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. These costs are separate from your monthly premium. Together, they determine how much you actually spend when you see a doctor, fill a prescription, or have a procedure done.
The Three Types of Cost Sharing
A deductible is the amount you pay each year before your insurance starts covering its share. If your plan has a $2,000 deductible, you pay the full cost of most services until you’ve spent $2,000. After that, your plan kicks in. The average deductible for workers with employer-sponsored single coverage is $1,886 in 2025.
A copayment (copay) is a flat fee you pay for a specific service. You might owe $30 for a primary care visit or $50 for a specialist. Depending on your plan, some copays apply even before you’ve met your deductible, while others only start after you’ve hit it.
Coinsurance is a percentage split between you and your insurer. A common arrangement is 80/20, meaning your plan pays 80% of a covered service and you pay 20%. For specialty medications, patient coinsurance averaged 26% in 2020. Coinsurance typically applies after you’ve met your deductible.
How These Costs Add Up Through the Year
Cost sharing follows a predictable sequence over the course of a plan year. Early on, you’re paying for most services out of pocket because you haven’t met your deductible yet. Once you cross that threshold, you shift to paying only copays or coinsurance for covered services, with your insurer picking up the larger share.
Eventually, if you have enough medical expenses, you hit your out-of-pocket maximum. This is a federally capped ceiling on what you can spend in a year. For 2025 Marketplace plans, that cap is $9,200 for an individual and $18,400 for a family. In 2026, those limits rise to $10,600 and $21,200 respectively. Once you reach your out-of-pocket maximum, your insurance pays 100% of covered services for the rest of the plan year. No more copays, no more coinsurance.
Your deductible resets at the start of each new plan year, and the cycle begins again.
What Doesn’t Count as Cost Sharing
Your monthly premium is not cost sharing. Neither are charges from out-of-network providers who bill you for the difference between their rate and what your insurer pays (known as balance billing). Anything your plan doesn’t cover at all, like cosmetic procedures, also falls outside the cost-sharing framework. These expenses generally don’t count toward your out-of-pocket maximum either, which means they won’t help you reach the point where your plan covers everything.
Preventive Care Is Usually Free
Federal law requires most health plans to cover a set of preventive services at zero cost to you, even if you haven’t met your deductible. This includes immunizations, cancer screenings, blood pressure checks, and other routine tests. The requirement covers preventive services for adults, women, and children, though the specific covered services differ for each group. The catch: you need to use an in-network provider. Go out of network, and those protections may not apply.
How Cost Sharing Affects What People Do
Higher cost sharing discourages people from using healthcare, and not always in harmless ways. A large systematic review found that 84% of studies linked increased cost sharing with worse medication adherence, and 79% found lower persistence (meaning people stopped taking medications sooner). Six out of seven studies found that higher costs made people less likely to start a prescribed medication in the first place.
The downstream effects are concerning. People facing higher cost sharing tended to skip outpatient visits but ended up in the hospital more often. Four out of six studies examining hospitalizations found a statistically significant link between higher cost sharing and increased hospital stays. In other words, when people avoid routine care because of cost, some end up needing more expensive care later.
Between 2005 and 2016, annual deductibles in employer-sponsored plans increased by 59% for workers with single coverage, meaning this isn’t a minor financial consideration for most families.
Help With Cost Sharing
If you buy insurance through the ACA Marketplace and your household income falls between 100% and 250% of the federal poverty level, you may qualify for cost-sharing reductions. These lower your deductibles, copays, and coinsurance, but only on Silver-tier plans. You don’t apply separately for them. If you’re eligible and choose a Silver plan, the reduced cost sharing is built in automatically.
For people on Medicare, Part B has its own cost-sharing structure. The annual Part B deductible is $257 in 2025 and rises to $283 in 2026. After meeting that deductible, beneficiaries typically pay 20% coinsurance for most outpatient services. Medicaid, by contrast, has minimal or no cost sharing for most enrollees, particularly those with very low incomes.
Protections Against Surprise Bills
The No Surprises Act, which took effect in 2022, limits what you can be charged when you receive emergency care from an out-of-network provider or get care from an out-of-network air ambulance. Under this law, your cost sharing for these services can’t exceed what you’d pay for the same service in network. This means if you end up in an out-of-network emergency room, you pay your normal in-network copay or coinsurance, not a dramatically inflated out-of-network rate.
Employer Plan Cost Sharing
Most Americans with private insurance get it through an employer, and cost sharing in these plans follows a somewhat predictable pattern. In 2025, workers contribute an average of 16% of the premium for single coverage (about $1,440 per year) and 26% for family coverage (about $6,850 per year). These are premium contributions, separate from the deductibles, copays, and coinsurance you pay when you actually use care.
Plans with lower premiums tend to have higher deductibles and more cost sharing, while plans with higher premiums generally require less out-of-pocket spending at the point of care. Choosing between these tradeoffs depends on how much care you expect to use. If you rarely see a doctor, a high-deductible plan with lower premiums might save you money overall. If you have ongoing prescriptions or regular specialist visits, a plan with higher premiums but lower cost sharing at each visit could be the better deal.