The Importance of Reading and Understanding Your Health Insurance Explanation of Benefits (EOB)
Getting a medical bill is never fun, but sometimes they can be shockingly expensive. Even if you have health insurance, medical bills can be financially devastating, especially for those who suffer from chronic health problems. That's why is it so important to use the information your health insurance company provides to you, specifically a document called the Explanation of Benefits.
What is an Explanation of Benefits?
When you see a doctor, they bill your insurance company who then (hopefully) pays at least part of the charge. Once the claim is processed, your heath insurance company sends you a statement called an Explanation of Benefits (EOB), This statement tells you:
What services the doctor or hospital had billed them for
The charges and amount the insurance company had paid, and
What was left over that I still owed to the doctor or hospital.
Compare Your Bill to the EOB
Last summer I received a $218 bill from my local hospital, for a charge I didn’t owe. I knew that because my health insurance EOB had already informed me that the allowable charges of my visit were completely covered and I did not owe any money to the hospital. (NOTE: You are not responsible for the charges your insurance company deems as non-allowable. This is also noted on your EOB.)
But the hospital kept sending me the same bill for $218. I contacted the billing department and told them that my EOB said I didn’t owe for that bill. They said it was a drug/pharmacy charge, which is different from other charges, and assured me that my insurance would reimburse me for it. At that point, I started to feel my confidence waver. I didn’t want the bill to be sent to collection, so I considered sending them the money in the hope that it really would be reimbursed by my insurance company. Instead, I decided to call my health insurance company and ask them if I really did owe for that charge. And guess what? The bill was a mistake; I did not owe a penny to anyone. My insurance company helped me get that bill removed from my account.
Protect Yourself and Your Family
My story had a happy ending, but only because I knew my rights. I have a background in benefits administration, and I worked with insurance companies for years. I know how important it is to read the EOB, and I understand the information it provides. But I fear that I may in the minority there. For example, I am confident that my husband would have simply paid the bill from the hospital without a second thought. Because that’s what we are conditioned to do – when a bill comes, we pay it without question. And let me be clear: I am NOT telling anyone to skip out on their bills. But I’m very concerned about how many Americans could be paying medical bills they don’t owe (and very possibly can’t afford), simply because they don’t understand the importance of reading the EOB, or they don’t understand how to read it.
While many medical bills are accurate, many others may contain costly errors or even misinformation. In addition, reading your Explanation of Benefits can help prevent insurance fraud. If you see that your doctor billed the insurance company for a procedure or service you didn’t receive, that could be fraud. Letting your insurance company know about the error can save thousands of dollars, which could help stabilize insurance costs.
It is important to read every Explanation of Benefits from the insurance company. If you have kids or chronic health problems, I know this can be a lot because each visit generates an EOB. And sometimes the insurance company sends several pages in one envelope, which can seem overwhelming in our busy lives. But, with practice, you will be able to scan scan them quickly and then move on with the rest of your day. At the very least, you should read your EOB before you pay a medical bill, just to be sure that bill is accurate. In my case, it saved my family $218; I would much rather spend that money on groceries or a family outing.
How Do I Read My EOB?
So how do you read the information in your Explanation of Benefits? While each insurance company uses their own EOB format, they all contain the same basic information:
The date of the appointment and what the doctor did It’s important to verify this against the itemized bill from the doctor or hospital. Did you actually have an appointment that day, and is that the service you received? One type of insurance fraud includes billing the insurance company for services not provided, so reading your EOB carefully is an important step in preventing fraud. Since fraud leads to higher insurance costs, everyone benefits from preventing it.
The amount your doctor billed the insurance company You can also verify that this information matches the itemized bill from the doctor to help prevent fraud (or simple billing errors).
How much of that bill your insurance will not allow (also called the “disallow amount”) – This is very important. Your insurance company has a contract with the doctor or hospital, and they will only pay a certain amount for each procedure. No matter how much the doctor or hospital charges for that procedure, insurance will only pay the contracted amount. The “disallow amount” is stricken off the bill. You cannot be billed for the disallow amount.
How much (if anything) your insurance company paid – It’s easier to understand how much you owe if you also know how much of the bill your insurance has paid.
How much you owe the doctor now that the claim has been processed – This is extremely important. You do not owe any more than this amount.
What if My Bill Looks Wrong?
If you receive a medical bill for an amount that is different from what your EOB says you owe, that is likely a billing error and you need to contact the doctor’s billing department. If they still insist that you owe that amount, despite what your EOB says, then contact your insurance company. This is what they do, and they will clarify exactly what you owe and what is not your responsibility. If necessary, they can also intervene on your behalf with your doctor or hospital billing office.
Most people believe the medical bill is always correct, and they don’t think (or are afraid) to question it. We all have to be our own advocates, especially with something as important as medical costs. Hopefully this information helps prevent people from inadvertently paying more than they owe.
Comments