coinsurance does not run forever; the maximum truncates it.

This is why a plan with a high deductible and a low out-of-pocket maximum can be safer than the reverse, and why comparing deductibles alone is the wrong comparison.

What does not count towards the maximum

The cap is narrower than it sounds. Typically excluded:

• Premiums. These never count towards the out-of-pocket maximum
• Out-of-network care, in many plans, or counted against a separate and higher limit
• Services the plan does not cover at all. If it is not a covered benefit, the spending does not accumulate towards the cap
• Costs above what the plan considers allowable for a service

That last group is the one that causes unpleasant surprises. The out-of-pocket maximum caps your share of covered, in-network care. It is not a cap on everything you might be billed in a bad year.

Reading a plan properly

Two plans, same insurer, very different shapes:

• Plan A: low premium, $6,000 deductible, $8,500 out-of-pocket maximum
• Plan B: higher premium, $1,000 deductible, $4,000 out-of-pocket maximum

If you use almost no care, Plan A wins on premiums alone. If you have a serious year, Plan B caps your exposure $4,500 lower. The right comparison is the total across a realistic year and a bad year: premiums for twelve months, plus what each plan would leave you paying.

The same logic as choosing a deductible applies here. You are deciding how much risk to keep rather than which number looks smaller.

The practical checks

• Find the out-of-pocket maximum first, and treat it as the plan's real worst case
• Check whether it is per person or per family, since family figures are usually higher
• Check how out-of-network care is treated, and whether it has its own limit
• Confirm your regular providers and prescriptions are in network and covered
• Remember the year resets, so care spanning December and January can mean paying two deductibles

An out-of-pocket maximum only protects you if you can actually pay it. If yours is $7,000 and your savings are $500, the gap is the real problem, which is what an emergency fund is for.

Sources

• HealthCare.gov: Deductible
• HealthCare.gov: Coinsurance
• HealthCare.gov: Out-of-pocket maximum / limit
• USA.gov: Health insurance

Current as of August 2026. Deductible, coinsurance and maximum figures are illustrative examples. Plan terms vary; read your own plan documents for the figures that apply to you.