What Is an Explanation of Benefits (EOB)?
Demystify your health insurance statements. Understand what your insurer paid and your true financial responsibility after medical care.
An Explanation of Benefits (EOB) is a document sent by your health insurance company after you receive medical care. It provides a detailed breakdown of the services you received, how your insurance plan processed the claim, and what portion of the costs was covered. The EOB clarifies the amount your insurance paid to the healthcare provider and any remaining amount you may be responsible for. This statement helps you understand how your benefits were applied. An EOB is not a bill.
Understanding the Key Sections
An EOB typically contains several sections that detail the financial transaction between your healthcare provider, your insurance company, and you. Understanding each part helps in tracking healthcare costs and verifying accuracy. While the layout may vary between insurance providers, the core information remains consistent.
The EOB begins with identifying information for both the patient and the healthcare provider. This section includes your name, insurance member ID, and policy number, along with the name and address of the doctor, hospital, or facility that rendered the services.
A section outlines the services you received, including the dates of service and descriptions of the procedures performed. You may also see procedure codes, such as Current Procedural Terminology (CPT) codes, which are standardized codes used by healthcare providers to describe medical, surgical, and diagnostic services.
The EOB then details the financial aspects of the claim. The “Amount Billed” represents the total charge submitted by the healthcare provider for the services. The “Allowed Amount” or “Approved Amount” is the negotiated rate your insurance company agrees to pay for a service, which may be less than the billed amount. Your insurance then shows the “Plan Pays” or “Paid by Insurance,” which is the amount the insurer has paid directly to the provider.
Your financial responsibility is outlined. The “Deductible” is the amount you must pay for covered healthcare services before your insurance plan begins to pay. Once the deductible is met, “Copayment” (Copay) refers to a fixed amount you pay for a covered service, often due at the time of service, while “Coinsurance” is a percentage of the cost you pay for covered services after your deductible has been met. The “Patient Responsibility” or “Amount You Owe” is the total amount you are expected to pay, encompassing any deductibles, copayments, coinsurance, or non-covered charges.
EOBs often include “Remarks” or “Reason Codes.” These alphanumeric codes provide additional information about how a claim was processed, explaining adjustments, denials, or other special circumstances. They can clarify why a service was partially covered or denied, and may offer instructions for follow-up actions.
Actions After Receiving an EOB
Upon receiving an Explanation of Benefits, begin by checking all personal and provider information to ensure accuracy. This includes your name, insurance ID, and the dates and types of services received.
The next step involves comparing the EOB with the medical bill you receive from your healthcare provider. Verify that the services listed on both documents match and that the amounts you are responsible for are consistent. Discrepancies can occur due to timing differences in claim processing or billing errors.
Your EOB clarifies your financial responsibility based on your specific health plan’s benefits. It details how much was applied towards your deductible, copayment, or coinsurance. This information is helpful for budgeting and managing your healthcare expenses.
Maintain a record of your EOBs. These documents are useful for future reference, especially for tax purposes if you plan to deduct medical expenses, or in case of disputes with your insurer or provider. Digital or physical storage systems can help organize these records.
If you identify any discrepancies or have questions after reviewing your EOB, contact your healthcare provider’s billing office first, as many issues stem from simple billing errors. If the provider cannot resolve the issue, or if the discrepancy involves your coverage, then contact your insurance company directly for clarification.
EOB Versus a Medical Bill
Understanding the distinction between an Explanation of Benefits (EOB) and a medical bill is important. An EOB details how your health insurance company processed a claim for medical services. It explains what your insurance covered and what portion, if any, is your responsibility.
In contrast, a medical bill is a formal request for payment sent directly by the healthcare provider or facility. This document states the amount you owe for the services you received. While the EOB explains how your insurance applied benefits, the medical bill is the actual invoice you must pay.
The sender of each document is a primary differentiator: your insurance company sends the EOB, whereas the healthcare provider (doctor, hospital, or clinic) sends the medical bill. The medical bill, however, requires action, specifically payment of the stated amount.
EOBs often arrive before or around the same time as the medical bill, providing an opportunity to cross-reference the information. This timing allows you to compare the patient responsibility amount on your EOB with the total due on the medical bill. Review the corresponding EOB before paying any medical bill to ensure the charges align with your insurance coverage.