The five numbers
- Premium: what you pay every month whether you use the plan or not.
- Deductible: what you pay yourself before insurance starts paying.
- Copay: a fixed dollar amount per visit ($25 doctor, $50 specialist).
- Coinsurance: percentage you pay after deductible (typically 10–30%).
- Out-of-pocket maximum: the most you can pay in a year, after this, insurance pays 100%.
How a typical year plays out
Plan: $400/month premium, $2,500 deductible, 20% coinsurance, $7,000 out-of-pocket max.
Light year (preventive only): $4,800 premium + $0 = $4,800.
Moderate year (one surgery, $15,000 billed): $4,800 + $2,500 deductible + 20% × $12,500 = $9,800. Out-of-pocket cap doesn't trigger.
Major year (cancer treatment, $200k billed): $4,800 + full $7,000 out-of-pocket max = $11,800. The cap is the protection.
Plan types and what they trade
- HMO: low premium, limited network, requires referrals. Best if you stay near home and use one health system.
- PPO: higher premium, larger network, no referrals. Best for travelers and complex care.
- EPO: PPO-like network, no out-of-network coverage. Middle ground.
- POS: HMO-style with limited out-of-network. Hybrid option.
- HDHP: high deductible, low premium, qualifies for HSA contributions. Best for healthy individuals or as a high-deductible safety net.
HSA-eligible high-deductible plans
An HDHP paired with an HSA is the most tax-advantaged combination available. HSA contributions are above-the-line deductible, grow tax-free, and come out tax-free for medical spending.
2026 HSA limits: $4,300 individual / $8,550 family (verify with IRS). After 65, HSA funds can be withdrawn for any purpose at ordinary income rates, making it a stealth retirement account.
Choosing during open enrollment
- Estimate next year's medical needs: prescriptions, expected procedures, family planning.
- List all in-network doctors and prescriptions on each plan you're considering.
- Run total annual cost for each plan: 12 × premium + expected deductible/copay/coinsurance, capped at OOP max.
- Pick the lowest-total-cost plan that includes your doctors and prescriptions in-network.
- If choosing HDHP+HSA, contribute at least the amount you'd save vs the next-cheapest plan into the HSA.
ACA marketplace and subsidies
Healthcare.gov subsidies (premium tax credits and cost-sharing reductions) are available based on household income relative to the federal poverty level.
Subsidy cliffs at certain income levels can cost thousands, managing AGI around the threshold (via 401(k), HSA, traditional IRA contributions) often makes the difference between a subsidized and unsubsidized plan.
What insurance doesn't cover (and how to handle it)
- Out-of-network surprise bills, Federal No Surprises Act protects in many emergency and ancillary cases since 2022.
- Cosmetic and elective procedures, usually 100% out of pocket.
- Long-term care / nursing home, separate long-term care insurance market.
- Vision and dental, usually separate add-on policies.
- Mental health parity, required in most plans, but in-network providers can be hard to find.
