How Health Insurance Works

The four numbers that shape every plan

Your premium is the fixed amount you pay each month to have the plan — whether you use it or not.

Your deductible is what you pay out of pocket for covered care before the plan starts sharing costs. A $3,000 deductible means the first $3,000 of most care is on you — though preventive care is usually covered before the deductible is met.

A copay is a flat fee for certain visits — say $30 for a primary care visit — often charged whether or not you've met your deductible.

Coinsurance is your percentage of the cost after the deductible: an "80/20" plan pays 80%, you pay 20%.

The out-of-pocket maximum: your worst-case number

Every major medical plan caps what you can pay in a year for covered, in-network care. Once your copays, coinsurance, and deductible spending add up to that cap, the plan pays 100% of covered in-network costs for the rest of the year.

When comparing plans, this is the number that tells you your worst-case scenario. A plan whose premium is $100 a month lower but whose out-of-pocket maximum is much higher can cost you far more the moment something real happens.

Networks decide more than the brochure does

A plan's network is the set of doctors, hospitals, and pharmacies it has negotiated rates with. In-network care is covered at those rates; out-of-network care may be covered at a much lower level — or not covered at all, leaving you with the balance.

Before enrolling in any plan, check that your doctors and hospitals are in its network. We do this check for every client, because the right plan with the wrong network is the wrong plan.

How to choose with these numbers

• Rarely see a doctor? A higher deductible with a lower premium is often cheaper overall
• Manage an ongoing condition or expect procedures? Prioritize lower deductibles and lower coinsurance
• Prescriptions matter: check each plan's drug list (formulary), not just the premium
• Always compare the out-of-pocket maximum, not just the monthly price