Health Coverage and Your Explanation of Benefits

Health Insurance

After a hospital stay or outpatient visit, you may get several bills and at least one statement that says “not a bill.” This is your explanation of benefits, or EOB.

At first sight, it might look like a bunch of numbers and nonsense to you, and you may even be tempted to throw it away. Don’t. For each medical bill you receive, you should receive an explanation from your insurer, though sometimes more than one medical bill is reflected on an EOB. Your EOB is the only way to know which medical services your health insurance plan covered, and you’ll need it if you were denied coverage or want to negotiate your bill.

Here’s how to make sure your health insurance coverage was applied correctly. It will help if you’ve already read the itemized medical bill for your services, but you can check certain parts of the EOB without the bill.

» MORE: How to read your medical bill

First steps

In addition to the medical bill, you’ll want to have some other paperwork handy, starting with your insurance plan summary of benefits. The summary outlines the insurance plan you bought, including which services you must pay of out-of-pocket, and your portion of costs for covered treatments and exams.

If you don’t have the plan summary, you can download it from your insurer’s customer portal or call the customer service line to have it sent to you.

Your health plan’s online customer portal also may have a sample explanation of benefits available; most major insurers do. Take a look at your plan’s sample before you start to read your own. Since EOB styles differ among companies, the sample your insurer provides is the best way to understand any confusing sections on your EOB.

What to compare with your medical bill

First, make sure your identifying information is correct on both your medical bill and EOB, along with your policy number. Clerical errors are easy to make, and a small mistake can result in rejection of the entire claim by your health insurer.

While medical bills are full of codes you’ll want to look up to ensure correct charges, you probably won’t have to worry much about them while reading your EOB. “I’d start by matching up the dollar amounts and the medical terms,” says Cheryl Welch, president of Hudson Valley Medical Bill Advocates. The dollar amounts on your bill should match the “amount billed” or “amount charged” section of your EOB, typically the first dollar figure listed.

Charge amount, or billed amount: a price for each medical service or treatment, or what you would have been charged if you didn’t have health insurance.

Place of service: This may or may not be listed on your EOB, along with a “location” code. These codes are often in place because your plan may only cover certain procedures if they’re performed in a specific setting, such as a hospital or urgent care facility.

What to compare with your plan summary

The point of reading your EOB is to make sure the insurance claim was processed correctly for your visit. Compare your summary of benefits with what your insurance actually paid.

Copayment and coinsurance: the amount you pay for each service, whether as a set fee (copay) or percentage (coinsurance). In some cases, this may be the only amount you’re responsible for, and for outpatient care, you probably paid it at the visit. Your copays and coinsurance should be clearly listed for each covered service on your plan summary.

Deductible: the amount that you pay before your plan covers a larger portion of your bills. Especially if you were hospitalized, you may have to pay your entire deductible for this visit, plus any coinsurance as outlined in your policy summary. Any services that aren’t covered by your health plan, as outlined in your plan summary, don’t count toward your deductible.

Details in the numbers

In addition to the information above, there will be other numbers, terms and codes on the EOB that may be unfamiliar. Mainly, these will reflect dollar amounts charged and paid for your medical services.

Allowed or “discounted” amount: If the provider is in your insurance network, this is the amount agreed to by your insurance company and health care provider. If a line is blank for this column, your insurance probably doesn’t cover this service.

Charges not covered: This is the difference between the charge and allowed amount. If it is equal to the charge, you aren’t covered for this service, and the EOB should have a remark or reason code.

Remark or reason code: When a charge isn’t paid by your insurer, the explanation of benefits should state a reason, such as an out-of-network physician, a noncovered service or an unmet deductible. Any codes or shorthand should be explained in an index or key.

Payment amount: the dollar amount that your insurance company agrees to pay for the visit. In most cases, it has made the payment before you receive your EOB.

Due from patient: the amount that you are responsible for paying to the provider. This should be your copay, coinsurance, deductible and noncovered charges all added together. If your provider tries to charge you for any difference between the allowed amount and the covered amount, that’s considered “balance billing” and does not count toward your deductible. Some states protect consumers from balance billing with “surprise medical bill” laws; to see if you’re protected, call your state’s insurance department.

Putting it all together

In an ideal world, your provider submits a claim, the visit is billed correctly, all providers are in-network, and you are only billed for the amount your EOB says is “due from patient.”

But a lot can go wrong. You could be balance billed, or there may be an error in either the billing department of your hospital or the claims department of your insurer.

Take the time to go through each charge separately to ensure your coverage was correct. If you don’t think it was, or you’re simply confused about the details, write down every question you have and call your insurer’s customer support line to ask.

On the other hand, if you think your insurance was billed incorrectly, call your hospital or provider first and request a copy of your medical records, which should detail all services you’re being billed for. Then, use a tool like FairHealth to find out what reasonable charges are for the services you received.

If you still think you’ve been billed unfairly, you may want to try to negotiate charges or ask an advocate like Welch to audit the medical bill and EOB for errors. “Most offer a free audit and only charge if we can save you money,” says Welch, who charges a percentage of savings, as many advocates do.

In extreme overbilling situations, an advocate who knows the medical industry may be your best chance to save money.