What Does an Explanation of Benefits Mean?

An Explanation of Benefits (EOB) is a document sent by your health insurance company after you receive medical care. This statement details how your medical claim was processed by the insurer. An EOB is not a bill, but an informational summary outlining payment decisions made by your health plan. It informs the policyholder about the insurer’s contribution and any remaining responsibility.

Purpose of an Explanation of Benefits

An EOB provides transparency into how medical claims are processed, offering a clear view of healthcare costs. It helps patients understand their financial responsibility by detailing what the insurance plan paid and what portion remains for the patient to cover. This document also allows individuals to track covered services. Reviewing EOBs serves as a record of insurance payments and can assist in identifying potential billing errors or fraudulent claims. It provides insight into the value your health insurance plan delivers by showing the total cost of services and savings achieved through coverage.

Key Sections of an Explanation of Benefits

An EOB typically contains several standardized components that break down the financial details of your medical claim.
Patient and Provider Information: Identifies who received the service and who provided it, including names and addresses.
Service Dates and Type of Service: Specifies when the medical care occurred and a description of the treatment or procedure performed.
Amount Billed by Provider (Charges): Indicates the total cost the healthcare provider initially submitted to your insurance company for the services rendered.
Allowed Amount: The maximum amount your insurance plan will pay for a covered service, which may be less than the amount billed.
Amount Covered by Insurance: Shows the portion of the allowed amount that your health plan has paid or will pay directly to the provider.
Non-Covered Services/Amounts: Identifies any services or portions of charges that your insurance plan determined were not eligible for coverage.
Deductible Applied: Indicates the amount of the allowed charges that is being applied toward your annual deductible.
Copayment (Copay): A fixed amount you pay for a covered service, usually at the time of service.
Coinsurance: A percentage of the cost of a covered service that you are responsible for after you’ve met your deductible.
Patient Responsibility (What you owe): Represents the total amount you are financially responsible for after your insurance has processed the claim.
Claim Number: A unique reference number assigned by the insurance company to track the specific medical claim.
Remark Codes: Notes explaining adjustments or limitations in coverage.

Explanation of Benefits Versus a Medical Bill

It is important to understand the distinct difference between an Explanation of Benefits and a medical bill. An EOB is a statement generated by your health insurance company, detailing how a medical claim was processed. It is informational and not a request for payment. Conversely, a medical bill is a formal request for payment sent directly from the healthcare provider. This document specifies the exact amount due for services rendered. Patients should wait to receive the provider’s bill to confirm their final financial responsibility, as the EOB is simply a summary of how the insurance company processed the claim.

Next Steps After Reviewing Your Explanation of Benefits

Upon receiving your EOB, carefully review its contents for accuracy. Compare the EOB details with the medical bill you receive from your healthcare provider, ensuring services, dates, and amounts match. This comparison helps verify correct billing and identify discrepancies. Keep EOBs for your records, as they provide a clear history of your healthcare services and insurance payments. If you identify inconsistencies, errors, or questions, contact your insurance company or the healthcare provider’s billing department to verify charges and ensure you pay only what you are truly responsible for.