# Deductible, copay, coinsurance and out-of-pocket maximum, explained

Source: https://www.getprescience.com/guides/deductible-copay-coinsurance-explained
Author: Aditya Jain, MD, Cofounder and COO, Prescience
Published: 2026-11-02
Updated: 2026-11-02
Cite as: Aditya Jain, MD. "Deductible, copay, coinsurance and out-of-pocket maximum, explained." Prescience, November 2, 2026. https://www.getprescience.com/guides/deductible-copay-coinsurance-explained

Four numbers help explain what an employee pays for covered care: the deductible, flat copays, percentage coinsurance and the out-of-pocket maximum. The maximum limits covered in-network cost sharing, not every medical expense. I use the worked examples below to show how the numbers interact, including services covered before the deductible and separate family limits.

- **Average single deductible:** $1,886 (KFF, 2025)
- **Small-firm average deductible:** $2,631
- **2026 HDHP out-of-pocket max:** $8,500 / $17,000
- **Prescience cost sharing:** Simple copays and a low out-of-pocket maximum

## The four numbers

- **Deductible:** what you pay for covered care each year before the plan starts sharing costs. Preventive care is usually covered before it.
- **Copay:** a flat fee for a service, like $25 for a visit.
- **Coinsurance:** your percentage of the bill after the deductible, like 20%.
- **Out-of-pocket maximum:** the most you pay in a year for covered in-network care. After that, the plan pays 100%.

**What typical employer plans look like, 2025 (KFF)**

| Number | Average | Notes |
| --- | --- | --- |
| Single deductible, all firms | $1,886 | Among covered workers whose plan has a general annual deductible |
| Single deductible, firms with 10–199 workers | $2,631 | Deductible average excludes workers without a general deductible |
| Primary care copay | $27 | For plans that use copays |
| Specialist copay | $45 | For plans that use copays |
| Office visit coinsurance | 19% | For plans that use coinsurance |
| Hospital admission | 20% coinsurance or a $313 copay | 65% of workers have coinsurance only |
| Outpatient surgery copay | $186 | For plans that use a copay |

## The terms behind the four numbers

- **Allowed amount:** the price your plan has agreed with in-network providers. A doctor may bill $400, but if the allowed amount is $180, your deductible and coinsurance are based on $180.
- **Balance billing:** an out-of-network provider billing above the amount recognized by your plan. The No Surprises Act restricts it for most emergency services, certain care at in-network facilities and covered air ambulance services. Ground ambulances generally fall outside federal protections.
- **Premium:** what you pay each month to have the plan. It never counts toward the deductible or out-of-pocket maximum.
- **Plan year:** the plan’s annual coverage period. Check the policy’s separate deductible and maximum accumulator periods; they can follow the calendar year even when the employer renews at another time.
- **Embedded deductible:** in family coverage, each person has their own deductible inside the family one, so one sick child doesn't have to meet the whole family amount.
- **Prior authorization:** the plan's approval before certain care. Skipping it can mean the claim is denied even if the care is covered.

## How a claim gets paid, in order

1. **Is it covered and in network?** Check coverage, network, authorization and any approved network exception. An HMO or EPO generally excludes elective out-of-network care, but emergency protections and other legal or plan exceptions can apply. Ask how the claim will count toward your limits.
2. **Is it preventive care?** Required preventive services on non-grandfathered plans generally have no deductible, copay or coinsurance when delivered in network under the applicable age, risk and frequency guidelines. A physical does not make every test or treatment during the visit free.
3. **Does a copay apply?** Many plans charge a flat copay for visits, urgent care and generic drugs, often without touching the deductible.
4. **Otherwise, the deductible** You pay the allowed amount until you have met the deductible for the year.
5. **Then coinsurance** After the deductible, you pay your percentage, such as 20%, and the plan pays the rest.
6. **Until the out-of-pocket maximum** Once your deductible, copays and coinsurance add up to the maximum, the plan pays 100% of covered in-network care until the applicable annual accumulator period resets.

## A worked example

**A $5,000 outpatient procedure on two plans**

|  | Illustrative conventional plan | Prescience benefit description |
| --- | --- | --- |
| Deductible | $2,500 (employee pays) | Effective $0 |
| Coinsurance on the rest | 20% of $2,500 = $500 | Simple copay |
| Employee pays | $3,000 | The applicable copay, subject to the proposed plan documents and low out-of-pocket maximum |

Illustration only; your plan documents set the real numbers.

## Three common bills on a typical small-business plan

These fictional examples use a $2,500 deductible, then 20% coinsurance, $30 primary care and $50 specialist copays that do not count toward the deductible, and a $6,000 out-of-pocket maximum. Each starts with empty accumulators. All care is covered and in network in one plan year. Amounts are illustrative allowed prices, not quotes or predictions of a particular medical bill.

**An ER visit for a broken wrist**

Allowed amount for the ER visit, X-rays and splint: $2,500. The ER bill is subject to the deductible.

