Have you ever received an Explanation of Benefits (EOB) form from your health insurance company and had no idea what it meant?
Is an Explanation of Benefits a bill?
Is it simply information?
Do you have to take action on an explanation of benefits?
And what exactly is the mysterious ‘code’?
In this article, we reveal what an Explanation of Benefits is, how to read it, what the information included means, and how you can make and Explanation of Benefits work for YOU.
What is an Explanation of Benefits?
An Explanation of Benefits is just that – an explanation.
The Explanation of Benefits (EOB) is your health insurance plan’s written explanation regarding a claim. An EOB describes what costs the health insurance plan will cover for medical care or products you’ve received. The EOB shows what the insurance company paid and what the patient must pay.
According to Cigna, a health insurance company sends you EOBs to help make clear:
- The cost of the care you received
- Any money you saved by visiting in-network providers
- Any out-of-pocket medical expenses you’ll be responsible for
Who Gets an Explanation of Benefits (EOB)?
Typically, once a claim has been initiated, the insurer sends the EOB to the primary person on the health plan. Even if an employer provides the insurance, the employee usually receives the EOB, including EOBs for any other persons listed on the plan.
You may ask the insurer to send your EOBs to a different address for confidential services or for personal safety concerns.
Is an Explanation of Benefits (EOB) a Bill?
No.
“The EOB is not a bill, although it will explain any charges that the patient still owes or may have already paid (in the form of a copay at the time the medical care was received, for example). If the patient owes additional money after the insurance company has paid its portion, the medical provider will send a separate bill, which should match the patient’s portion listed on the EOB.”
Source: Health Insurance
How Do You Read an Explanation of Benefits (EOB)?
Let’s look at an example of an Explanation of Benefits form.
Typically, the form includes identification of the insurance holder and receiver of benefits. Other information includes the date services were received, a description of services, the amount billed to insurance, the amount paid by insurance and the balance remaining on the claim. The codes should be explained by documentation included with the EOB.
There is no standard format for EOB forms. Each insurance carrier uses their own forms which may be several pages long.
Don’t let extra pages of unnecessary information distract you from the important information you need.
At a minimum an EOB should include patient details, services received, claim status, provider charges, amount paid, amount not covered, remark code, and appeal information.
View a more complex EOB example from CMS here.
Glossary of Terms Used on an Explanation of Benefits
ALLOWED CHARGES is the amount the service provider will be paid by the insurance carrier
AMOUNT NOT COVERED is costs your health plan did not cover
AMOUNT PAID by your health insurance plan
APPEAL INSTRUCTIONS explain action to take if you disagree with the billing as presented
CLAIM STATUS tells you if a claim is paid or not paid
HRA Payment is the amount that may have been paid from spending accounts, such as a health reimbursement account (HRA), if applicable
PATIENT DETAILS is information about the person who received services and includes the patient’s name and health insurance number
PAYEE is the person responsible for paying the bill (often the primary carrier of insurance)
PROVIDER CHARGES is the amount provider billed. It is the provider cost of those services
REMARK CODE – These are typically letter/number codes that are listed with further explanation elsewhere within the EOB
SERVICES RECEIVED is a description of services received, who performed them and the dates of service. This includes provider visits, lab tests and screenings, surgery, etc.
YOU OWE PROVIDER is any outstanding amount you are responsible for paying
How Does an Explanation of Benefits (EOB) Help?
An EOB can help you track how much you’ve spent out-of-pocket for covered healthcare costs. This information lets you see how close you are to reaching your deductible and out-of-pocket expenses for the year.
By tracking your progress toward deductible and out-of-pocket expenses, you will know if you are being asked to pay for charges that should be covered by insurance. Contact your insurer right away if this happens. Take detailed notes of each phone call or communication for future reference.
If you are denied coverage or the insurer only pays part of a claim, instructions to file a grievance or appeal will be found on the EOB. Don’t be afraid to file an appeal. Filing an appeal may initiate a pause on bill collection activity initiated by the insurance company and give both parties time to work out a solution to the problem to avoid sending the account to collections.
