Health Insurance Deductibles, Coinsurance and Annual Limits

When buying health insurance, you need to know how your health plan works and what your out-of-pocket costs may be. We'll look at a few examples of health care costs — coinsurance after deductible, deductible versus out-of-pocket maximum, coinsurance versus deductible — and how they affect your medical costs. Read our Health Insurance Costs page for a definition of the terms used on this page.

Example #1: Deductibles, Coinsurance and Out-of-Pocket Maximum

Your health insurance plan has a:

  • $4,000 deductible
  • 30% coinsurance
  • Out-of-pocket maximum of $5,000

This means:

  • You must pay $4,000 toward your covered medical costs before your health plan begins to cover costs.
  • After you pay the $4,000 deductible, your health plan covers 70% of the costs, and you pay the other 30%.
  • When you've paid $5,000 out of your pocket toward your medical costs, your plan covers 100% of your costs until your "plan year" renews.

Whenever the next plan year begins, your coinsurance and deductible reset. You are once again responsible for the $4,000 deductible and 30% coinsurance for that year.

Example #2: Coinsurance After You've Met Your Deductible

Let's say you break a bone in your foot and need an X-ray. If you've met your annual $4,000 deductible, your health plan will start contributing to your medical costs based on your coinsurance.

The cost breakdown would look like this:

  • The X-ray for your foot costs $300.
  • Your plan covers 70%, which is $210.
  • The amount you pay out-of-pocket for your coinsurance is $90.

Example #3: Annual Limits

Your health plan will cover up to a certain amount for certain procedures, medical services and tests. This is called an annual limit, which helps to decrease costs by keeping rates reasonable and fair for all members.

Here's an example. Let's say you need to visit your doctor.

  • Your health plan covers up to 20 physical therapy visits.
  • You visit your physical therapist 22 times.
  • That means you have to pay for the last 2 visits.