- Deductible (the whole bill): $2,500
- Coinsurance: $0 (nothing left over the deductible)
- Follow-up with an orthopedist: $50 copay
- Employee pays: $2,550

The employee pays the entire allowed ER amount in this example, plus the follow-up copay. The negotiated price and protection against larger covered costs still matter. Other ER designs may use a copay, coinsurance or a combination.

**A knee MRI ($3,000) and 10 physical therapy visits ($120 each)**

Physical therapy is subject to the deductible and coinsurance on this plan.

- MRI: deductible: $2,500
- MRI: 20% of the remaining $500: $100
- Physical therapy: 20% of $1,200: $240
- Employee pays: $2,840
- Plan pays: $1,360

The employee pays $2,840 of this $4,200 illustrative episode. Before nonurgent imaging, compare written estimates for covered facilities and confirm authorization. A different allowed price changes this calculation; a provider name alone does not establish the price.

**Having a baby**

Assume $20,416 in covered maternal claims subject to deductible and coinsurance within one plan year. This is a fictional calculation, not a pregnancy price quote; preventive services and newborn claims are excluded.

- Deductible: $2,500
- 20% of the remaining $17,916: $3,583
- Subtotal: $6,083
- Capped at the out-of-pocket maximum: $6,000

Rounding the coinsurance to dollars gives a subtotal above the $6,000 maximum, so the employee pays $6,000. Newborn claims have their own member accumulators and also affect the family limit. Claims spanning two plan years can meet two sets of limits.

## Family deductibles: embedded vs. non-embedded

**A child needs a $4,000 surgery (illustrative)**

Compare two fictional non-HSA family plans: both have a $5,000 family deductible and then 20% coinsurance. Only the embedded design has a $2,500 per-person deductible. All claims are covered, in network and below the out-of-pocket limits.

- Embedded: the child's own $2,500 deductible: $2,500
- Embedded: 20% of the remaining $1,500: $300
- Embedded: family pays: $2,800
- Non-embedded: the whole $4,000 counts toward the $5,000 family deductible: $4,000

The aggregate design costs this family $1,200 more for this surgery. Conventional HSA-qualified family coverage cannot begin paying non-exempt benefits below the $3,400 family minimum in 2026, even through an embedded individual deductible.

For non-grandfathered group health plans, the annual ACA self-only cost-sharing ceiling also protects each person enrolled in family coverage for covered in-network essential health benefits. In 2026 that ceiling is $10,600; a lower plan limit may apply. This is separate from the rules determining whether a family deductible qualifies for HSA contributions.

## Out-of-pocket maximum limits for 2026 and 2027

**Legal ceilings on in-network out-of-pocket costs**

|  | Self-only | Family |
| --- | --- | --- |
| ACA ceiling for non-grandfathered plans, 2026 | $10,600 | $21,200 |
| ACA ceiling for non-grandfathered plans, 2027 | $12,000 | $24,000 |
| Conventional HSA-qualified HDHPs, 2026 | $8,500 | $17,000 |

- **Counts toward it:** deductibles, copays and coinsurance for covered in-network care.
- **Doesn't count:** premiums, care the plan doesn't cover, most out-of-network care, and balance bills above the allowed amount.
- **Copays and the deductible:** copays almost always count toward the out-of-pocket maximum, but often not toward the deductible.

The ACA ceiling applies to covered in-network essential health benefits. Grandfathered plans have different requirements. IRS Notice 2026-5 also provides a special HSA rule for qualifying individual-market bronze and catastrophic coverage starting in 2026; do not apply the conventional HDHP ceiling to every plan now eligible for an HSA.

## Find these numbers in your plan in five minutes

Request the Summary of Benefits and Coverage for comprehensive group medical coverage. Its standardized questions make comparisons easier. Use the full policy for exclusions, authorization conditions and details that do not fit in the summary.

1. **Page 1: the deductible and maximum** The first questions on the SBC give the overall deductible, whether services are covered before it, and the out-of-pocket limit, each for in-network and out-of-network care.
2. **The service table: copays and coinsurance** Find the rows for a primary care visit, a specialist visit, diagnostic tests and imaging, the emergency room and a hospital stay. Note whether each says a copay, a percentage, or "deductible applies."
3. **The drug tiers** Check what generic, preferred brand and specialty drugs cost. Specialty drugs are often coinsurance, which can be hundreds of dollars a month until you reach the maximum.
4. **The coverage examples** The standardized examples illustrate having a baby, managing type 2 diabetes and a simple fracture. Compare their assumptions and exclusions. They are comparison aids, not personalized estimates of actual treatment costs.

