Explanation of Benefits: Made Easy

An Explanation of Benefits (EOB) is not a bill. It’s a document from your insurance company explaining your coverage. Let’s break it down.

It can be unnerving to read an EOB. Adding to the intimidation, they’re usually first introduced following a significant health experience. Most routine appointments don’t necessitate an EOB. Instead, they are more commonly sent when you’ve had a hospital stay, medical procedure, or imaging/lab testing. EOB’s can either be sent for a single service or multiple services at a same facility on the same day.

I hadn’t received an EOB until this health journey began. When I opened my first one, I was confused by all of the information. Although each health insurance has their own format, this guide will give you the gist.

Mine typically include the following pages:

• Title Page (with check attached, if applicable)
• Summary Page
• Health Plan Payment Details

Let’s start with the Title Page.

Title Page

The Title Page can be fairly insignificant. It usually includes general information about the health insurance company and your specific plan. As noted above though, the Title Page can also include a check. Don’t simply remove the check and throw the rest away. It’s important to read through the remaining pages so that you can fully understand your coverage, determine where the check belongs, and make a dispute if necessary. As you flip through the EOB with your check in hand, keep the following questions in mind: 

• Did I already pay the bill? If so, the bill is likely a reimbursement for what you already paid. 
• Am I waiting to be billed? If you haven’t received the bill yet, don’t assume it’s not coming. Sometimes insurance companies process claims more quickly than the health care provider. 
• Should I have more coverage? I’ve received EOB’s that outline coverage lower than expected. When in doubt, call your insurance company. I’ll provide examples of ways to identify coverage discrepancies in the “What You Owe – Explained” section below.

Once you’ve perused the Title Page, head over to the Summary Page.

Summary Page

The Summary Page generally includes high-level information about the Allowed Amount, Amount Covered, and What You Owe. Mine also includes a column detailing the total amount charged by the health care provider and the total discounts provided by the insurance company. Let’s take a deeper dive into these discounts before we jump over to the Health Plan Payment Details.

• What’s the discount? Great question! In-network providers typically have an arrangement with your insurance company of the maximum cost allowed for each unique service. When I go to in-network health care providers, I’m not responsible for the amount they bill. I’m only responsible to pay the agreed discount. For example, a nerve test might be billed at $10,000 by a health care provider. Once the insurance company receives the bill, they will annotate the agreed cost. In most cases, the patient is not held responsible for additional payment outside of that agreement. Let’s say the agreed cost for a nerve test is $2,000. The insurance company and health care provider would then apply that agreed cost of $2,000 (removing all parties from the $10,000 responsibility).
• Does the insurance company pay for the entire cost when the discount is applied? Sometimes! Using the same scenario above, if you haven’t yet met your deductible, you may be responsible for paying some or all of that $2,000. The good news is, once you’ve met your in-network deductible and in-network out of pocket deductible, the insurance company will generally pay 100% of the remaining in-network costs. 
• What about out-of-network? This is where it gets a little tricky and is why it’s so important to talk to your out-of-network providers before you pursue their care. For example, when I visited an out-of-network provider, they still billed my insurance company. It was kind of a long-shot as to whether there would be any coverage, though. I did, however, notice that my insurance company would sometimes apply and pay the in-network agreed amount for a service. However, unlike the example with in-network, I knew I could be responsible for the remainder of the bill. Let’s break this example down:

I know what you’re thinking, “Woah, Courtney. That math doesn’t add up…” Stay with me. The out-of-network provider I visited had a patient discount that outlined a maximum for each service (Note: This is different from an insurance discount). I discussed the patient discount with my provider prior to each service. With this hypothetical, the health care provider billed the $10,000 cost to my insurance company. Let’s say the patient discount at the facility for this service was $2,500. Since my insurance paid $2,000 – I would only be responsible for the outstanding $500. 

This does not reflect all out-of-network facilities and insurance companies. Make sure you do your research before scheduling care. Check out this blog to learn the right questions to ask your out-of-network provider.

Once you’ve glanced through the high-level summary, you’re ready to review the Health Plan Payment Details page.

Health Plan Payment Details

Using the same categories as the Summary Page, the Health Plan Payment Details page breaks down the benefits by service. Whereas you’ll only see cumulative numbers on the Summary Page, here you’ll find multiple line items detailing the Allowed Amount, Amount Covered, and What You Owe for each of the services. I once had five pages outlining the Health Plan Payment Details. That was a doozy. 🙂

Here’s how each of my line items are broken out (again, basically the same as the Summary Page):

• Allowed Amount – Mine usually include the details outlining amount charged and insurance discount. Your EOB’s may be worded differently.
• Amount Covered – As noted above, once you’ve met your deductibles this is typically the same as the Allowed Amount.
• What You Owe –  This is the balance you could be responsible for.

For me, the helpful stuff on this page is the “What You Owe” sub-columns.

What You Owe – Explained

My EOB includes additional columns under “What You Owe” for each service. These outline the reasoning behind my benefits and coverage. You may have a similar column or block when you receive an EOB. These can include:

• Copayments – This notates any copayment that you may owe. Even after you’ve met deductibles, you will usually still have a copay.
• Deductibles – Whether you go in-network or out-of-network, your first few EOB’s will likely include a large amount of uncovered charges, indicating that you owe a significant percentage of the bill. Unfortunately, this is standard in order for you to meet your deductibles. 
• Co-Insurance – This is typically a cost percentage from the health care provider’s actual charge. My insurance either charges this or the allowed amount (whichever is less). 
• Not Covered – This is the most important section. Throughout the year, I became more familiar with my coverage. When I had charges identified as “Not Covered”, I’d dig into the reasoning. My EOB’s include notes which have helped get me started in the dispute process. Here’s a few things you should know:
  • Wrong medical billing code – Mistakes happen. The health care provider could have added the wrong number to a code that didn’t align with the description of the service. Or, in some instances there are multiple codes for a similar service. When a code is being received as Not Covered, you can call your provider to ask them to re-bill.
  • It’s truly not covered… and you didn’t know – If you are billed for an in-network service and had not been informed about the lack of coverage, you can dispute the charge with the health care provider. Generally, they won’t hold you responsible. Most insurance companies also have patient advocates who can assist the claim on your behalf.
  • You went out-of-network – The bad news: Your insurance company has no obligation to assist with billing when you go out-of-network. The good news: Remember that this is just an “explanation of benefits” – not a bill. If you have a separate agreement with your out-of-network facility, there’s no need to panic.

Your turn!

As I’ve said, each EOB is different with each insurance company. Understanding how to read them is key to managing your health care. If you haven’t already contacted your insurance company, reach out to them for support. You may have some long hold times, but the conversations can be really helpful. I’ve linked a few EOB overviews for common insurance companies below:

• Blue Cross and Blue Shield, MN
• Cigna
• United Healthcare

Do you have other tips on how to read an EOB? Drop them below.