How to Read an Explanation of Benefits Statement

An Explanation of Benefits (EOB) is a communication from your health insurance company detailing how a medical claim was processed. It summarizes the healthcare services you received, their costs, and how your insurance plan applied benefits. An EOB is for informational purposes only; it is not a bill. Its aim is to help you understand your healthcare costs and insurance coverage, offering transparency. By reviewing your EOB, you gain insight into what your insurer paid and what amount, if any, remains your responsibility, allowing you to track expenses and verify services were processed correctly.

Navigating Your Explanation of Benefits Document

Understanding the layout of an Explanation of Benefits statement is key to deciphering your healthcare costs. While specific formats vary, EOBs generally organize information into consistent categories for a clear overview of your medical claim.

An EOB identifies the patient and policyholder, including your name, policy number, and dates of service. It also lists the healthcare provider, their name, and the facility where care was received. This section helps verify you are reviewing the correct claim and involved parties.

Claim details outline the specific services provided. This includes a description of the service, such as an office visit or lab test, often with Current Procedural Terminology (CPT) codes and diagnostic codes (ICD-10). These codes are standardized identifiers for medical procedures and diagnoses.

The EOB details the financial aspects of your claim. This includes the “Amount Billed” by the provider, their initial charge. The “Allowed Amount” is the maximum your insurer agrees to pay, often a negotiated rate. The EOB also shows the “Amount Paid by Insurer,” the portion your health plan covered. The “Patient Responsibility” section states the amount you may owe.

EOBs also contain “Remarks/Explanation Codes” or notes, typically at the bottom or on the back. These codes provide concise explanations for adjustments, denials, or other processing notes. For example, a code might indicate a service was not covered or a deductible was not yet met.

Understanding Key Terms and Calculations

Understanding the financial terms on your Explanation of Benefits helps you understand your healthcare costs and how your insurance plan functions. These terms directly influence your financial obligation for medical services.

The deductible is the amount you pay out-of-pocket for covered healthcare services before your insurance plan begins to pay. For instance, if your deductible is $1,000 and your bill is $1,200, you would pay the first $1,000, and your insurer would then consider covering a portion of the remaining $200.

A copayment, or copay, is a fixed amount you pay for a covered healthcare service at the time of service, after you have met your deductible, or sometimes even before. For example, you might pay a $30 copay for a doctor’s office visit. Copays can vary depending on the type of service.

Coinsurance represents your share of the costs of a healthcare service, calculated as a percentage of the allowed amount. If your plan’s coinsurance is 20% and the allowed amount for a service is $100 after your deductible is met, you would be responsible for $20.

The “Allowed Amount,” also known as the negotiated rate, is the maximum amount your health plan will pay for a covered healthcare service. If an in-network provider bills more than this amount, they typically cannot charge you the difference, as they have agreed to the negotiated rate.

“Non-Covered Services” are healthcare services or items your insurance plan does not pay for. This can occur if a service is not considered medically necessary or is excluded from your specific plan’s benefits.

The distinction between “In-Network” and “Out-of-Network” providers also impacts costs. In-network providers have a contract with your insurance company, agreeing to specific allowed amounts. Using an out-of-network provider generally means higher costs for you, as the insurer may pay a smaller percentage or none at all.

Calculating your “Patient Responsibility,” or “What You Owe,” involves combining these elements. It is the sum of any applicable deductible, copayment, coinsurance, and charges for non-covered services. For example, if a service has an allowed amount of $1,500, and you have $300 remaining on your deductible, 20% coinsurance, and a $25 copay, your responsibility would include the $300 deductible, plus 20% of the remaining $1,200 ($240), plus the $25 copay. This totals $565.

Reconciling Your EOB with Your Medical Bill

Upon receiving healthcare services, you will typically receive two distinct documents: an Explanation of Benefits (EOB) from your insurance company and a medical bill from the healthcare provider. The medical bill is a request for payment from the provider for services rendered.

Comparing these two documents is important to ensure accuracy and prevent overpayment. Cross-reference the service dates and descriptions on both the EOB and the medical bill. Verify that the provider names and the specific services listed match. Any discrepancies warrant further investigation.

Next, compare the “Amount Billed” by the provider on your EOB with the total charges on your medical bill. Check the “Patient Responsibility” amount on your EOB against the “Amount Due” or “Balance Due” on your medical bill. These figures should reflect your remaining financial obligation after insurance processing.

Common reasons for discrepancies include timing differences, where the bill might be generated before the EOB is fully processed. Errors in coding, such as incorrect CPT or diagnostic codes, can also lead to mismatches. Services may be billed that were not covered by your plan, or there could be duplicate charges.

Actions to Take After Reviewing Your EOB

After reviewing your Explanation of Benefits and reconciling it with your medical bill, several actions may be necessary. These steps help you manage your healthcare finances and address any potential errors.

If your EOB is accurate and the patient responsibility matches the medical bill, pay the amount indicated. Many insurers provide access to EOBs online for digital record-keeping.

If you identify a discrepancy or error, your first contact should be the healthcare provider’s billing department. Many billing errors, such as incorrect coding or duplicate charges, originate with the provider. Request an itemized bill for more detail.

Should the issue remain unresolved with the provider, or if the discrepancy stems from an insurance matter, contact your insurance company directly. Have your EOB and medical bill readily available when you call.

If your insurance company denies coverage for a service you believe should be covered, you have the right to appeal their decision. This process typically begins with an internal appeal. If an internal appeal is unsuccessful, you may have the option for an external review by an independent third party.