An EOB is also a way to see the status of your health insurance plan. Review services versus savings. EOBs also help you measure how close you are to reaching your annual deductible. Typically, once your deductible is met, your plan pays for covered services.
If you have other accounts in your health plan, the EOB may show how much is left in them as well.
Use the EOB as a tool for evaluating healthcare costs during your plan timeline. Use this information to your advantage. Strategic use of your insurance plan can save you money.
For example, let’s say your plan ends in December. It’s now September and you have already met your annual health insurance deductible. Your doctor indicated that you need to have a medical procedure performed in the near future. This procedure is covered under your insurance benefits. Since your deductible is met, scheduling the procedure before the end of the year maximizes the insurance benefit to you and lowers out-of-pocket expenses for the current year.
If you have a high deductible plan, it may be to your advantage to investigate self-paying for hospital healthcare bills. On January 1, 2021 the Hospital Price Transparency Rule went into effect. Get more information about the Hospital Price Transparency Rule here. Other healthcare practitioners have self-pay cost sheets as well and often are happy to take direct cash payment for services instead of dealing with insurance companies. Use your EOB as tool to help you decide if self-pay is a better option for you.
How is an Explanation of Benefits (EOB) Different from a Bill from Your Provider?
An EOB is provided to share service charges and payment information with the patient. It is generated after your health care provider has billed the insurance company for care.
While the EOB is NOT a bill, it gives the policy holder an idea of how much of the provider charge was paid by the insurance company. Once the amount covered is paid to the provider, the remainder of the cost will be absorbed by the provider or billed to the person receiving services by the medical provider.
Generally speaking, it’s best to pay your medical bills on time as some providers will stop seeing you if you do not pay. However, it is always appropriate to contact your healthcare provider or health insurance carrier with billing questions.
What to Do If You Have Questions
Questions, complaints, appeals, and grievances should all be addressed as soon as possible.
Instructions for filing an appeal are included on EOB forms. Contact your health insurance company if you have any questions about your EOB. Complaints or concerns with a denial of coverage under your health plan, may be appealed by filing a grievance.
Insurance companies have customer support departments available to resolve billing issues. Do you think you were charged for services that your coverage is supposed to pay for? If so, call the customer support phone number on your insurance card or on the EOB to speak with customer support.
Carefully read and compare the EOB and medical bills. Errors do happen. Were you charged for a procedure that was never performed or lab tests that were never done? Follow up promptly with the insurance carrier to have errors removed.
Keep ALL of your paperwork including bills and EOB forms for future reference.
If you dispute or need to negotiate a medical bill, do so as soon as possible after receiving the bill to begin the process. The steps below are a basic outline of what you may need to do when disputing or negotiating a medical bill. GET ALL INSTRUCTIONS IN WRITING AND KEEP A DETAILED LOG OF PHONE CONVERSATIONS AND ELECTRONIC COMMUNICATIONS.
- Call the medical provider billing department to let them know you are disputing the bill. If the medical provider is unable to solve the problem go to #2
- File an appeal with the health insurance company following the Appeal Instructions on the EOB
- File an appeal with the medical provider’s patient advocate or customer resolution department
- Contact the state insurance commissioner
- Speak with / hire an attorney
Note: This is not a detailed instruction.
Conclusion
Explanation of Benefits forms provide valuable information to healthcare consumers.
The EOB form is not a bill, but shows where insurance has delivered benefits in the form of payment to healthcare providers.
The form gives information to allow tracking of insurance charges, payments, and deductibles.
If there are questions or grievances, the EOB gives instruction on how to file an appeal.
Finally, the Explanation of Benefits form is a gold mine of healthcare benefit information. That information gives you the knowledge needed to manage your healthcare benefits and billing. Use that information to your advantage.
Advocating for yourself and your insurance benefits are key to maximizing healthcare insurance for yourself and your loved ones. Don’t be afraid to speak up and get the healthcare coverage compensation you deserve.
Want to learn more? Read: Insurance 101: Insurance for Patient Advocates
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