What Is an Explanation of Benefits (EOB)?

An Explanation of Benefits, commonly known as an EOB, is a document sent by your health insurance company after you receive medical care. Its main purpose is to detail how your recent healthcare claim was processed and what portion of the costs your insurance plan will cover. This statement provides a summary of the services you received, the amount billed by the healthcare provider, and the financial breakdown of your insurer’s payment. It originates from your insurance carrier once they have reviewed the claim submitted by your doctor or hospital.

Understanding the Information

An EOB provides a detailed breakdown of your medical service and how your insurance plan processed the claim. This document begins by listing identifying information for the patient and the healthcare provider, including names, addresses, and sometimes policy numbers. It also specifies the date the service occurred.

The EOB outlines a description of the medical service or procedure performed, such as an office visit or a diagnostic test. Adjacent to this, the document displays the charges billed, which represents the initial amount the healthcare provider requested. This is the gross amount before any insurance adjustments or payments.

The allowed amount, also referred to as the approved amount, represents the maximum amount your insurance company will pay for a covered service. This is often a negotiated rate less than the original charges. Any difference between the billed amount and the allowed amount is a write-off by the provider, meaning you are not responsible for that difference.

The EOB details how your financial responsibility is calculated, starting with your deductible. This is the predetermined sum you must pay out-of-pocket for covered medical services before your insurance plan begins to contribute. The EOB indicates if any portion of the claim was applied towards meeting this annual deductible. It then specifies any applicable copayment or coinsurance amounts.

A copayment is a fixed dollar amount you pay for a covered service, while coinsurance is a percentage of the allowed amount you are responsible for, such as 20% after your deductible is met. The EOB states the amount paid by your plan, which is the sum your insurance company paid to the healthcare provider. Finally, the document specifies the patient responsibility, the remaining amount you are obligated to pay to the provider. This total includes any deductibles, copayments, or coinsurance. Reason codes or remark codes are also included, explaining adjustments, denials, or how benefits were applied.

Distinguishing an EOB from a Bill

It is important to understand that an Explanation of Benefits and a medical bill serve distinctly different purposes and originate from different entities. An EOB is an informational statement from your health insurance company. It explains how a medical claim was processed, detailing services covered, amounts paid by the insurer, and the portion you may owe.

Conversely, a medical bill is a direct request for payment from the healthcare provider. This document outlines the specific charges for the care you received and states the exact amount you are required to pay. The bill is the official invoice for your share of the costs. While the EOB explains what your insurer covered, the bill tells you what you still need to pay.

You will receive an EOB from your insurance company before a formal bill from the healthcare provider. The EOB acts as a preliminary notification, allowing you to understand your financial obligations before the provider’s bill arrives. Understanding the EOB first helps you anticipate the amount you will be billed and verify its accuracy.

Actions to Take After Receiving an EOB

Upon receiving an Explanation of Benefits, a careful review is important. Check all listed details for accuracy, including your name, the healthcare provider’s name, the dates of service, and the specific medical services rendered. Ensuring these details are correct can prevent billing issues. Any discrepancies should be noted.

Compare the EOB against your personal records of appointments and medical services received. Cross-referencing the EOB with your own notes can help confirm that all services listed were provided on the specified dates. This comparison aids in identifying any services you did not receive or unfamiliar charges, which could indicate an error.

Once the healthcare provider’s bill arrives, match the “patient responsibility” amount on your EOB with the amount requested on the bill. These figures should align. If there is a difference, it signals a discrepancy that requires investigation. Do not pay a bill that does not reconcile with your EOB.

Should you identify any discrepancies, whether on the EOB or when comparing it to the provider’s bill, take prompt action. If the issue appears to be with how the claim was processed by your insurer, contact your insurance company directly. Their customer service number is found on the EOB document.

If the discrepancy lies with the services billed or the amount requested by the provider, reach out to the healthcare provider’s billing department. This could involve charges for services not rendered, incorrect dates, or an overcharge. Billing departments can clarify charges and make adjustments. Always keep records of all EOBs, corresponding medical bills, and communications with both your insurance company and healthcare providers. These records are valuable for future reference and in case of billing disputes.