How to compare health plans by total yearly cost
Add up 12 months of premiums (after any tax credit) plus what you'd expect to pay when you use care: copays, your deductible and coinsurance, capped at the plan's out-of-pocket maximum. Do it for two scenarios: a typical year for you and a worst-case year (premiums + out-of-pocket maximum). The plan with the lowest premium is often not the cheapest overall. Our free calculator does the math.
The five numbers that matter
- Premium
- What you pay every month, whether or not you get care. Use the amount after any premium tax credit.
- Deductible
- What you pay for covered services each year before the plan starts sharing costs (preventive care is free before the deductible).
- Copays
- Flat fees for specific services, such as a doctor visit or a generic prescription. Some apply before the deductible, some after.
- Coinsurance
- Your percentage share of costs after you meet the deductible, for example 20%.
- Out-of-pocket maximum
- The most you pay for covered in-network care in a plan year. After you reach it, the plan pays 100% of covered in-network services. Premiums don't count toward it.
The formula
Total yearly cost = (monthly premium × 12) + your out-of-pocket spending
where out-of-pocket spending = copays + the part of your bills you pay before the deductible + coinsurance after it, but never more than the out-of-pocket maximum.
Step by step
- Estimate your care for next year. Look at last year: doctor and specialist visits, prescriptions, therapy, planned procedures, a baby on the way.
- Gather each plan's numbers from its Summary of Benefits and Coverage (SBC). Every plan must provide one in a standard format.
- Calculate a typical year for each plan using the formula above.
- Calculate a worst-case year: annual premiums + out-of-pocket maximum. This is your financial exposure if something serious happens.
- Check the non-price factors: network (are your doctors in it?), drug list, referral rules and quality ratings.
A made-up example (for illustration only)
These numbers are invented to show the math. They are not real plan prices.
| Example Plan A | Example Plan B | |
|---|---|---|
| Monthly premium (after credit) | $300 | $450 |
| Deductible | $6,000 | $1,500 |
| Coinsurance after deductible | 40% | 20% |
| Out-of-pocket maximum | $9,000 | $6,000 |
| Low-use year ($500 of care) | $3,600 + $500 = $4,100 | $5,400 + $500 = $5,900 |
| Worst-case year | $3,600 + $9,000 = $12,600 | $5,400 + $6,000 = $11,400 |
In this illustration, Plan A wins in a healthy year and Plan B wins in a bad year. Which is "cheaper" depends on how likely you are to need significant care and how much risk you can absorb.
Tips
- If you can't afford to pay the deductible if something happens, a low-premium plan may be riskier than it looks.
- With an HSA-compatible plan, tax savings on HSA contributions can offset some costs. See HSA basics.
- If you qualify for cost-sharing reductions, Silver plans may have much lower deductibles than the list price suggests.
- Out-of-network care usually doesn't count toward the in-network out-of-pocket maximum.
Frequently asked questions
Do premiums count toward the out-of-pocket maximum?
No. The out-of-pocket maximum covers deductibles, copays and coinsurance for covered in-network care. Premiums are separate.
Is the plan with the lowest premium the cheapest?
Not necessarily. If you use a lot of care, a plan with a higher premium and lower deductible can cost less over the year. Compare total yearly cost for a typical year and a worst-case year.
Where do I find a plan's deductible and out-of-pocket maximum?
In the plan's Summary of Benefits and Coverage (SBC), which insurers must provide in a standard format, and in the plan details on HealthCare.gov or your state Marketplace.
What's a worst-case year?
Twelve months of premiums plus the plan's full out-of-pocket maximum. It's the most you'd pay for covered in-network care in a year.
Sources
- HealthCare.gov: Health plan categories (Bronze, Silver, Gold & Platinum) (accessed October 28, 2026)
- HealthCare.gov: Saving money on health insurance (accessed October 28, 2026)
- HealthCare.gov: Health insurance plan & network types (accessed October 28, 2026)