What Is an EOB in Medical Billing?

An Explanation of Benefits (EOB) is a statement from your health insurance company detailing how a medical claim was processed. It explains the costs of healthcare services you received, how much your insurer paid, and your remaining financial responsibility. Remember, an EOB is not a bill, and you should not send payment based solely on this document.

Essential Information on Your EOB

An EOB includes specific details about the healthcare services you received and how your insurance plan applied benefits. You will find your personal information, such as your name, policy number, and member ID. The document also lists the healthcare provider’s details, including their name and address.

The EOB specifies the dates of service and a description of the service or procedure codes (like CPT codes) that identify the type of treatment. It shows the total amount the provider charged for the services. The EOB also details the amount your insurance company paid to the provider and any amount that was adjusted or disallowed from the original charge.

Understanding Key Terminology

Several common terms appear on an EOB that are important for understanding your financial responsibility. A “deductible” is the amount you must pay for covered healthcare services before your insurance plan begins to pay. For example, if your deductible is $1,000, you would pay the first $1,000 of covered medical costs yourself before your insurance contributes.

“Copayment” (copay) refers to a fixed amount you pay for a covered healthcare service, usually at the time of service. For instance, you might have a $30 copay for a doctor’s office visit. “Coinsurance” is your share of the costs of a covered healthcare service, calculated as a percentage of the allowed amount for the service, after you’ve met your deductible. If your coinsurance is 20% and the allowed amount is $100, you would pay $20.

The “allowed amount,” also known as the approved amount or negotiated rate, is the maximum payment your health plan will pay for a covered service. If an in-network provider charges more than the allowed amount, they are required to “write off” the difference, meaning they cannot bill you for that excess.

“Patient responsibility” is the portion of the bill you are expected to pay after your insurance has processed the claim. “Non-covered services” are treatments or procedures that your insurance plan does not pay for, and you would be responsible for the full cost. “Balance billing” occurs when an out-of-network provider bills you for the difference between their charge and the allowed amount by your plan. This happens when you see a provider outside your insurance network, as they do not have a contract with your health plan.

How to Interpret Your EOB

Interpreting your EOB systematically helps you understand your financial obligations.

• Confirm your personal information, the healthcare provider’s details, and the dates and descriptions of services to ensure accuracy.
• Compare the “total charges” from the provider with the “allowed amount” your insurance agreed to pay.
• Review how your deductible, copay, and coinsurance were applied to the allowed amount.
• Locate the “amount paid by insurance” and your “patient responsibility” amount, which is what you owe.

Actions After Reviewing Your EOB

After reviewing your EOB, compare it with any medical bill you receive from the provider. This ensures the amounts and services match, as discrepancies can occur due to billing errors.

If you find differences or errors, gather all relevant paperwork, including the EOB and the medical bill. For questions about claim processing or plan coverage, contact your insurance company directly. If the discrepancy relates to services or charges, reach out to the healthcare provider’s billing department. You should expect to receive a separate bill from your provider for the “patient responsibility” amount indicated on your EOB.