5 Tips on How To Understand Your Explanation of Benefits

November 01, 2012

Let’s run through a handful of tips that will have you reading your next EOB like a pro.

1. Know the Basics

Your explanation of benefits will contain your name, address, policy ID number and if the coverage is through your employer, who the benefits are provided by. Take a look at an example of a real EOB.

This is my EOB for routine lab work that my doctor order as part of my yearly physical exam. Notice in the bottom right hand corner it says “this is not a bill” you should see that clearly labeled somewhere on your own EOB. That brings us to our second tip.

2. It’s Not a Bill

Put your wallet away and bring your blood pressure back down to a healthy level. You will never receive a bill for a medical procedure from your insurance company. That will always come from the doctor or hospital who performed the service. Don’t stress yourself out thinking you are getting billed twice for the same service.

You will notice that your claim is broken down into four columns, total amount billed, allowed amount, benefits paid and amount you are responsible for. It’s important to know what each of these amounts are for.

Total Amount Billed - This is the full dollar amount the hospital would have charged you had you not had insurance.

Allowed Amount - This is the amount of money your insurance company is accepting to be charged for the service. You probably have already received a bill for that amount.

Benefits Paid - This is the amount of money your policy paid for that service.

Amount You Are Responsible For - This is the remaining amount of money you are responsible to pay directly to the doctor or hospital that preformed the service.

3. Pay Attention to The Total Amount Billed

If you ever get down about your health insurance and feel like it isn’t doing much for you, just pull out an EOB and see how much money it saved you. If you do the math on the example above, you will see that Medical Mutual, my insurance company, knocked $170.52 off the total price. In the insurance business we like to call this the negotiated rate. This is what you can expect to happen for any service you receive from an in-network doctor. There will always be an amount your doctor tries to bill and an amount your insurance will only allow them to bill.

4. Accept the Allowed Amount

You will notice the note on my EOB that says “Your participating health care professional has agreed to accept the allowed amount as payment in full.” If this were an out-of-network charge, the doctor or hospital that performed the service could balance bill (request full payment for remaining money) you. In this case it would be the $170.52 we talked about. That amount of money might not strike fear into your bank account. However, if you were dealing with a more serious medical claim, like a surgery or hospitalization, you could be talking about thousands of dollars left over.

5. Problem Solving

The last area of your explanation of benefits that you are going to want to pay attention to is the section on questions and complaints. If your health insurance company isn’t paying for something you think they should be, you will need to follow these instructions to correct the issue.

If you are working with one of Giangola Insurance’s agents they can handle this process for you. The first thing you are going to want to do is find out if your doctor submitted the claim properly to the insurance company. If they billed your preventive service as a diagnostic visit you will end up paying the full negotiated rate for the visit instead of your insurance company.

Have you had trouble making sense of your EOB? What specific problem did you have?