How to understand your Explanation of Benefits

Have you ever asked yourself “Why does my health insurer send me an Explanation of Benefits (“EOB”) statement?” or “Why do I get all this paperwork when it clearly states ‘This is Not a Bill’“? Let’s talk about how to read an EOB and why they are important.

An Explanation of Benefits statement is how your insurance provider communicates the costs your health plan will cover for services you’ve received. It also includes the out-of-pocket dollar amount not covered by insurance you may be responsible for, which can be confusing since the EOB clearly states, “This is not a bill”. The same information is sent to your healthcare provider for them to process the insurance company’s payment and issue a bill to you for any remaining balance.

If you’re one of the millions of Americans who are dealing with medical debt, when you receive an EOB, stress and anxiety aren’t far behind, especially if you are unfamiliar with what you’ve received.

Knowing that an EOB is informational and intended to give you visibility into what your insurance plan is covering – and how it can help protect you against medical errors – goes a long way toward easing that anxiety.

Why do you receive an insurance Explanation of Benefits?

The primary purpose of an EOB is to help verify that medical services were properly billed to your insurance company by the healthcare provider, and that there are no charges for services you did not receive. EOBs also act as a backup for you to validate the bill you will eventually receive from your healthcare provider.

The EOB helps you keep track of deductibles and co-payments, providing insight into how soon you might reach your annual deductible and your annual out-of-pocket maximum. Your annual deductible is the amount you pay before your insurance makes any payment toward your healthcare costs; the annual out-of-pocket maximum is the most you would pay before insurance covers all charges. Certain types of charges – like regular checkups and other preventive care – may be paid entirely by your insurance company even before the deductible is met.

You may find yourself in this difficult situation for any number of reasons that are beyond your control. It could be that you lack health insurance, or you are insured, but your insurance company didn’t cover some or any of the services you needed. You may have been hospitalized with a serious health issue but have no experience negotiating hospital bills. You may have consulted with a medical bill advocate and tried to work out a payment with the debt collection agency, but it didn’t pan out.

Regardless of the circumstances that got you to this point, as someone who has spent more than 20 years in the healthcare debt industry, I can tell you that the reason most people with medical debt in collections haven’t paid it off isn’t because they don’t want to—in fact, BuoyFi’s research data shows that more than 75% of people with burdensome medical debt want to pay their debts but simply can’t afford to, or they don’t know where to start.

One thing to know from the start – especially if the amount of your debt is so high that you feel like it would be impossible to pay off – is that hospital representatives and debt collectors know you didn’t plan to have a medical crisis and that you have other important financial obligations to take care of like food, housing, transportation and child care.

Because of this, your account holders will often settle a medical debt for a reduced amount or provide for partial payments over time. This is particularly true if the debt has gone delinquent . In fact, through actively working with millions of patients to resolve their medical debt, we’ve found that most patients can afford to pay something as long as the solution is customized to fit their unique and individual needs.

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How can an EOB help you find medical bill errors?

An EOB is an important tool when reviewing medical bills for errors – and there are plenty being made. Nearly 80% of U.S. medical bills contain some form of mistake, according to Becker’s Hospital Review data.

Be sure to pull out your health insurance policy plan and compare the information on your EOB to the coverage spelled out in your policy. If you find any discrepancies or have questions about why something was covered at a certain rate, call your insurance company and talk with a claims specialist for a complete explanation.

By cross-referencing an EOB with the corresponding bill sent by your healthcare provider, you can also ensure you are being billed correctly. Compare the dates of service and details, line items that describe the services you received, and how the amount due is divided between you and your insurer. If the information doesn’t match, reach out to both parties (typically your healthcare provider first and your insurance company second) to determine who has made the error.

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How do you understand an EOB?

EOB formatting might be different between health insurance providers, but the information contained within each EOB is essentially the same. By reviewing each section carefully, you can move through the document with relative ease. As always, if you have any questions about your EOB, reach out to your health insurance company for answers. Otherwise, begin at the top with:

  • Patient information: Includes name, insurance ID, and date of service.
  • Provider information: The healthcare provider’s name and business address.
  • In-network or out-of-network status: In-network providers have contracted with your insurance company to provide services at negotiated rates. Out-of-network providers have not. The amount your insurance company will cover and the amount you owe are often affected by this designation.
  • Service information: A list of medical services or procedures performed, along with service date, provider, and the billed amount.
  • Insurance payment: Displays the amount paid by the insurance company for each service, including adjustments or discounts.
  • Patient responsibility: The out-of-pocket dollar amount you owe, or your co-pay, including deductibles, a co-pay or co-insurance.
  • Explanation of Codes: The insurer’s billing department uses codes to indicate why it paid a certain amount for each medical service or procedure or why it denied payment. If you have a question about the codes, reach out to your insurance provider. You may also find some information on the back of the EOB or by searching the web.
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What if you have a question about your health insurance coverage or a specific Explanation of Benefits?

If something about your EOB is unclear or does not match what your policy says, reach out to your health insurer and ask questions and gain clarity. If you are still unclear, or find you want help navigating the issue, reach out to the Patient Advocate Foundation.

If you are struggling with medical debt, BuoyFi is here for you. We offer a suite of tools, educational content, and access to medical bill advocates who can help you avoid future financial challenges while simultaneously taking control of your finances and planning for future unexpected medical or other expenses.

We’re happy to help you figure out how to pay your medical debt affordably, recommend personalized plans to help you take the first step toward financial freedom, and provide you with the tools and products that can help you to maintain that freedom. 

Ready to take the first step? Download the BuoyFi app today