An Explanation of Benefits (EOB) statement is sent by your insurance company, usually after you have seen a provider. The statement includes details concerning the services performed by the healthcare provider, their charges, and how the charges are processed by your insurance company. Understanding how to read an EOB can help you track expenses, understand your insurance benefits, and avoid paying too much. Below is an example of an EOB, although each company’s format will differ slightly. **If health insurance terminology is unfamiliar, please refer to our Glossary of Health Insurance Terms. (image courtesy of: https://www.globalempservices.com/myhealth/healthchoice/html/using_your_plan/index.html)
1. Date(s) of Service:The date or range of dates of the service provided.
2. Type of Service (Service Code): The healthcare provider must assign at least one medical billing code to the service provided. General descriptions of the code(s) can be found within the claim detail or the notes section.
a. For example, if you refer to the EOB above, the types of services billed for the July 15 visit were 1) an office visit and 2) diagnostic (DX) service. This means the patient was probably seen for a routine check-up with blood work. If you have copies of your medical records you will be able to look back and see what services were performed, and make sure they align with what was billed
3. Notes: Usually found at the bottom of the claim detail, the notes can include a description of the service codes, explanations of charges that are not covered by the insurance plan, and any additional information regarding the claim.
4. Amount Billed (Charges): Amount the provider billed for the service provided. This is often not the final charge because providers charge the same amount across all sources. This means they charge the same initial rate for walk-ins, insurance members, works compensation patients, etc. If you have insurance, the amount billed is often higher than the final contracted rates (See Plan Discounts below).
5. Plan Discounts: Insurance carriers negotiate discounted rates with healthcare providers. These typically limit the amount that a provider can charge for a service. These discounts are determined when the claim is processed by the insurance company, and you can see the difference in rates.
6. Amount Plan Paid: The amount of the adjusted rate that is paid by the insurance carrier.
Member’s Itemized Responsibility
7. Deductible: If a patient’s annual deductible has not been met, the charges that they are responsible for will be listed here. Once their deductible is met, that will be reflected here. The remaining balance, if any, will be subject to co-insurance instead of the deductible. Click here to learn more about co-insurance and deductibles.
8. Copay: The amount members are responsible for paying at the time of service. Copays are not required for all plans. If the patient has a copay, their insurance card should state the required amount due at the time of service. Copays vary depending on the type of provider or facility. If a copay was paid at the time of service, it will be listed here.
9. Coinsurance: After the deductible is met and before the out-of-pocket maximum is met, the member’s financial responsibility is based on the plan’s co-insurance. For example, if a member has 20% co-insurance, the insurance company will cover 80% of the costs after the deductible. Therefore, a member would pay $200 of a $1000 procedure and the company would cover the remaining $800. (Click here to learn more)
10. Not Covered: Service charges that are not eligible for insurance coverage under a member’s plan; an explanation of these charges will be provided in the notes section.
11. Estimated Member Responsibility: The estimated amount the member owes the provider for this claim. This is what the member is responsible for. It reflects the allowed charges, the deductible and co-insurance considerations, and the copay. It is worth noting that the estimated responsibility may not be accurate on the EOB if the care provider has submitted a revised claim. Check with your insurance provider if you have questions.
The EOB statement should also include a summary of the remaining member benefits (i.e. deductible, out of pocket max) above or below the claim detail.
Other Recommendations:Review and understand your insurance benefits. If you have any questions, ask your insurance provider. There is nothing more frustrating than getting surprised with unexpected charges. Do not be afraid to call the insurance carrier for any questions that may arise. Keep detailed records and receipts of any copays, services or payments made on a particular service. Mistakes can be made. Obtain copies of updated medical records from your healthcare provider. It’s always good to keep track of your information. EOBs can help you understand how the health insurance system works, and they provide transparency into the complicated finances of health care. Knowing how to read them ensures you stay in control of your health care finances.