What Is an Explanation of Benefits?

An explanation of benefits, or EOB, is a statement from your insurer that explains what your health insurance will cover for healthcare — and how much you will pay.

When you see a doctor, go to the hospital, or have a lab test, your health plan will send you a statement explaining what your insurance will cover. Both you and your healthcare provider will receive this explanation of benefits (EOB).

For instance, if you see your primary care doctor for pain in your kidneys, your doctor may send your urine to a lab to test for bleeding caused by kidney stones, then refer you for an imaging scan to gauge their size. You may need an outpatient procedure at a hospital to remove them.

Afterward, you may receive separate EOBs for your visit to the doctor, the tests, and the procedure.

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With an EOB, your insurance company is keeping you in the loop about the services your healthcare providers submitted for payment. Your EOB also tells you how much you may have saved, based on rates your insurance company negotiated with your healthcare provider, and what you’re going to pay when your bill arrives, such as copays, coinsurance, and deductibles.

The EOB will note if you received any service your insurance company considers medically unnecessary, experimental, or cosmetic — and will not cover.

Save all of your EOBs for when you file your taxes. They also help you keep a record of your family’s healthcare and expenses.

It’s important to know that your EOB will look like a bill, but it isn’t. (View a sample EOB.) Usually, you will see “THIS IS NOT A BILL” or similar words printed somewhere on the top of the document. This can be a problem. Many Americans tend to ignore their EOB because it’s not a bill. Yet, an EOB gives you a chance before you receive a bill to find mistakes.

Pay particular attention to everything on your EOB. Look for any incorrect information about you, such as your name, your date of birth, your address, or your insurance number. You also should review your EOB for the services your doctor said you received.

The document can help you and your insurance company identify healthcare fraud and abuse — such as a service you didn’t receive but your doctor submitted for payment (whether in error or on purpose).

You can also catch billing errors, which are far more common than they should be, and make sure your share of the cost of your healthcare is correct.

If you notice anything unusual or wrong, call the customer service number on the statement.

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