Remember the last time you received health care services? Following your visit, you or your provider sent a claim to your short term health or major medical insurance company and waited for it to be processed.
A short time later, you received an Explanation of Benefits (EOB) statement from your major or short term medical insurance company. If you found the statement challenging to understand and full of unfamiliar terms – you’re not alone. A recent study found that many consumers are frustrated with health insurance terms, and some don’t understand what an EOB is and what to do with it.
What Is an EOB?
An EOB is not a bill. Rather, it is a summary that illustrates how your major medical or short term health insurance plan benefits were specifically applied to your health care claim. Important information outlined in your EOB includes:
- What medical services or products your health care provider performed or prescribed
- How much your provider charged for those services or products
- What amount your plan will pay for those services or products
- How much of the charge, if any, you must pay your health care provider
The EOB serves as a helpful document that you can use to compare against statements you receive from your health care provider. It is particularly useful for ensuring that the services you received (and for which you are billed) are the same as those submitted to your insurance company.
How Does Reviewing My EOB Help Me?
Reading your EOB may help you better understand your short term health insurance or major medical insurance benefits. According to Mindy Stadel, a relationship manager with Pivot Health Group, it’s critical for health care consumers to familiarize themselves with key terms that are used on EOBs and other important insurance documents.
“An educated health care consumer who understands health insurance terms can more easily determine if their claim was processed correctly,” says Stadel. “If you don’t understand basic insurance terms such as deductible, coinsurance, out-of-pocket maximum, etc.,” she continued, “it’s difficult to understand how payments are calculated or if your insurance benefits were correctly applied to your claim.”
Another benefit of gaining a better understanding of insurance terms and learning more about how your health insurance plan benefits work? You can become a savvy health care consumer.
Key Sections of an EOB
Each short term health insurance or major medical coverage provider has its own unique EOB statement design. However, all EOBs have several sections that explain services provided, charges billed, insurance company payments, and other important information. When you review your EOB, make sure that each section shows accurate details.
Let’s take a closer look at the key sections of an EOB and a few terms you can generally expect to find in each.
Provider Information
This section includes the name of your health care provider (doctor, hospital, or other health care professional or service). This information is helpful if you received a number of services and products in a short period of time, such as seeing multiple providers and receiving different services during a hospitalization.
Member Information
You will find the name of the member, insurance plan identification (ID) number, patient name, and claim number here.
Provided Services and Charges
Details about the charges for services or products that your health care provider submitted to your insurance company are included in this section. You’ll find a few useful pieces of information here:
Dates of Service
Indicates the dates you received the service or product.
Service/Product
Details the service or product you received from your health care provider.
Billed Charges
Shows the amount your health care provider billed to your health insurance plan for each service or product.
Plan Responsibility
This section explains how the insurance company applies your plan benefits to the charges billed by your provider.
Discount Amount and Code
Indicates if a discount was applied to the amount billed, and if so, for what reason. For example, you may see a discount applied if you received services from a health care provider that participates in a preferred provider network. These providers negotiate discounted charges with health insurance companies.
Amount Not Eligible
Shows any amount that is not eligible for payment by your insurance company. For instance, a billed charge amount may be higher than the maximum charge amount allowed by your insurance company for a service for product. Or, you may have received a service or product not covered by your insurance plan.
Total Eligible
Details the total amount per billed charge that is eligible for benefits under your plan.
Amount Paid by Your Plan
The portion of the charges your plan benefits will pay.
Member Responsibility
In this area of your EOB you will find the amount you are responsible to pay for the health care services or products you received. This amount might include your copay, deductible, coinsurance, any amount not eligible under your plan benefits, and charges for any products or services not covered by your plan.
Copay
A set amount you pay for certain covered services such as office visits or prescriptions. Copays are usually paid at the time of service.
Deductible
Your deductible is the amount you need to pay each year for covered services before your plan starts paying benefits.
Coinsurance
This is a percentage of the covered expenses you will pay after you meet your deductible. Check your plan for more information about the specific percentage you pay.
Out-of-Pocket Maximum
This is the most you will have to pay during a calendar year for your health care services. Once you have reached your out-of-pocket maximum, your plan will pay the full amount of allowed charges for covered health care services and products.
Plan Status
Many EOBs also include a section that keeps track of the health care expenses you have paid during the calendar year. You may see details on how much of your annual individual and family deductibles you have satisfied. In addition, some EOBs show the amount remaining until you have met your annual individual and family out-of-pocket limits.
Claim Notes
This section provides more information your claim. If, for example, your provider submitted the same claim twice, you would see a note that the second claim was denied because it was a duplicate.
What Should I Do With My EOB?
Many people choose to keep a file of the EOBs they receive throughout the year. They serve as documentation for the health care expenses you pay. At the end of the year, if you have incurred qualified health care expenses that exceed 10% of your adjusted gross income for the year, and those expenses were not covered by your health insurance plan, you may deduct those expenses when you file your federal taxes.
What If I Find an Error on My EOB?
Your EOB is an important tool in ensuring you receive the insurance benefits available to you under your plan’s coverage provisions. Always compare your EOB to the statements you’ve been given by your health care provider, such as the list of services performed and your bill.
A billing error on your claim, even as simple as the wrong spelling of your name or an incorrectly typed medical services code, might result in a problem with processing your claim correctly. Unfortunately, that occurs more often than you might think, according to Pat Palmer, the CEO and founder of Medical Billing Advocates of America.
“We are seeing a lot of error types escalating, especially in the hospital area,” Palmer stated in a recent interview. She estimated that three out of every four claims her firm reviews contain medical billing errors, and that in most cases, the error might be in your favor.
If you reviewed your EOB and found a billing error, call your health care provider. When you have alerted them to the mistake, they can resubmit the claim with the correct information.
Request a Review
There may be instances, however, when you don’t find an obvious billing error and don’t understand why some or all of your claim was not paid. If that occurs, you have the right to request your insurance company to review your claim. This process is called a claims appeal. With your EOB statement or insurance plan documents, you will find details on how to proceed with a claims appeal.
According to the Commonwealth Fund, one in three Americans say they spend “a lot of time on paperwork or disputes” involving health insurance claims. By understanding the terms of your plan, you can more easily and efficiently work with your insurance company if you ever need to file a claims appeal.
The More You Know
Having a sound understanding of how your insurance plan works can make you a smarter health care consumer. For instance, let’s say your health care provider suggests you need a certain procedure. If you know that you are close to satisfying your annual deductible, you may want to have the procedure in the same calendar year. That’s because if you wait until the next calendar year, you will once again be required to satisfy your entire annual deductible amount before benefits are paid under your plan. Paying for insurance helps protect your financial security – so be sure to make the most of your benefits coverage and keep an eye on your future insurance options.
Contact Pivot Health today for more information about how a short term medical insurance plan can help keep your monthly budget in line.
