The Premiums You Pay For Coverage Do Not Pay For Everything

Health insurance would be pretty simple if your plan covered all your health care expenses and your only out-of-pocket costs were the premiums you pay for coverage. While health insurance does pay for a significant amount of your health care – especially if you have a catastrophic injury or chronic injury, or need major surgery or an inpatient hospital stay – you will still have to contribute to the costs of your care in several ways – these costs are commonly referred to as being “out-of-pocket.”

But understanding what you may have to pay out-of-pocket for, how much you’ll need to pay, and when you’ll need to pay it can be confusing if you are unfamiliar with the unique terminology of health insurance coverage – as most people are. Coinsurance, copays, deductibles – all of these things play roles in determining the actual cost of health insurance beyond premiums.

Related: Understanding Arizona Health Insurance Premiums

At Arizona Health Insurance Experts, we want to empower you with the information you need to make informed decisions about your health coverage and manage your costs effectively. To that end, here is a comprehensive guide to out-of-pocket costs in health insurance.


AZ Health - out-of-pocket-costsA deductible is the initial amount you must pay for covered care and services before the insurance company starts footing the bill. For example, if a policy has a $5,000 deductible, you are responsible for the first $5,000 of covered expenses. Not all care or services are subject to deductibles, but most are.

The amount of your deductible will vary from plan to plan. According to Kaiser Family Foundation (KFF), the average 2023 deductibles for marketplace plans sold via were $7,481 (Bronze tier plans), $4,890 (Silver tier plans), $1,650 (Gold tier plans), and $45 (Platinum tier plans).

For high-deductible health plans (the IRS defines these as a plan with minimum deductibles of $1,500 for individual coverage or $3,000 for family coverage), KFF reports that the average deductible in 2022 was $2,925 for individual coverage and $6,013 for family coverage.

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Copayments are fixed amounts that you must pay for specific covered services.

For example, your health insurance policy might stipulate a $20 copayment for each doctor’s visit or a $10 copayment for generic prescription medications. For some care, like a hospital stay, your copay may be a percentage of the costs rather than a set amount.


Coinsurance represents the percentage of the cost of covered healthcare services that you are responsible for after meeting the deductible. For example, if your plan has a 20% coinsurance, you would pay 20% of the covered costs while the insurance company covers the remaining 80%.

In practical terms, that means that if you receive a bill for care in the amount of $1,000, your financial responsibility is $200, and your health insurance carrier will pay the remaining $800.

Out-of-Pocket Maximum/Limit

Your out-of-pocket maximum or limit is the most you will have to pay from your own wallet for covered services during a policy period (usually 12 months).

Once you hit the maximum on your policy, the insurance company covers 100% of the remaining covered expenses.

Factors That Impact Your Out-of-Pocket Costs

Type of Plan

The type of health insurance plan you choose, such as HMO plans (Health Maintenance Organization), PPO plans (Preferred Provider Organization), or HDHP (High Deductible Health Plan), significantly affects your out-of-pocket costs. HDHPs generally have lower monthly premiums but higher deductibles and out-of-pocket limits.

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Lower Premiums vs. Higher Deductibles

Lower premiums usually come with a cost: smaller provider networks, fewer benefits, higher deductibles, and higher out-of-pocket limits are the main trade-offs for those seeking to minimize their premiums.

In-Network vs. Out-of-Network Care

One of the best ways to keep out-of-pocket costs down is to use healthcare providers and facilities in your plan’s network. If you visit or get treatment from out-of-network providers or facilities, you will pay more out-of-pocket, and some coverage that may be available in-network may not be available outside of the network.

Looking for More Help Understanding Out-Of-Pocket Costs for Health Insurance? Speak With One Of Our Experts Today.

Figuring out your out-of-pocket costs for health insurance is just one of the many challenges Arizonans face when looking for coverage. Working with an experienced Arizona health insurance broker is the best way to get your questions answered and find a policy that fits your family’s needs and budget.

Let Arizona Health Insurance Experts connect you with the experts that will make your health insurance journey easier. By partnering with a local experts, our extensive collection of independent insurance agents and brokers puts you on the path to an exceptional customer experience that results in the individual and family health insurance coverage you need.

Find a broker near you today.