Understanding Your Explanation of Benefits
You will receive a detailed breakdown of pricing and compensation each time a healthcare provider bills your health insurance company for services rendered. This is an explanation of benefits, and it is very commonly confused with a medical bill. It is not, but it is still important to understand how to read one and what you can do if there is a discrepancy.
What Is an Explanation of Benefits?
Healthcare providers, such as physicians, hospitals, and labs, must submit an invoice for covered procedures to insurance companies so that they can receive payment. For transparency, the insurance company will then send you an explanation of benefits.
An EOB summarizes the total cost of the procedure, the amount the
health insurance covers, and any balance that you might owe. It is vital to understand that this is not a medical bill; don’t send money to your insurance company.
Keep this paperwork in a safe place. You can use it to track your and your family’s medical history or to see how your insurance has helped you through the year. You may also need it if you itemize your medical expenses when you file taxes.
What Are the Components of an EOB?
Laws, such as the
Affordable Health Care Act, and regulations, such as the
Health Insurance Portability and Accountability Act, dictate what information can and cannot be included on an EOB.
General Information
This is the information usually included at the top of your EOB. It includes your name and address, the billing practitioner’s information, and any other specific identifiers. It will list the beneficiary’s name, account number, plan number, and group ID. If the insurance issued a check to your doctor, it will also include the check’s date.
More importantly, it will show a phone number for you to call if you have any questions about your EOB.
Benefit Detail
While the specific format varies by health insurance provider, most EOBs will contain some, if not all, of the following:
Dates:
When the service began and endedAmount Billed: Total amount of the procedureNot Covered: Amount not included with your insurance benefitsDiscount Amount: Contractual discount given to healthcare providersAllowed Amount:
Maximum allowed charge after the Not Covered and Discount Amount have been appliedDeductible Amount:
Charges you are responsible for before the coverage takes overCopay: Amount you pay your healthcare provider when you receive the serviceCovered Amount: Eligible charges covered by your planPaid At: The percentage of the covered amount that your benefits will payPayment Amount: Any remaining charges you are responsible for
The detail section will also list special codes for remarks, procedures, and discounts.
Summary Information
Underneath the benefit detail, your EOB will give you the total amount paid, if applicable, an explanation of any codes listed, and your plan status. The plan status summarizes your benefits for the year, including how much of your total deductible you’ve paid and how close to your out-of-pocket maximum you are.
Why Is an EOB Important?
Your EOB serves as a necessary record of billing and payments made by your doctor and insurance plan as well as a record of treatments and procedures received throughout the year. Paying attention to and understanding your EOB can also educate you on the cost of healthcare and insurance benefits.
However, it is more important to review each EOB you receive to make sure that your practitioner charges for the correct procedures and your insurance company applies the correct deductibles and payment amounts. In addition, always compare your EOB to any actual medical bills you receive. If the charges don’t make sense or you notice any irregularities, your EOB will be instrumental in resolving those issues.
How Do You Take Action Based on an EOB?
You should take action immediately if any of the information on your EOB is incorrect or missing or if there are any discrepancies with the
bill from your doctor. Before you contact your health insurance company, do the following:
Collect all the paperwork, including the medical bill if there is one Compare the codes listed on the EOB and the bill and look for errorsMake sure the information is correct, including your name, plan number, services you received, and that the billing is in agreement with your plan.Review the itemized bill (request one if necessary) with your medical provider and ask for explanations
Then, ask your health insurance company about any differences you find. Write down the dates and names of the person you spoke with, details that will help you remember the conversation, and any actions to take by any party, including yourself. Continue to follow up until the results are satisfactory.
Work With Your Local Health Insurance Broker
When you partner with Sacket & Associates as your health insurance broker, understand that we work for you, not the big insurance companies. We have been providing customized health insurance coverage for individuals, businesses, and Medicare participants since 1979.
Contact us for more information on how we can serve you today.
