What Is an Explanation of Benefits (EOB)?

An Explanation of Benefits (EOB) is a document commonly received after a medical service has been processed by a health insurance company. It details how a healthcare claim was handled, outlining the amounts billed by the provider, the portion covered by insurance, and any remaining balance that may be the patient’s responsibility. An EOB is not a bill, but rather a summary of the claim’s resolution. This document serves as a record of the financial aspects of your healthcare visit and the insurance company’s payment decision.

Understanding the EOB’s Purpose

An EOB is issued to provide transparency to the policyholder regarding how their medical claim was processed by the insurance company. It serves as a communication tool, summarizing the services received and the financial breakdown of the claim. This statement details the amount the healthcare provider originally charged, the amount the insurance company covered, and any remaining amount the patient might owe. It allows individuals to see the cost of the care they received and any savings achieved through their insurance plan. This document helps policyholders understand the financial value their health insurance provides and track their out-of-pocket medical expenses.

Key Sections of an EOB

An EOB contains several distinct sections, each providing specific details about a healthcare claim. Key components typically found in an EOB include:

• Patient and Provider Information: Includes names, policy numbers, and dates services were rendered.
• Service Description: Outlines medical services provided, such as an office visit or lab test.
• Amount Billed: The original charge from the healthcare provider.
• Allowed Amount: The maximum amount the insurance company will pay for a covered service, often based on negotiated rates.
• Discounts or Adjustments: The difference between the billed amount and the allowed amount, often due to negotiated rates.
• Deductible: The amount an individual must pay out-of-pocket before insurance begins to pay for most covered services.
• Copayment (Copay): A fixed amount paid by the patient for a covered service, such as a doctor’s visit.
• Coinsurance: A percentage of the cost of a covered healthcare service paid by the patient after the deductible has been met.
• Amount Paid by Insurer: The portion the insurance company covered.
• Patient Responsibility: The remaining balance the patient is financially accountable for.
• Reason Codes: Explanations for claim adjustments, denials, or patient responsibility.
• Claim Status: Indicates whether the claim was approved, denied, or is still pending.

What to Do After Receiving an EOB

Upon receiving an EOB, the first step is to carefully compare it with the actual bill received from the healthcare provider. This comparison helps ensure consistency in the services listed, dates of service, and the amounts charged. Discrepancies can occur, and cross-referencing these documents helps identify any potential errors.

Review the EOB for accuracy, checking for any incorrect dates, services that were not received, or duplicate charges. If any discrepancies or questions arise, contact the insurance company directly or the healthcare provider’s billing department for clarification. This proactive approach can help resolve billing issues before they become more complex.

Maintaining EOBs for your records is important for several reasons. They can be useful for tax purposes, as medical expenses exceeding a certain percentage of adjusted gross income may be deductible. While an EOB itself isn’t proof of payment for tax deductions, it shows the patient’s responsibility and can be used in conjunction with payment records like bank or credit card statements. Retaining these documents for at least seven years is a prudent practice, aligning with common recommendations for tax-related records.