Who this is for
Workers comparing employer health plans during open enrollment.
60-second summary
The premium is what comes out of your paycheck. The deductible is what you pay for covered care before the plan starts paying for many services. The out-of-pocket maximum is your annual in-network cap for covered services, but it does not include premiums, non-covered care, out-of-network care, or costs above the allowed amount. The best plan is not always the lowest premium plan.
Fact sheet
Premium
The amount you pay to keep coverage active, usually taken from each paycheck.
- Premiums count even if you never use care.
- A low premium can be useful if you have cash for a higher deductible.
- A high premium can be worth it if it meaningfully lowers expected medical costs or risk.
Deductible
The amount you pay for covered services before the plan starts paying for many benefits.
- Some services can be covered before the deductible.
- Prescription drugs may have a separate deductible.
- Family plans can have both individual and family deductibles.
Out-of-pocket maximum
The most you pay in a plan year for covered in-network services, excluding premiums and several other costs.
- It includes deductibles, copays, and coinsurance for covered in-network care.
- It does not include premiums, out-of-network care, non-covered services, or some amounts above allowed charges.
- This is the bad-year number to compare.
Employer HSA/HRA money
- Employer account money can offset deductible risk.
- Do not ignore it when comparing plans.
- A plan with a higher deductible can still be competitive if the premium savings and employer contribution are large enough.
The $80/paycheck trap
Plan A costs $80 less per paycheck than Plan B. Over 26 paychecks, that saves $2,080. But if Plan A has a $4,000 higher out-of-pocket max and no employer HSA money, it may be cheaper only in a healthy year.
Open Enrollment True Cost Calculator
Common mistakes
- Only comparing premiums.
- Ignoring employer HSA contributions.
- Not checking prescription deductibles.
- Assuming the out-of-pocket max includes premiums.
- Not comparing worst-case exposure.
Key takeaway
Compare premium, expected spending, employer account money, and out-of-pocket max together. A health plan is a risk tradeoff, not just a payroll deduction.
How to Check Prescription Drug Coverage Before Choosing a Health Plan
Verify each medication, tier, pharmacy, restriction, and expected annual cost before choosing a health plan.
Want to run the numbers instead?
After the next article, you can also jump into a calculator or return to the full open enrollment path.
Open Enrollment True Cost Calculator
Compare premiums, expected care, employer account money, and bad-year exposure before choosing a plan.
Out-of-Pocket Max Estimator
Use this when you want to understand how much covered in-network cost-sharing room may remain.
Open Enrollment Guide
Go back to the full ordered article path, tools, and final checklist.
Sources
- HealthCare.gov· Deductible glossary
Defines deductibles and explains copays, coinsurance, preventive care, separate deductibles, family deductibles, and premium tradeoffs.
- HealthCare.gov· Out-of-pocket maximum glossary
Defines out-of-pocket maximums and what they do not include.
- HealthCare.gov· Coinsurance glossary
Defines coinsurance and gives deductible/coinsurance examples.
- HealthCare.gov· Allowed amount glossary
Defines allowed amount, eligible expense, payment allowance, and negotiated rate.
- IRS· Rev. Proc. 2025-19 — 2026 HSA and HDHP limits
Provides 2026 HSA limits, HDHP minimum deductibles, HDHP out-of-pocket limits, and excepted-benefit HRA amount.