Out-of-Pocket Maximums: How Generic Copays Count Toward Deductibles in Health Insurance

Most people think if they’re paying for prescriptions every month, those payments must be chipping away at their deductible. That’s not true-and it’s one of the biggest misunderstandings in health insurance today. You pay your $10 or $15 copay for generic blood pressure pills, diabetes meds, or asthma inhalers, and you assume you’re getting closer to meeting your deductible. But here’s the reality: generic copays count toward your out-of-pocket maximum, not your deductible. And that difference can cost you thousands if you don’t understand it.

What’s the difference between a deductible and an out-of-pocket maximum?

Your deductible is the amount you pay out of pocket for covered services before your insurance starts sharing the cost. For example, if your plan has a $2,000 deductible, you pay the full price for doctor visits, lab tests, and prescriptions until you’ve spent $2,000. After that, you start paying coinsurance-say, 20%-while your plan covers the rest.

Your out-of-pocket maximum is the total amount you’ll pay in a year for covered services, including your deductible, copays, and coinsurance. Once you hit that number, your insurance pays 100% of everything else for the rest of the year. For 2025, the federal cap is $9,200 for an individual and $18,400 for a family on Marketplace plans.

Here’s the key: all your in-network cost-sharing-deductibles, coinsurance, and copays-counts toward your out-of-pocket maximum. But only some of it counts toward your deductible. That’s where confusion kicks in.

Why generic copays don’t count toward your deductible

Before 2014, copays for prescriptions didn’t count toward anything. You paid them, and they disappeared into the insurance system with no benefit to you. The Affordable Care Act changed that-but only partially. It required all copays to count toward your out-of-pocket maximum, which was a huge win for people on chronic meds. But it didn’t require them to count toward your deductible. So now you have a two-tier system:

• You pay $10 for a generic prescription. That $10 goes straight to your out-of-pocket maximum.
• That same $10 does NOT reduce your $2,000 deductible.

That means you could pay $3,000 in generic copays over the year and still not have met your deductible. You’re not getting any discount on future doctor visits or hospital stays. You’re just hitting your out-of-pocket max faster.

This setup exists because insurers designed plans to separate medical and prescription costs. It lets them offer lower premiums by keeping prescription costs in a different bucket. But it creates a trap for consumers who assume they’re making progress toward lowering their overall costs.

How your plan type changes how copays work

Not all health plans are built the same. There are three common structures, and each affects how your generic copays behave:

1. Single deductible (27% of employer plans): Your medical and prescription costs roll into one big deductible. If you pay $50 for a specialist visit and $15 for a generic pill, both count toward the same $2,000 total. Once you hit it, coinsurance applies to everything. In this model, copays don’t really exist-you pay full price until the deductible is met.
2. Separate medical and prescription deductibles (37% of plans): You have two deductibles. One for doctor visits and hospital stays. Another, often $500 or $1,000, just for prescriptions. You pay full price for meds until you hit the prescription deductible. After that, you pay a copay-say $10 per script-and those copays count toward your out-of-pocket maximum, but not your medical deductible.
3. Copay-only (no prescription deductible) (36% of plans): No prescription deductible at all. You pay your $10 copay from day one, no matter what. Those payments go toward your out-of-pocket maximum, but again, not your medical deductible.

If you’re on a plan with separate deductibles, your generic copays are essentially free money for the insurer after you hit the prescription deductible. They don’t help you lower your medical deductible. You could be paying $150/month in insulin copays for a year and still owe $1,500 toward your doctor visit deductible.

Real stories: What happens when people don’t understand this

One user on HealthCare.gov posted: “I paid $10 copays for my blood pressure meds every month for a year. I thought I was getting closer to my $2,000 deductible. When I went to the ER in December, I still had to pay the full $2,000 deductible because my copays didn’t count.”

On Reddit, someone wrote: “I hit my out-of-pocket max in October because of my meds. I thought I was done paying for everything. Then I went to the doctor for a sprained ankle and got hit with a $500 bill. I didn’t know my deductible was still untouched.”

A 2023 survey by America’s Health Insurance Plans found that 68% of people think prescription copays count toward their deductible. Only 22% know they don’t. That confusion leads to people skipping needed meds or delaying care because they think they’ve already paid enough.

On the flip side, people with chronic conditions say the out-of-pocket maximum rule is life-changing. “Before 2014, my $15 insulin copays didn’t get me closer to anything,” shared a user on PatientsLikeMe. “Last year, I hit my $8,500 out-of-pocket max in August. My insulin was free for the rest of the year. I didn’t know I’d ever get to that point.”

How to find out how your plan works

You can’t guess. You have to check your documents. Every plan must give you two key papers:

• Summary of Benefits and Coverage (SBC): This is the standardized form insurers are required to give you before you enroll. Look for the section labeled “Cost-Sharing” or “How Much You Pay.” It will show you exactly what counts toward your deductible and what counts toward your out-of-pocket maximum.
• Explanation of Coverage: This longer document details every rule. Search for phrases like “Does this payment count toward your deductible?” and “Are prescription copays included in your out-of-pocket maximum?”

Don’t rely on your employer’s HR rep or your insurer’s website. Read the documents yourself. Look for:

• Is there a separate prescription deductible?
• Do copays count toward your deductible?
• What’s your out-of-pocket maximum for the year?

If you’re shopping for a new plan during open enrollment, spend at least 45 minutes comparing SBCs side by side. The differences matter more than the premium.

What’s changing in 2025 and beyond

The government is trying to fix the confusion. In April 2024, the Department of Health and Human Services announced new rules requiring insurers to clearly label which costs count toward which limits. Starting in 2025, your SBC must use bold text and icons to show exactly how copays behave.

Some insurers are testing “Integrated Deductible” plans-where all costs, including prescriptions, count toward one deductible. Early results in five states show a 28% increase in medication adherence among patients with chronic diseases.

McKinsey & Company predicts that by 2027, 60% of major insurers will offer at least one plan where generic copays count toward the deductible. Why? Because consumers are fed up. But the American Hospital Association warns this could raise premiums by 3-5% because insurers lose the ability to separate risk.

For now, the system remains complicated. But you’re not powerless. Understanding how your copays work gives you control over your spending-and your health.

What to do next

If you take generic meds regularly, here’s your action plan:

1. Find your SBC document. Open it now.
2. Check the “Cost-Sharing” section. Does it say copays count toward your deductible? If yes, you’re in a rare plan. If no, they don’t.
3. Calculate how much you’ve paid in copays this year. Add that to your deductible payments. If you’re close to your out-of-pocket maximum, you’ll soon pay $0 for covered services.
4. If you’re near your deductible but not your out-of-pocket max, don’t skip your meds. Keep paying the copays-they’re still helping you hit your cap.
5. When choosing a plan next year, prioritize one with a lower out-of-pocket maximum over a lower premium if you take regular meds.

You’re not just paying for insurance-you’re paying for predictability. Knowing how your copays work means you won’t get blindsided by a $1,000 bill when you finally need a doctor visit. And that’s worth more than a few dollars saved on your monthly premium.