## Mistakes that cost employees money

- **Reading the deductible but not the maximum.** A $1,000 deductible with a $9,000 maximum can cost more in a bad year than a $2,500 deductible with a $4,000 maximum.
- **Assuming a copay means the visit is the only cost.** Labs, imaging or a procedure in the same visit can go to the deductible.
- **Paying a bill before the claim is processed.** Wait for the Explanation of Benefits, then compare it with the bill.
- **Ignoring the accumulator period.** Check the actual reset date before scheduling elective care. Do not delay medically necessary treatment to optimize a deductible.
- **Assuming every annual visit is free.** Required preventive benefits have eligibility and network conditions; diagnostic care may have cost sharing. See [preventive care covered free](https://www.getprescience.com/guides/preventive-care-covered-free).

## What employers can change

I compare available plan designs using both premiums and what members could owe. A lower deductible does not by itself prove better overall value. Employers can also consider HSA contributions or an appropriate HRA, with eligibility and tax rules checked separately. Compare the network, covered drugs and maximum exposure before deciding.

At Prescience, we design and run your company's health plan, from setup and enrollment to claims, compliance and COBRA. What your team gets:

- **An effective $0 deductible,** so the plan helps from the first visit.
- **Simple copays** shown before a visit, capped by a low out-of-pocket maximum.
- **A broad national PPO network,** plus providers we contract with directly.
- **24/7 physician-led care navigation:** a care team that finds the right provider, books appointments and explains costs up front.

What your company gets: one monthly cost set in your quote, usually 10–20% below comparable fully insured coverage and fixed before the plan starts, with no admin fees. You keep your payroll provider, and the plan can start mid-year.

> **Prescience Diamond: A company health plan with an effective $0 deductible.** The three bills above are what an effective $0 deductible is designed to fix: employees pay simple copays shown before the visit instead of the first $2,500.
> - **An effective $0 deductible** and simple copays shown before a visit
> - **A broad national PPO network,** plus providers we contract with directly
> - **24/7 physician-led care navigation** that books visits and explains costs
> - **Usually 10–20% below comparable fully insured coverage,** fixed in your quote, with no admin fees
> Best for teams of about 15 or more that want one great group plan. [Get a Diamond quote](https://www.getprescience.com/get-started?p=Employer&product=diamond)

**Choosing benefits for a team? Compare the employee costs**

Use the same employee and family tiers when comparing premiums, deductibles and out-of-pocket limits. Bring a written proposal into that comparison instead of assuming that a lower premium means a lower employee bill.

[Compare plans for my employees](https://www.getprescience.com/quote)

[Work through covered employee spending](https://www.getprescience.com/tools/out-of-pocket-cost-calculator)

## Frequently asked questions

**Do copays count toward the deductible?**

It depends on the plan. Copays usually count toward the out-of-pocket maximum, but often not the deductible. Check the plan's summary of benefits and coverage.

**What happens after I hit my out-of-pocket maximum?**

The plan pays 100% of covered in-network care for the rest of the applicable annual accumulator period.

**What is a good deductible for employees?**

A useful deductible fits employees' budgets alongside premiums, network access and the out-of-pocket maximum. KFF's 2025 deductible averages exclude plans without a general deductible. Prescience offers an effective $0 deductible.

**What is the difference between a copay and coinsurance?**

A copay is a fixed dollar amount, like $30 a visit. Coinsurance is a percentage of the allowed amount, like 20%, so it grows with the size of the bill.

**Does the deductible reset every year?**

Deductibles generally reset annually. Check the policy for the actual accumulator period, which can be calendar-year based even when the employer renews at another time.

**Is a lower deductible always better?**

Not necessarily. Compare premiums, covered services, network access and the out-of-pocket maximum. A lower deductible can still accompany higher total annual spending.

**What is the maximum out-of-pocket for 2026?**

The 2026 ACA ceilings are $10,600 self-only and $21,200 family for covered in-network essential health benefits on non-grandfathered plans. Conventional HSA-qualified HDHP ceilings are $8,500 and $17,000; special individual-market rules can differ.

**Do premiums count toward the out-of-pocket maximum?**

Premiums do not count. Deductibles, copays and coinsurance for covered in-network care generally count; legally protected out-of-network surprise bills can also count toward in-network limits. Check the policy for exclusions and separate accumulators.

## Sources

- [KFF, 2025 Employer Health Benefits Survey](https://www.kff.org/health-costs/2025-employer-health-benefits-survey/)
- [IRS Revenue Procedure 2025-19 (2026 HSA and HDHP limits)](https://www.irs.gov/pub/irs-drop/rp-25-19.pdf)
- [HealthCare.gov, Out-of-pocket maximum/limit](https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/)
- [HealthCare.gov, Preventive health services](https://www.healthcare.gov/coverage/preventive-care-benefits/)
- [CMS, No Surprises Act: ending surprise medical bills](https://www.cms.gov/nosurprises)
- [CMS, 2027 cost-sharing parameters](https://www.cms.gov/files/document/2027-papi-parameters-guidance-2026-01-29.pdf)
- [IRS, Notice 2026-5](https://www.irs.gov/pub/irs-drop/n-26-05.pdf)
- [CMS, Medical bill rights](https://www.cms.gov/initiatives/your-patient-rights/medical-bill-rights)