How to Read Your Health Insurance Explanation of Benefits Statement

People generally know less than they think they do when it comes to understanding their health benefits — which can lead to problems down the road. According to the American Institutes for Research, 3 out of 4 people said they felt confident that they knew how to use their health insurance. But only 1 out of 5 could accurately calculate their out-of-pocket costs.

This lack of knowledge can hurt when the explanation of benefits (EOB) shows up in the mail. The EOB is a form that identifies the treatment or services you were provided and what amount your insurance will pay, says Erin Singleton, chief of mission delivery at the Patient Advocate Foundation, a nonprofit that provides professional case management services to people with chronic, life-threatening and debilitating illnesses. The EOB often says “This is not a bill” in large letters, and then has a chart or balance sheet detailing what is covered.

The problem is, these forms aren’t standardized across providers, and they don’t always arrive at the same time your actual bills do. It can be confusing to determine whether everything that should have been covered actually was or if there were any errors. These tips can help you read your explanation of benefits statement.

Write It All Down

A lot of understanding the EOB comes from keeping your own records, Singleton says. Keep a record of your appointments and make notes of any procedures, services or referrals. Having an accurate record of what was done can help you determine whether your EOB is accurate and if you have a basis for an appeal down the road.

Check the Basics

When you first review your EOB, ensure your name and provider are accurate, Singleton says. Mistakes happen, and if you have changed insurance companies recently, your health care provider may not have gotten the notification yet. Check to see if the dates of procedures match your records.

Examine Details

Next, look at the procedure that’s described. Does it match up with your experience? There may be a “remark code” indicating that the insurance company needs more information to process the claim correctly, Singleton says. For example, it may want to know if your treatment was for a work injury that should be covered by workers compensation.

If your claim is denied, there should be a denial code that tells you the reason for the denial. If you inadvertently used an out-of-network provider, for example, part or all of your claim may be denied.

Don’t Take It at Face Value

Going over your EOB without any context of what coverage you have is a wasted effort, says Sarah O’Leary, founder and CEO of Exhale Healthcare Advocates. You must have a thorough understanding of the parameters of your insurance plan when reviewing the EOB, so if something is denied, you’ll know how to appeal it. And there may be errors — according to one estimate, 30 percent to 40 percent of medical bills have errors in them; other estimates are even higher.

Empower Yourself

It takes time and effort to ensure your coverage is correct, but getting it right can save you money. “If you have the opportunity to appeal something, take it,” Singleton says. “Don’t give up. Investigate it — this is an opportunity for you to take control of your own medical bills. You just have to take the time to do it.”

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