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

Let’s say you take a generic blood pressure pill every day. Each time you fill it, you pay $10 at the pharmacy. You’ve done this 200 times this year. That’s $2,000 gone. You might think, ‘I’ve paid my deductible already.’ But you haven’t. And that’s not a mistake on your part-it’s how the system is built.

What an out-of-pocket maximum really means

Your out-of-pocket maximum is the most you’ll ever pay in a year for covered health services. Once you hit that number, your insurance pays 100% of everything else for the rest of the year. For 2025, the federal limit is $9,200 for an individual and $18,400 for a family. These numbers go up every year. In 2026, they’ll be $10,600 and $21,200.

This cap was created by the Affordable Care Act in 2014 to stop people from going broke because of medical bills. Before then, copays didn’t count toward anything. You could pay hundreds or thousands in copays and still be stuck paying full price for your next surgery or hospital stay.

Now, every copay you make-for doctor visits, lab tests, or generic prescriptions-counts toward that out-of-pocket maximum. That’s a huge win if you have a chronic condition. Someone on insulin might pay $15 copays 365 days a year. That’s $5,475. If their out-of-pocket max is $7,000, they’re already 78% there. Once they hit the cap, insulin becomes free for the rest of the year.

Why generic copays don’t count toward your deductible

Here’s where it gets confusing. Even though your $10 generic pill copay counts toward your out-of-pocket maximum, it usually doesn’t count toward your deductible.

Your deductible is the amount you pay before your insurance starts sharing the cost of services. For example, if your deductible is $2,000, you pay the first $2,000 of covered care yourself. After that, you pay coinsurance-maybe 20%-until you hit your out-of-pocket maximum.

But for many plans, prescription copays are treated differently. You pay them upfront, even before you’ve met your deductible. And those payments? They don’t chip away at your deductible. They only help you get closer to your out-of-pocket maximum.

This creates a weird gap. You might think you’ve paid your deductible because you’ve spent $2,500 on prescriptions. But if your medical deductible is $2,000 and those copays didn’t count, you still owe $2,000 for your next MRI or specialist visit. You’re not done paying. You’re just halfway to your out-of-pocket max.

Three common plan structures you need to know

Not all health plans work the same way. There are three main designs:

• Single deductible (27% of plans): One number covers both medical and prescription costs. If you pay $1,500 in doctor visits and $500 in prescriptions, you’ve met your $2,000 deductible. Copays don’t exist here-you pay full price until the deductible is met, then coinsurance kicks in.
• Separate deductibles (37% of plans): You have a medical deductible (say, $2,000) and a prescription deductible (say, $500). You pay full price for prescriptions until you hit $500, then you start paying copays. Those copays count toward your out-of-pocket maximum, but not your medical deductible.
• Copay-only (36% of plans): No prescription deductible. You pay your $10 or $30 copay right away, no matter what. These payments count toward your out-of-pocket maximum, but not your medical deductible.

The problem? Most people don’t know which type they have. And if you don’t know, you can’t plan for costs.

How to find out how your plan works

You won’t figure this out by guessing. You have to read your plan documents. Look for two key files:

• Summary of Benefits and Coverage (SBC): This is a standardized 2-page form every insurer must give you before you enroll. It has a table that says, ‘Does this payment count toward your deductible?’ Look for the row labeled ‘Generic Prescription Drugs.’ If it says ‘No,’ your copays don’t count toward your deductible.
• Explanation of Coverage (EOC): This is the full plan document. It’s longer, but it has all the details. Search for ‘deductible,’ ‘copay,’ and ‘out-of-pocket maximum.’

Don’t rely on your employer’s HR rep or your insurance app. They often get it wrong. I’ve seen people told their copays count toward their deductible-only to find out at renewal they still owe thousands.

Why this confusion costs people money

A 2023 survey found that 68% of people think prescription copays count toward their deductible. Only 22% know the truth. That misunderstanding leads to people skipping meds.

Someone with diabetes might see their $15 insulin copay and think, ‘I’ve already paid my deductible.’ They assume they’re covered. But if their deductible isn’t met, the next doctor visit could cost $500 out of pocket. So they delay the visit. Then their A1C spikes. Then they end up in the ER. The cost? $12,000.

This isn’t hypothetical. The Congressional Budget Office estimates that $15 billion a year is lost because people avoid care due to confusion over cost-sharing rules. That’s billions in preventable hospitalizations.

What’s changing-and what’s not

There’s pressure to fix this. In April 2024, the Department of Health and Human Services required insurers to make cost-sharing rules clearer on all documents starting in 2025. New plans must highlight whether copays count toward the deductible.

Some insurers are testing ‘integrated deductibles’-where prescription costs, including copays, count toward one single deductible. Early results in five states show 28% higher medication adherence. That means fewer complications, fewer hospital stays.

But the industry is hesitant. Removing the distinction between deductible and copay counting could raise premiums by 3-5%. Insurers argue that keeping them separate helps manage costs. Critics say it’s just hiding complexity from consumers.

McKinsey predicts that by 2027, 60% of major insurers will offer at least one plan where generic copays count toward the deductible. That’s a shift-but it’s not here yet.

What you should do now

If you take regular prescriptions:

1. Find your SBC document. Look for the ‘Generic Prescription Drugs’ row.
2. Check if copays count toward your deductible. If it says ‘No,’ you’re in a separate or copay-only plan.
3. Add up your annual copay costs. That’s your progress toward your out-of-pocket maximum.
4. Track your medical spending separately. Your deductible is still separate.
5. Ask your pharmacist: ‘Do my copays count toward my deductible?’ They often know the plan details better than your insurer’s call center.

If you’re choosing a plan during open enrollment, compare the SBCs side by side. Look for plans with a single deductible if you take multiple prescriptions. You’ll save confusion-and possibly thousands.

Real stories: The difference it makes

One user on PatientsLikeMe, who goes by ‘DiabetesWarrior,’ said: ‘Before 2014, my $15 insulin copays didn’t get me closer to anything. Now those same copays count toward my $8,500 out-of-pocket max, which I actually reached last year and had my meds free for the rest of the year.’

Another, ‘MedicareMom,’ posted on HealthCare.gov: ‘I paid $10 copays for my blood pressure medication all year thinking it counted toward my $2,000 deductible. But at renewal, I still hadn’t met it-even though I’d paid over $2,500.’

That’s the gap. The system protects you from catastrophic bills. But it doesn’t make the journey easy to understand.

Final takeaway

Generic copays are not free. They’re not a discount. They’re your money going toward the limit that protects you from financial ruin. But they don’t erase your deductible. You need to track both numbers separately.

The system is designed to shield you from disaster-not to make your monthly bills simple. If you’re on chronic medication, you’re already halfway to your out-of-pocket maximum. Don’t assume you’re done paying. Keep counting. Keep reading. And don’t skip your next appointment because you think you’ve paid enough.