How Does Health Insurance Work? Deductibles, Copays, and Coinsurance Explained
Published: December 1, 2025 | Last updated: October 23, 2026
In short: Health insurance shares the cost of your care with you. You pay a monthly premium to keep coverage. When you get care, you usually pay your deductible first, then share costs through copays (a flat fee) or coinsurance (a percentage). Once you reach your out-of-pocket maximum, your plan pays 100% of covered care for the rest of the year.
Trying to navigate the ins and outs of health insurance can sometimes feel like a whole new language, but understanding a few key terms is the first step toward making the most of your coverage. At Lourie Life & Health, we’re here to help you break it all down, so you can feel confident about your health insurance choices.
What Do Common Health Insurance Terms Mean?
Deductible: This is the amount you pay out-of-pocket before your insurance starts to help cover costs. For example, if your deductible is $1,000, you’ll pay the first $1,000 of your medical expenses.
Co-Insurance: After your deductible is met, co-insurance is the percentage you and your insurer share for covered services. For instance, if your plan has 20% co-insurance, you’ll pay 20%, and your insurer will cover the remaining 80%.
Co-Pay: This is a fixed amount you pay for specific services, like a doctor’s visit or prescription. For example, you might pay a $20 co-pay for seeing your primary care doctor.
Formulary: This is the list of prescription drugs that are covered by your health plan. It’s important to know which medications are covered to avoid unexpected costs.
Maximum Out-of-Pocket: This is the highest amount you’ll pay in a year for covered services. Once you reach this limit, your insurance covers 100% of your medical expenses for the rest of the year.
Network: A network is the group of doctors, hospitals, and other providers that your health insurance plan works with. Staying in-network can help you save on medical costs.
How Do Deductibles, Copays, and Coinsurance Work Together?
These terms are all part of how your health insurance policy functions. Understanding how they work together can help you navigate your benefits and avoid surprises when it comes to paying for care.
At Lourie Life & Health, we know health insurance can feel complicated. That’s why we’re here to guide you through the details and help you choose the right plan that fits both your needs and budget.
Call us today at (803) 256-2067 to speak with one of our licensed agents. We’ll help you understand your options and find the best coverage for you. And don’t forget to subscribe to our YouTube channel, https://www.youtube.com/@LourieLifeandHealth for more easy-to-understand health insurance tips!
Frequently Asked Questions
What is the difference between a copay and coinsurance?
A copay is a flat dollar amount, like $20 for a doctor visit. Coinsurance is a percentage of the cost, like 20%, that you pay after meeting your deductible.
Does my premium count toward my deductible?
No. Your premium is what you pay to keep your coverage. Your deductible is what you pay for care before your plan starts sharing costs.
Do copays count toward my out-of-pocket maximum?
Yes, for covered in-network care. Your deductible, copays, and coinsurance all count toward your out-of-pocket maximum. Premiums do not.
What is a formulary?
It's your plan's list of covered prescription drugs. Check it before you enroll to make sure your medications are covered.
Why does it matter if a doctor is in-network?
In-network providers have agreed to discounted rates with your plan, so you pay less. Seeing out-of-network providers can cost much more, or may not be covered at all.
Does it cost anything to get help choosing a plan?
No. Lourie Life & Health's service is at no cost to you.
Have questions about how your plan works? Call a local South Carolina agent at (803) 256-2067 (TTY 711). We'll explain your coverage in plain language and help you find a plan that fits your needs and budget.