Your premium is what you pay every month just to have the plan. Your deductible is what you pay for covered care before the plan starts paying. After that you usually pay coinsurance (a percentage) or copays until you hit the out-of-pocket maximum, the most you'd pay for covered care in a year. To compare plans, add up the premiums for the year, then picture a year where you barely see a doctor and a year where you hit the maximum.
The four numbers, in the order you pay them
| Number | What it is | When you pay it |
|---|---|---|
| Premium | The price of having the plan | Every month, even if you never use it |
| Deductible | What you pay for covered care before the plan pays its share | When you get care, until you've paid this much in the year |
| Coinsurance / copay | Your share after the deductible (say 20%), or a flat fee per visit | After the deductible, or for some visits before it |
| Out-of-pocket max | The most you pay for covered care in a plan year | Once you hit it, the plan pays 100% of covered care for the rest of the year |
One thing trips people up: premiums don't count toward the deductible or the out-of-pocket max. Those two only track what you pay for care.
Why the lowest monthly price can cost you more
Plans trade these numbers against each other. Lower the monthly premium and the deductible usually goes up. That trade is fine if you rarely use care and could handle a big bill. It's a problem if a $7,000 surprise would wreck you.
So the useful question isn't "which plan has the lowest monthly price?" It's "what does each plan cost me in a quiet year, and what does it cost me in my worst year?"
Send me the two or three plans you're choosing between. I'll run your good-year and bad-year numbers and tell you which one wins. Free, and no pitch at the end.
Two plans, a good year and a bad year
A made-up example with round numbers. A 27-year-old is choosing between two plans:
| Low-premium plan | Low-deductible plan | |
|---|---|---|
| Premium | $280 a month ($3,360 a year) | $410 a month ($4,920 a year) |
| Deductible | $7,500 | $1,500 |
| Out-of-pocket max | $9,000 | $5,000 |
| Quiet year (a checkup, nothing else) | $3,360 | $4,920 |
| Worst year (hits the max) | $12,360 | $9,920 |
In a quiet year, the low-premium plan comes out ahead by $1,560. In a year where both plans hit their max, the low-deductible plan comes out ahead by $2,440. Neither is "the better plan." The right one depends on how likely the bad year is for you, and whether you could pay $12,360 if it came.
Do this math for any plans you're comparing: premiums for the year, plus $0 for a quiet year, plus the out-of-pocket max for the worst year.
What happens in a bad year
Say you break your wrist and the covered bills come to $12,000. On a plan with a $3,000 deductible, 20% coinsurance and a $6,000 out-of-pocket max:
- You pay the first $3,000. That's the deductible.
- You pay 20% of the remaining $9,000, which is $1,800.
- Your total is $4,800, under the $6,000 max, so the plan pays the other $7,200.
Run up more bills that year and you'd stop paying at $6,000. That cap is the number that protects you, which is why I look at it before the premium.
Marketplace caps vs private plans
Marketplace plans have to stay under a federal out-of-pocket limit. For 2027, HealthCare.gov lists it as $12,000 for one person and $24,000 for a family. Many plans set theirs lower.
Private medically underwritten plans don't have to follow that limit, and they can be built differently: some cap your costs per year, some pay set amounts per service. Private plans also ask health questions and can say no. Before you pick one, find its own maximum and what counts toward it. I walk through that line by line.
Four mistakes I see with young people
- Picking on premium alone. The monthly price is only part of what you pay.
- Not knowing the out-of-pocket max. It's the worst-case number. Know it before you need it.
- Assuming every visit hits the deductible. Preventive care is free on Marketplace plans, and many plans have copays for visits before the deductible.
- Forgetting the network. Out-of-network care may not count toward your deductible at all.
How I compare plans
- List each plan's yearly premium, deductible and out-of-pocket max.
- Price a quiet year and a worst year for each.
- Check what's covered before the deductible: visits, prescriptions, urgent care.
- Check that your doctors and nearby hospitals are in network.
- Pick the plan whose worst year you could handle, then the one that costs least among those.
Where I land
The premium is the price of having a plan. The deductible and out-of-pocket max are what using it costs. If you're young and healthy and could cover the out-of-pocket max in a bad year, a lower premium usually wins. If you couldn't, pay a little more each month for a lower deductible and a lower cap. Do the quiet-year and worst-year math before you pick.
Send me the two or three plans you're choosing between. I'll run your good-year and bad-year numbers and tell you which one wins. Free, and no pitch at the end.
Questions I get
What's the difference between a premium and a deductible?+
The premium is what you pay every month to have the plan, whether you use it or not. The deductible is what you pay for covered care before the plan starts paying its share. A low premium usually comes with a high deductible, and the other way around.
Do monthly payments chip away at the deductible?+
No. Premiums are the price of having the plan. Only what you pay for covered care counts toward your deductible and out-of-pocket maximum.
What is the out-of-pocket maximum?+
The most you pay for covered care in a plan year. Deductibles, coinsurance and copays count toward it; premiums don't. For 2027, HealthCare.gov lists the Marketplace limit as $12,000 for one person and $24,000 for a family.
Do I pay the deductible for a checkup?+
On Marketplace plans, certain preventive care is covered in full even before you meet your deductible. Many plans also cover some visits with a flat copay before the deductible. Check the plan's summary of benefits.
Is a high-deductible plan a bad idea if I'm young?+
Not necessarily. If you're healthy and could cover the out-of-pocket maximum in a bad year, a lower premium can save money most years. If a big bill would sink you, a lower deductible may be worth the higher premium.