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HEALTH INSURANCE BASICS · ANY PLAN, INCLUDING MEDICARE

Premium, deductible, copay and coinsurance, explained with one $100 bill

These four words decide what you pay for care. Follow one $100 doctor bill and you will see how each one works.

The four words in one line each

PremiumThe monthly price of having the plan, paid even if you never see a doctor.
DeductibleThe amount you pay for covered care before the plan starts sharing costs, usually each year. Many plans cover some services, like preventive care, before you meet it.
CopayA fixed dollar amount you pay for a service, like $25 for a visit.
CoinsuranceA percentage of the bill you pay, like 20%. The plan pays the rest.

First, the premium

Say your plan costs $150 a month. That is the premium: $1,800 a year, paid whether you use care or not. Think of it like a gym membership. It is never counted toward the bill examples below.

Watch the deductible fill up

A deductible works like a meter that fills during the year. Until it is full, you pay each approved amount yourself. Once it is full, the plan starts sharing costs. This deductible-first example uses a $500 deductible and 20% coinsurance; real plans may cover some services, like preventive care, before the deductible. (Medicare Part A uses a deductible per benefit period instead of per year.)

Deductible meter

Try it ↓ Press Next bill to add the year’s next bill and watch the meter fill. Press Start the year again to reset. You’ll see why you pay more early in the year and less once the deductible is met.

Deductible this year

You paid so far Plan paid so far

Now follow one $100 doctor bill

In each example the plan has a $500 yearly deductible, and $100 is the plan-approved amount for a covered, in-network visit. These are example numbers, not any real plan.

1. Deductible not met yet

It is January and you have paid nothing toward the $500 deductible.

You pay $100. The plan pays $0.

You now have $400 of deductible left.

2. Deductible met, 20% coinsurance

You have already paid the full $500 this year.

You pay $20 (20%). The plan pays $80.

Coinsurance grows with the bill: on a $1,000 bill you would pay $200.

3. A $25 copay

The deductible is already met, and the plan charges a flat copay for office visits. (Some plans charge the copay even before the deductible.)

You pay $25. The plan pays $75.

A copay stays $25 whether the visit bill is $100 or $300.

The safety net: the out-of-pocket maximum

Many plans cap what you pay in a year for covered, in-network care (deductible, copays and coinsurance added together). Once you reach that cap, the plan pays 100% of covered in-network costs for the rest of the year. Premiums, services the plan doesn’t cover and, usually, out-of-network care do not count toward it. Original Medicare has no yearly cap on Part B coinsurance, which is one reason people add a Medigap plan; Medicare Advantage plans have a yearly limit.

Try your own numbers

Who pays the bill?

Calculated in your browser. Nothing is saved or sent.

Enter the plan-approved (allowed) amount for a covered, in-network service, not the provider’s full charge. If a provider charges $1,000 and the approved amount is $100, use $100. This example applies the deductible first and assumes you have not reached your plan’s yearly out-of-pocket limit.

Try it ↓ Change any amount below, or switch between coinsurance and copay. The result updates as you type, showing exactly how much you pay and how much the plan pays.

You pay Plan pays

Real plans can differ. Some copays apply before the deductible, and out-of-network care can cost more. Check your plan’s Summary of Benefits.

How this works in Medicare

See the full picture in Medicare explained for families.

Keep plan papers and bills where your family can find them

Insurance cards, plan letters and bills are easier to check when they live in one place. Start a Care Binder for free.

Start my free Care Binder

Kindoya Senior adds expense monitoring for families who track care costs. See Kindoya Senior.

Questions about insurance costs

What is the difference between a copay and coinsurance?

A copay is a fixed dollar amount, such as $25 per visit. Coinsurance is a percentage of the bill, such as 20%. With coinsurance, a bigger bill means you pay more.

Does my premium count toward my deductible?

No. The premium is the price of having the plan. The deductible counts only what you pay for covered care.

Is a lower premium always cheaper?

Not always. A plan with a low premium often has a higher deductible or higher copays. Add the yearly premiums to what you expect to pay for care before comparing plans.

What does 20% coinsurance mean?

After your deductible is met, you pay 20% of the approved amount for a covered service and the plan pays 80%. On a $100 approved amount you pay $20; on $1,000 you pay $200.

What happens after I meet my deductible?

The plan starts sharing costs. You usually pay a copay or coinsurance until you reach the plan’s yearly out-of-pocket maximum, if it has one.

Do copays count toward my deductible?

It depends on the plan. In many plans copays don’t count toward the deductible but do count toward the out-of-pocket maximum. Check your plan’s Summary of Benefits.

What is an out-of-pocket maximum?

The most you pay in a year for covered, in-network care. After you reach it, the plan pays 100% of covered in-network costs for the rest of the year. Premiums don’t count toward it.

Is it better to have a high deductible or a high premium?

A high-deductible plan usually has a lower premium but costs more when you need care. If you expect many doctor visits or medicines, a higher premium with a lower deductible can cost less overall. Add up premiums plus expected care costs to compare.

Sources

This page gives general information, not insurance or financial advice. Your plan documents decide what you pay.

By Kindoya · CareWell Connected LLC · Updated October 19, 2026. Browse all caregiver guides.