How do I read an Explanation of Benefits (EOB)?

The last time you went to the doctor, you probably got an EOB in the mail a few weeks later from your insurance company. If you’ve looked at that document and felt confused, you’re not alone. American health care paperwork and jargon have always been confusing: they help insurance companies obscure your actual cost of care and make it increasingly difficult for you to fight back when you’re overcharged or under-cared for. 

In this series, we’ll break down the complex jargon that powers American healthcare to help you better understand your care, your bill, and your medical expenses.

Next-up: Explanation of Benefits (EOB).

What is an Explanation of Benefits (EOB)

An EOB is a statement from your health insurance provider generated after you receive any health care services once you submit a claim to your insurance plan. The EOB will describe what costs your insurance plans cover, any money you saved by visiting in-network providers, any out-of-pocket costs you may be responsible for, and the overall cost of the care you received.

This can seem like a lot to digest. Below, we’ll break down what you can expect to be in your EOB, how it can impact your out-of-pocket obligations, and why it’s so important to double-check that your bill is fair and accurate.

Is my EOB a bill?

While an EOB may look somewhat like a bill, it is not your bill. Sometimes your EOB will even say THIS IS NOT A BILL across the top. Instead, think of your EOB as a record of medical services your provider billed insurance for - and a breakdown of what they’re willing to cover. It’s best not to use your EOB to pay any outstanding amount. Instead, wait for a bill from your provider before paying the remaining balance.

What’s with that “patient may owe” section?

You may see a section at the bottom of an EOB, you may see a section that says, “Patient may owe.” This is simply the outstanding balance between what your provider billed and what your insurance is willing to cover. This is not your bill but a record of the difference between what your health care provider charges and what your insurance company plans to cover.

How do you read an EOB?

While not all EOBs look the same, they all contain the same basic information:

On the first page, you’ll find information and claim details such as:

  • Details that include your name and health plan
  • The name of your provider and any medical service they provided
  • The type of service provided, as well as the total amount your provider billed insurance, broken down by service
  • The total amount your health insurance plan paid your provider
  • The total amount not covered by your health insurance
  • Any outstanding amount you may be responsible for paying

On the next few pages, you’ll likely see a glossary of terms to help you better understand your EOB, as well as some payment information.

Additional information may include language assistance instructions, and more specific details about filing an appeal in your state of residence.

Why is an EOB important?

EOBs are essential to understanding what services your insurance is being billed for - and what your overall out-of-pocket liabilities are. An EOB is one of three documents you’ll need to verify that the information sent to insurance is correct and that any outstanding costs are accurate.

How do I verify my EOB?

To verify your EOB, you’ll need three documents:

  1. The EOB itself - which your insurance company should provide
  2. The list of services provided - which may be provided to you when you leave the doctor’s office or clinic. If you do not receive this, you can request it from your provider at any time.
  3. The bill your health care provider sends you afterward. This often comes in the mail as a paper bill, although some providers may elect to bill you electronically.

Start by looking at the first page of your EOB (or wherever the services are listed). Find the list of services, which can sometimes be written in confusing health care jargon. We suggest looking up each service listed. You can find this directly in Google or by using an online medical dictionary like MegaLexia.

Next, find the provider’s medical bill and their list of services. Next, compare the two. The CPT codes - listed after the service name - should be identical. To identify what these five-digit codes mean, you can use an online CPT code glossary - although the service name beside the code should identify them.

If any codes and services are missing or do not match, circle them. You’ll need this information when challenging your bill with your insurance or provider.

Next, take the exact same steps only this time, you’ll compare that same bill with the record of services given to you after your appointment.

If you’re missing the bill or the record of services rendered, call your provider and ask them for it. If you’re missing your EOB, call your insurance company and ask them to re-send it.

Healthcare Jargon: Copays, coinsurance, and deductibles

While looking over your EOB and provider bills, you may come across words like copay, coinsurance, annual deductible, allowed charges, and more. We’ve provided definitions of the most common below as a reminder:

Q: What is a copay?
Copays (or copayments) are the set amounts you pay to your medical provider when you receive services. Copays typically start at $10 and go up from there, depending on the type of care you receive. Different copays usually apply to office visits, specialist visits, urgent care, emergency room visits, and prescriptions. Your copay applies even if you haven't met your deductible yet. For example, if you have a $50 specialist copay, that's what you'll pay to see a specialist—whether or not you've met your deductible.

Q: What is an annual deductible?

A deductible is the amount you pay each year for most eligible medical services or medications before your health plan begins to share in the cost of covered benefits. For example, if you have a $2,000 yearly deductible, you'll need to pay the first $2,000 of your total eligible medical costs before your plan helps you pay.

Q: What is coinsurance?

Coinsurance is your share of the costs of a health care service, and it’s usually figured as a percentage of the amount we allow to be charged for services. You start paying coinsurance after you've paid your plan's deductible.

How it works: You’ve paid $1,500 in health care expenses and met your deductible. When you go to the doctor, you and your plan share the cost instead of paying all costs. For example, your plan pays 70 percent and the 30 percent you pay is your coinsurance. 

Q: What is the “allowed amount?”

The allowed amount is the most a health plan will pay for a health service. A health service could be a test, procedure, doctor visit, or other types of treatments or services. Your plan's in-network providers have signed a contract to provide services at a discount, and they agree not to charge more than this allowed amount to members of the health plan.

Q: What is my “out-of-pocket maximum?”

An out-of-pocket maximum is a predetermined amount of money that an individual must pay before an insurance company or (self-insured health plan) will pay 100% of an individual’s covered health care expenses for the remainder of the year.

More questions about your EOB, billing, or managing healthcare in America?

Check out Peachy’s resources or get in touch directly. We’d be thrilled to help you access better care.