Cost sharing is the portion of medical expenses you pay out of your own pocket when you use your health insurance. It includes three main components: deductibles, copayments, and coinsurance. Your monthly premium, the cost of services your plan doesn’t cover, and bills from out-of-network providers generally don’t count as cost sharing.
Understanding how these three pieces work together helps you predict what you’ll actually spend when you visit a doctor, fill a prescription, or have a procedure.
How Deductibles Work
A deductible is the amount you pay for covered medical services before your insurance starts picking up its share. If your plan has a $1,000 deductible and you receive a $2,000 medical bill, you pay the first $1,000 and your insurer covers the remaining $1,000. Until you hit that threshold each year, you’re paying the full allowed cost of most services yourself.
Only covered expenses count toward your deductible. If your plan doesn’t cover a particular service, paying for it out of pocket won’t bring you any closer to meeting that threshold. Deductibles reset each plan year, so you start from zero again.
Some services bypass the deductible entirely. Most health plans are required to cover preventive services like immunizations, screening tests, and annual checkups at no cost to you, even if you haven’t met your deductible. You won’t owe a copayment or coinsurance for these visits.
Copayments vs. Coinsurance
Once your deductible is met (or for services that don’t require one), you’ll typically pay either a copayment or coinsurance, depending on your plan and the type of care.
A copayment is a fixed dollar amount. The size depends on the service: a plan might charge $15 for a generic prescription, $30 for a primary care visit, and $50 to see a specialist. You know the cost before you walk in the door.
Coinsurance is a percentage of the bill rather than a flat fee. If your plan has 20% coinsurance and the allowed amount for a treatment is $100, you pay $20 and your insurer pays $80. Coinsurance typically kicks in after you’ve met your annual deductible. The key difference is that your cost scales with the price of the service, so coinsurance can be harder to predict, especially for expensive procedures.
The Out-of-Pocket Maximum
Every plan has a ceiling on how much cost sharing you can be asked to pay in a single year. This is called the out-of-pocket maximum. Once your deductibles, copayments, and coinsurance add up to that limit, your insurance covers 100% of covered services for the rest of the plan year.
For 2025, high-deductible health plans cap out-of-pocket costs at $8,300 for individual coverage and $16,600 for family coverage. Other plan types have their own limits, but federal rules set an upper boundary that no marketplace plan can exceed. This cap exists specifically to protect you from catastrophic medical bills.
Premiums and Cost Sharing Move in Opposite Directions
Plans with lower monthly premiums generally come with higher cost sharing: bigger deductibles, higher copays, and steeper coinsurance percentages. Plans with higher premiums tend to cover a larger share of your costs when you actually use care. This is the core trade-off in choosing a health plan.
For most people in a given year, premiums represent the larger financial burden. Median cost-sharing expenses typically run between 1% and 2% of income for people buying individual marketplace plans, while premiums alone can account for 5% to 9% of income depending on earnings. But if you have a year with significant medical needs, cost sharing can climb well above 10% of income, which is exactly why the out-of-pocket maximum matters.
If you’re generally healthy and mostly need preventive care, a lower-premium, higher-deductible plan may save you money overall. If you have ongoing prescriptions, a chronic condition, or expect a major procedure, a higher-premium plan with lower cost sharing often works out cheaper in total.
How Your Provider Network Affects Cost Sharing
Staying in your plan’s network of contracted providers keeps your cost sharing predictable. When you go out of network, several things change. Your deductible is usually higher, your coinsurance percentage jumps, and many plans won’t count out-of-network spending toward your out-of-pocket maximum. Some plans, particularly HMOs, won’t cover out-of-network care at all except in emergencies.
PPO and POS plans will cover part of out-of-network costs, but your insurer may only pay what it would normally pay a contracted provider for the same service. The difference between that amount and what the out-of-network provider charges, known as balance billing, can land on you.
Protections Against Surprise Bills
The No Surprises Act, a federal law, limits what you can be charged in specific situations where you didn’t choose an out-of-network provider. If you receive emergency care from an out-of-network hospital or doctor, you’re only responsible for your in-network deductible, copayments, and coinsurance. The provider cannot balance bill you for the rest.
The same protection applies when you go to an in-network facility but are treated by an out-of-network provider you didn’t select, like an anesthesiologist, pathologist, or radiologist. Those charges are billed at your in-network rate, and any payments you make count toward your in-network deductible and out-of-pocket maximum.
Putting It All Together
Here’s how cost sharing plays out in practice. Say your plan has a $1,500 deductible, $30 copays for office visits, 20% coinsurance for procedures, and an $8,000 out-of-pocket maximum. Early in the year, you visit your doctor for a screening. That’s preventive care, so you pay nothing. A month later, you need an MRI that costs $2,000. You haven’t met your deductible yet, so you pay the first $1,500 yourself. For the remaining $500, your 20% coinsurance means you owe another $100. Your insurance covers the other $400.
Later, if you need surgery costing $40,000, your 20% coinsurance on the full amount would theoretically be $8,000. But because you’ve already paid $1,600 toward your out-of-pocket maximum (the $1,500 deductible plus $100 in coinsurance), you’d only owe another $6,400 before hitting the $8,000 cap. After that, your plan pays everything for the rest of the year.
The key takeaway: cost sharing means you and your insurer split the bill for your care, with rules that determine who pays what and when. Your deductible sets the starting line, copays and coinsurance determine the split after that, and the out-of-pocket maximum sets the finish line where your insurer takes over completely.