What is an EOB?
Learn how to understand your Explanation of Benefits
If you’ve ever dealt with medical or dental claims, you’ve probably encountered Explanation of Benefits or EOB’s. While they may seem difficult to read at first glance, they’re really not hard to decipher once you break them down. Let’s take closer look at how to properly read EOB’s, and make them much easier to understand.
An Explanation of Benefits is not a bill
First of all, an Explanation of Benefits or EOB, is not a bill. Billing statements are sent from a doctor’s office, a dental office, or hospital to show amounts they are billing for services performed at their facility. However, EOB’s are sent to a member from an insurance company after a claim has been processed.
EOB’s explain how an insurance claim has processed
The main purpose of an Explanation of Benefits is to show how an insurance carrier has processed a specific claim for benefits. You will typically receive separate EOBs for different providers that you may see and for services that are performed.
EOB’s will show several key pieces of information including the date a service took place, the procedure’s that were performed, and the amounts that were approved and processed by the insurance company.
EOB’s will also indicate if a provider is listed as In Network or Out of Network. If a provider is In Network, the EOB will list the negotiated discounts that may be applied to each procedure.
If your plan has a deductible or co-pay, then it can show how much was applied towards the deductible or what the co-pay amount was for each listed procedure.
Explanation of Benefits show your patient responsibility payment
One of the most important areas of an EOB is often shown at the bottom of the statement. It’s called the patient responsibility or patient payment amount. This is an estimate of what the plan expects the member should have to pay to the provider for the listed services and charges. This patient responsibility will take deductibles, co-pays, and coinsurance payments into account to show the amount the patient should be paying to the provider.
The patient payment amount is often listed next to the plan payment amount. The EOB will show how much the insurance plan is paying the provider and then how much the member should pay according to the plan benefits.
For example, if a member had a simple procedure performed with charges for $100 and had a plan with 80/20% coinsurance benefits, then the EOB might indicate the plan made a payment of $80 and the member will have a patient responsibility of $20 for this charge.
EOB’s can show other important information
Explanation of Benefits can also show other important information such as codes for pending status or claim denial. Sometimes a claim may be filed by the provider, but not include all of the information necessary for the insurance carrier to complete the claim’s processing.
Claim codes for pending status, request for additional information, or denial status will often give a detailed explanation towards the bottom of the statement. It’s important to read this info and potentially follow up with the provider if additional information is being requested.
Always review your Explanation of Benefits
While EOB’s may initially seem complex, they are really easy to breakdown and understand. Once you review the key pieces of information such as the provider name, date of service, procedure codes, and charges, you’ll be able to understand how a claim has been processed. If you make a habit of comparing your EOB’s patient responsibility to the provider’s billed amount, then you can be sure that you’re paying the correct amounts. This can help make sure that you’re getting the most out of your insurance benefits.
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