The question of how to read an insurance plan’s explanation of benefits (EOB) remains one of the most requested.
During community and employer outreach (prior to COVID), the two top questions were: a) How do you read the EOB from the insurance and b) How does out-of-network work with my insurance? In previous articles we tackled these topics, but as one of the most requested, below is an updated article on how to read and understand the insurance company’s EOB. Enjoy!
One of the biggest challenges in getting sick or having an unplanned procedure is understanding your insurance — in-network or out-of-network — and then how to read the explanation of benefits (EOB) after the health care provider has submitted the bill. Every insurance plan has their own system for communicating what was billed by the health care provider, what they allowed and what you will owe out of pocket/co-payment toward your deductible or your co-insurance if the deductible has been met. Wow! This can be highly challenging as you will need to have the health care provider’s itemized statement which lists every item that was billed and compare it against the insurance plan’s EOB. Unfortunately, every provider and every insurance plan can have their own system with the patient trying to sort it out.
Let’s look at some explanation of benefits and provide keys to understanding.
Insurance EOB samples
Column headings are unique to each insurance company.
EX) Date of service, service code and description (This includes a revenue code/used by hospitals in submitting department-specific charges. EX: 301 laboratory- Hematology. The individual lab tests are not listed, just the categories. 352 CT Scan — Body Scan). Billed charges, allowed amount. The allowed amount is the amount that is a result of the in-network contract. The difference between billed and allowed is absorbed by the provider; not billed to the patient. The total amount due by either the insurance plan or the patient is the allowed amount, not billed charges. Plan paid, deductible and copayment. The deductible must be met first before the copayment amount is due. The amount plan paid is the net result of allowed — deductible minus copayment (if applicable). Non-covered charges. If there were services that are not covered by the insurance plan, they will be listed. It takes a little math plus always reading the remark codes and description to further clarify the EOB.
EX) 99214 Office/Outpatient Visit, Established. Physician’s name is at the top of the EOB. Billed charges: $201. Allowed $145. Plan paid $95 Deductible $0 Copayment $50/due from the patient. Adding: $95 Insurance pd + $50 copayment = total amount payable to the health care provider = $145. The healthcare provider must absorb $56 difference. $145 + 56 = $201 billed charges.
EX) Medical (sometimes patients have services and do not remember what was actually done. This was a pre-operative EKG interpretation done by a physician/unknown to the patient. Physician’s name is listed for each line item.) Amount billed: $18. Amount not covered: $5. Your discounted rate $13. Applied to your deductible $13. Amount insurance paid $0 as the deductible of $3,500 was not met so the insurance plan paid zero. The total amount that is due to the healthcare provider is $13/in-network discounted rate/contracted rate; not billed charges.
EX) COVID administration EOB: Provider charged $48 to administer the vaccine. The allowed amount is $15; the provider absorbed/wrote off the difference between $48—$15 = $33 which is required. There is no patient co-pay for the vaccine nor the administration of the vaccine.
UPDATE: The “Medicare 101, Social Security Benefits and Assistance for Senior Boot Camp” has been delayed until the third quarter of 2021. Our community outreach education will resume when it is safe for all of us. All the fun related topics will be included and open to all ages. See you in mid-2021!
Day Egusquiza is the president and founder of the Patient Financial Navigator Foundation Inc. — an Idaho-based family foundation. For more information, call 208-423-9036 or go to pfnfinc.com. Do you have a topic for Health Care Buzz? Please share at firstname.lastname@example.org.