When it comes to paying for your health insurance there are three main parts: your deductible, your coinsurance and your monthly premium.

Let’s break this down. Your health insurance deductible is the amount you must pay before the health plan starts paying for your covered care. So, if your deductible is $5,000, your plan won't pay for some services until you've paid $5,000. Keep in mind, all Health Insurance Marketplace plans and many other plans must cover certain preventive services without charging you a copayment or coinsurance. This is true even if you haven’t met your yearly deductible.

What is the right deductible for you?
As a rule, the higher your deductible, the lower your monthly premium. So, the lower the deductible, the higher the premium.

There are a few questions you should ask yourself before buying health insurance. If you know you'll be using your insurance often, you may want a plan with a higher premium and lower deductible. This means you'll pay more each month, but the amount you pay when you go to the doctor will be less.

On the other hand, if you know you won't use your insurance very much, you may want to pick a plan with a lower monthly premium and higher deductible. This way you keep your monthly costs down by taking the chance that you may not need to pay your deductible.

Deductible vs Out-of-Pocket

Here is an example of how the deductible, coinsurance and out-of-pocket maximum work together.

An insurance plan has a:

• $5,000 deductible
• 20% coinsurance
• $6,000 out-of-pocket maximum

This means:

• You must pay the first $5,000 of most of your health care costs. Some health plans apply the deductible toward the out-of-pocket maximum. Check the details of yours plan to see if that is the case.
• After that, your plan pays 80% of the costs, and you pay the other 20% (coinsurance).
• When the amount of deductible and coinsurance you've paid reaches $6,000, the plan covers 100% until your "plan year" renews. A plan is active for one year at a time.

At the start of each plan year, your deductible and coinsurance resets for the next plan year. That means deductible and coinsurance start again.

It gets a bit confusing, so if you still have questions or need help, ask us.

Originally published 1/13/2015; Revised 2018, 2023