Understanding Out-of-Pocket Costs: Deductibles, Copays and Coinsurance in California

Health insurance plans have many terms and conditions that may be challenging to understand when shopping for insurance. For many, the most confusing health insurance terms are the out-of-pocket costs not covered or reimbursed by your insurance provider. These typically include deductibles, copays and coinsurance, which are health care costs you continue to incur even after you’ve paid your monthly or yearly insurance premiums.

Out-of-pocket health care costs vary depending on your insurance plan and add up to your total medical bills. These costs are set up to ensure cost-sharing between you and your insurer to keep medical expenses manageable. Below, we discuss the common out-of-pocket expenses you can expect to incur to help you choose the best insurance plan for you and your family.


A deductible is a dollar amount you pay for your covered health care expenses before your health plan starts to pay its share. Your health insurance plan determines your deductible, which is reset yearly. For instance, if your deductible is $1,500, you must pay this amount before your insurance company steps in to pay for eligible expenses.

Here are some noteworthy conditions of a deductible:

  • Insurance plans with lower premiums have higher deductibles.
  • Insurance plans with higher premiums have lower deductibles.
  • Some insurance plans have different deductibles for specific services, such as prescription drugs.
  • Many health care plans pay for preventive services and certain benefits like screening tests and disease management programs before you have to pay the deductible.
  • Family health care plans have an individual deductible for each family member and a comprehensive family deductible for all members under the cover.

High vs. Low Deductible Plans

Insurers give you a choice between paying lower premiums and higher deductibles or higher premiums and lower deductibles. The plans with higher deductibles are called high-deductible health plans (HDHP). They are generally the most cost-effective option for young and healthy individuals without many health care costs. The main disadvantage is that you incur more out-of-pocket expenses when accessing health care services.

Fortunately, many HDHPs offer a health savings account (HSA) that you and your employer can contribute toward your out-of-pocket costs. High deductible plans also cover most preventive health care costs at little to no cost. Some of these preventive services include:

  • Weight loss programs
  • Screening for heart conditions
  • Annual physical exams
  • Tobacco cessation programs
  • Cancer screenings
  • Routine prenatal care
  • Immunization and well-child visits

Low deductible plans are typically the best option for older individuals with more health care costs or people managing serious illnesses. These plans can also be ideal for pregnant individuals, people planning to have children soon and athletes who play high-risk sports. You will pay high monthly or yearly insurance premiums but benefit from paying lower upfront costs for every visit. This is especially helpful if you require surgery or extensive care for a serious illness.

With a low deductible plan, you can easily predict and manage your medical expenses. Unfortunately, you risk losing your policy should you be unable to pay the high premiums. The best deductible generally depends on your budget, how much you can pay on monthly premiums and how much you can contribute toward an HSA monthly.


Copay or copayment is a fixed dollar amount you pay out-of-pocket for health care services. This amount varies based on the specific services and is due every time you seek the services.

Copay varies between policies, but it’s typically $25 or less on average. For example, your health coverage may require you to pay $20 for every doctor’s appointment, $15 for each prescription and $100 for an emergency visit. You’ll pay these amounts every time you visit a health care facility for any of these services before or after meeting your deductible, depending on your plan. With some policies, the copay contributes toward your deductible.

Here are a few things to note:

  • Not all health insurance plans have copays.
  • Not all services have copays.
  • Copays only apply to in-network facilities.
  • Some plans use a combination of deductible, copay and coinsurance.
  • Health insurance plans with lower monthly premiums have higher copayments and vice versa.


Coinsurance is a predetermined percentage you pay after satisfying your deductible. It works like a cost-sharing agreement where you and the insurer share the cost of health care after you’ve met your deductible. Coinsurance applies to all medical costs, including checkups, hospital stays, surgeries and prescriptions.

Coinsurance only applies after you’ve paid your annual deductible in full. You’ll continue to pay coinsurance and copay until you meet the out-of-pocket maximum on your plan — the most you can pay for covered services every year. After meeting your out-of-pocket maximum, your insurance is responsible or paying 100% of your health care expenses for the rest of the year. The out-of-pocket limit, however, doesn’t spare you the following costs:

  • Monthly premiums
  • Expenses for services not covered by your plan
  • Health care costs above the allowed amount
  • Out-of-network services

Most health care plans offer a coinsurance arrangement where the insurer pays 80% and the insured covers 20% of the medical expenses. The percentages vary between plans, with some offering 40% for the insured and 60% for the insurer, 30% for the insured and 70% for the insurer or 10% for the insured and 90% for the insurer. Please note some insurance plans don’t offer coinsurance, while others offer 100% coinsurance for in-network services.

Coinsurance makes health care expenses more manageable by ensuring the insured pays a lower percentage of the total costs and allowing flexible percentage breakdowns. Additionally, coinsurance benefits save you the cost of paying a deductible for frequent surgeries and procedures. On the flip side, because it’s a percentage, the amount you pay varies based on the total cost of services, so it’s difficult to determine how much you’ll owe beforehand.

Find the Best Health Insurance Plan With Health for California

California has a wide selection of affordable health care plans for individuals and families. From short-term and long-term plans to Medicare and Medicaid that meet specific health care plans. All these plans also feature different kinds of out-of-pocket costs that influence the decision for many individuals.

Health for California is a reliable partner that can help you find the most affordable health care plans in California. We provide free quotes from multiple providers within 30 seconds and help you apply in five to 10 minutes. To get started, fill out our confidential form or explore more about insurance information on our health care blog.

Not sure how Obamacare affects your health care plans in California? Learn how the ACA works in California, including benefits, costs and enrollment.

Covered California is the Golden State’s official health exchange marketplace where individuals, families and small businesses can find high-quality, low-cost California government health insurance.

Learn about Obamacare income guidelines in California using our income limits chart, and see if you’re eligible for government assistance.

Learn about the Covered California website. Find easy online enrollment. Set up your account, log in, buy insurance and more on the California health marketplace website.