An explanation of benefits (EOB) is a document provided to you by your insurance company after you had a healthcare service for which a claim was submitted to your insurance plan.
This article will explain what information you’ll find on an EOB, how this is useful in terms of your financial planning for the year, and why it’s important to make sure that all of the details are correct.
Your EOB gives you information about how an insurance claim from a medical provider (such as a doctor, hospital, or lab) was paid on your behalf—if applicable—and how much you’re responsible for paying yourself.
You should get an EOB regardless of the portion of the bill that the insurer paid. Depending on the circumstances, the insurer might not be paying any of the bill. This could be the case if the service wasn’t covered by your plan, or if the full cost was applied to your deductible and deemed your responsibility to pay.
But in other circumstances, the EOB will indicate that the insurer has paid some or all of the bill. That would leave you with either a portion of the charges or no out-of-pocket costs at all.
You should get an EOB if you have insurance you purchased on your own, a health plan from your employer, or Medicare.
(Note that if you have Original Medicare, this will be called a Medicare Summary Notice. If you have a Medicare Advantage or a Medicare Part D plan, the document will generally be called an Explanation of Benefits).
And depending on where you live, you might get an EOB if you’re enrolled in Medicaid and receive healthcare services.
If you are a member of a health maintenance organization (HMO) that pays your healthcare provider through capitation (a set amount of money each month to care for you), you may not receive an EOB because your practitioner is not billing the insurance company. This type of arrangement is not common, but it’s possible that you could just receive a receipt for your copay instead of an itemized EOB.
Information in an Explanation of Benefits
Your EOB has a lot of useful information that may help you track your healthcare expenditures and serve as a reminder of the medical services you received during the past several years.
A typical EOB has the following information, although the way it’s displayed may vary from one insurance plan to another:
- Patient: The name of the person who received the service. This may be you or one of your dependents.
- Insured ID Number: The identification number assigned to you by your insurance company. This should match the number on your insurance card.
- Claim Number: The number that identifies, or refers to the claim that either you or your health provider submitted to the insurance company. Along with your insurance ID number, you will need this claim number if you have any questions about your health plan.
- Provider: The name of the provider who performed the services for you or your dependent. This may be the name of a doctor, a laboratory, a hospital, or other healthcare providers.
- Type of Service: A code and a brief description of the health-related service you received from the provider.
- Date of Service: The beginning and end dates of the health-related service you received from the provider. If the claim is for a healthcare provider visit, the beginning and end dates will be the same.
- Charge (Also Known as Billed Charges): The amount your provider billed your insurance company for the service.
- Not Covered Amount: The amount of money that your insurance company did not pay your provider. Next to this amount you may see a code that gives the reason the healthcare provider was not paid a certain amount. A description of these codes is usually found at the bottom of the EOB, on the back of your EOB, or in a note attached to your EOB. Insurers generally negotiate payment rates with healthcare provider, so the amount that ends up being paid (including the portions paid by the insurer and the patient) is typically less than the amount the provider bills. The difference is indicated in some way on the EOB, with either an amount not covered, or a total covered amount that’s lower than the billed charge.
- Amount the Health Plan Paid: This is the amount that your health insurance plan actually paid for the services you received. Even if you’ve met your out-of-pocket requirements for the year already and don’t have to pay a portion of the bill, the amount the health plan pays is likely a smaller amount than the medical provider billed, thanks to network negotiated agreements between insurers and medical providers (or in the case of out-of-network providers, the reasonable and customary amounts that are paid if your insurance plan includes coverage for out-of-network care and you’ve met your out-of-network deductible already).
- Total Patient Cost: The amount of money you owe as your share of the bill. This amount depends on your health plan’s out-of-pocket requirements, such as an annual deductible, copayments, and coinsurance. Also, you may have received a service that is not covered by your health plan in which case you are responsible for paying the full amount.
Your EOB will generally also indicate how much of your annual deductible and out-of-pocket maximum have been met. If you’re receiving ongoing medical treatment, this can help you plan ahead and determine when you’re likely to hit your out-of-pocket maximum. At that point, your health plan will pay for any covered in-network services you need for the remainder of the plan year.
An example of an EOB:
Frank F. is a 67-year-old man with type 2 diabetes and high blood pressure. He is enrolled in a Medicare Advantage Plan and sees his doctor every three months for a follow-up of his diabetes. Six weeks after his last visit, Frank received an EOB with the following information:
- Patient: Frank F.
- Insured ID Number: 82921-804042125-00 – Frank’s Medicare Advantage Plan Identification Number
- Claim Number: 64611989 – the number assigned to this claim by Frank’s Medicare Advantage Plan
- Provider: David T. MD – the name of Frank’s primary care physician
- Type of Service: Follow-Up Office Visit
- Date of Service: 1/21/22 – the day that Frank had an office visit with Dr. David T.
- Charge: $135.00 – the amount that Dr. David T. billed Frank’s Medicare Advantage Plan
- Not Covered Amount: $70.00 – the amount of Dr. David T’s bill that Frank’s plan will not pay. The code next to this was 264, which was described on the back of Frank’s EOB as “Over What Medicare Allows”
- Total Patient Cost: $15.00 – Frank’s office visit copayment
- Amount Paid to the Provider: $50.00 – the amount of money that Frank’s Medicare Advantage Plan sent to Dr. David T.
Some math: Dr. David T. is allowed $65 (his charge of $135 minus the amount not covered of $70.00 = $65.00). He gets $15.00 from Frank and $50.00 from Medicare.
Why Is Your Explanation of Benefits Important?
Healthcare providers’ offices, hospitals, and medical billing companies sometimes make billing errors. Such mistakes can have annoying and potentially serious, long-term financial consequences.
Your EOB should have a customer service phone number. Do not hesitate to call that number if you have any questions or concerns about the information on the EOB.
Your EOB is a window into your medical billing history. Review it carefully to make sure you actually received the service being billed, that the amount your healthcare provider received and your share are correct, and that your diagnosis and procedure are correctly listed and coded.
It’s also important to make sure that your records reflect the same numbers that the EOB show, in terms of your progress toward your deductible and out-of-pocket maximum for the year.
Once you’ve met your deductible, your health plan will start paying for more of your care. And once you’ve met your out-of-pocket maximum, the plan will start paying 100% of your covered, in-network costs for the rest of the year. So it’s important to make sure that these amounts are accurately reflected on each EOB.
EOBs and Confidentiality
Insurers generally send EOBs to the primary insured, even if the medical services were for a spouse or dependent. This can result in confidentiality problems, especially in situations where young adults are covered under a parent’s health plan, which can be the case until they turn 26.
To address this, some states have taken action to protect the medical privacy of people who are covered as dependents on someone else’s health plan. But it’s important to understand that as a general rule, states cannot regulate self-insured health plans, and these account for the majority of employer-sponsored health plans.
An explanation of benefits (EOB) is a document that a health plan sends to a member after a medical claim is processed. The EOB will show a variety of information, including details about the medical treatment, the amount that was billed, the amount that the health plan allows for that service, the amount the health plan paid (if any), and the amount that the patient owes. The EOB will also generally show how much the member has accumulated toward their deductible and out-of-pocket maximum so far that year.
A Word From Verywell
It may be tempting to just ignore EOBs, especially if you have substantial claims and numerous EOBs arriving in your mailbox. But it’s important to at least scan each EOB to make sure that the details make sense. This will give you a good idea of what to expect in terms of medical bills from providers, since they use their own version of that same EOB in order to process billing statements. And it will also help you know what to expect in terms of your potential future medical bills for the remainder of the year.
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