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September 12, 2018

Adulting 202: Understanding Your EOB and Medical Bill

Once you understand your health insurance coverage and where you can go to get treatment, you need to understand the bills and statements that will be coming your way after receiving care.

Explanation of Benefits (EOB)

You should receive an Explanation of Benefits (EOB) from your insurance company after a health visit. An EOB is a summary of which services you received from your health care provider and how much the insurance company is paying the provider. Any amount not paid by the insurance company is going to be your responsibility via a bill from your provider. Typically, you should receive an EOB from the insurance company first and then a bill from your provider if any amount is due. If you ever receive a bill before an EOB, wait until your insurance company processes your claim and sends you an EOB before paying your provider. Most of the time you will not owe the full amount of a medical bill because your health insurance company and provider have negotiated discounts.

Common Terms on EOBs

EOB styles and formats differ among insurance companies. A sample EOB from your insurance company is the best way to understand any confusing sections. However, some common terms on EOBs are:

  • Amount billed or charged: The amount your health care provider charges for the service provided
  • Allowed or discounted amount: The amount agreed upon by your insurance company and health care provider to charge for your service. If this is blank, your insurance probably doesn’t cover this service
  • Charges not covered or eligible: The difference between the charged and discounted amount. If this amount is equal to the charged amount, you probably aren’t covered for the service, and the EOB should have a remark or reason code
  • Remark or reason code: The EOB should state reasons why items were discounted or not covered, such as an out-of-network physician, a non-covered service, or an unmet deductible. Any codes or shorthand should be explained in a key
  • Amount paid by plan: The dollar amount that your insurance company agrees to pay your provider
  • Due from patient: The amount that you are responsible for paying to your health care provider. This should be your co-pay, co-insurance, deductible, and non-covered charges all added together. This should match the bill your health care provider sends. If not, call your insurer or health care provider to reconcile before paying

With medical bills being the number one cause of bankruptcies, greater than those due to credit card bills or unpaid mortgages, it is imperative to understand your health insurance. By understanding your coverage, understanding your provider options, and understanding your bill, you’re on the way to making sure you and your family are covered.

Stay tuned for the final blog of this series on how to choose which health insurance plan is the best for your situation. We will also discuss how to incorporate a tax-advantaged savings plan with your coverage to help combat rising medical costs.

Learn more in our health insurance blog series:
Adulting 200: Understanding Your Health Insurance Coverage
Adulting 201: Understanding Your Healthcare Provider and Plan Options

This post is part of our Adulting blog series. Contact your employer for questions specific to your health insurance coverage.

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