When evaluating group health plans, most employers focus primarily on the monthly premium. But for employees, the premium is just part of the picture — what they actually pay when they use healthcare often matters more.
The Out-of-Pocket Trifecta
Employee cost-sharing comes in three forms, and understanding all three is essential:
Deductible
The amount employees pay before insurance starts covering most services. A $3,000 deductible means the first $3,000 of non-preventive care costs come entirely out of the employee’s pocket. For families with low healthcare utilization, this may never be a problem. For others, it’s a significant annual burden.
Coinsurance
After meeting the deductible, employees typically pay a percentage of costs (coinsurance). An 80/20 plan means the employee pays 20% of covered expenses after the deductible is met. On a $10,000 hospital bill, that’s a $2,000 employee payment on top of the deductible.
Out-of-Pocket Maximum
The most the employee will ever pay in a plan year. Once this limit is hit, insurance covers 100% of covered expenses. The ACA caps out-of-pocket maximums at $9,450 for individuals in 2026.
Why This Matters for Employers
Employees who face high unexpected medical costs often blame their employer — even when the employer is paying the lion’s share of premiums. A plan with a very high deductible may look like a bargain to the employer until employees start complaining that their insurance “doesn’t cover anything.”
The Balance to Strike
The goal is a plan that’s affordable for the employer to offer and provides meaningful protection for employees when they actually need care. Finding that balance is what good benefits design looks like.
Want help finding the right balance for your group? Garden State Benefits can run scenario analyses showing what employees would actually pay under different plan designs.