What Is an Explanation of Benefits?
An Explanation of Benefits (EOB) is a document your insurance company sends to you after processing a healthcare claim. It explains how your claim was processed, what your insurance company paid, what you owe, and what the provider will bill you for. The EOB is not a bill — it's an explanation of the claim processing.
Your EOB should include: the date of service, the provider name, the procedure code and description, the billed amount, the allowed amount (the negotiated rate), the amount your insurance paid, your patient responsibility (copay, coinsurance, or deductible), and any amounts that are denied.
Key Terms to Understand
Allowed Amount is the maximum amount your insurance company will pay for a specific service. This is often much lower than the provider's billed amount. You are typically responsible only for the difference between your insurance's payment and the allowed amount, not the full billed amount.
Deductible is the amount you must pay out of pocket before your insurance begins paying. Coinsurance is your percentage of costs after meeting your deductible (e.g., 20%). Copay is a fixed amount you pay for specific services.
Network vs. Out-of-Network affects your costs significantly. In-network providers have negotiated rates with your insurer. Out-of-network providers typically cost substantially more, and you may pay a higher coinsurance percentage.
Reading Your EOB Correctly
Review your EOB carefully for accuracy. Check that the provider, date of service, and procedure code are correct. Verify that the procedure was actually performed and that the amount billed is reasonable. Look for claim denial codes that indicate why a portion of the claim was denied.
Common EOB denial codes include "Not Medically Necessary," "Prior Authorization Not Obtained," "Exceeds Frequency Limit," and "Not a Covered Service." Each code requires a different appeal strategy.
What to Do If You Find an Error
Contact your insurance company immediately if you find errors on your EOB. Most insurers allow 30-45 days to dispute claims. Request that the error be corrected and ask for written confirmation. If the error involves a claim denial, ask for the specific clinical reason for the denial and request an appeal.