Explanation Of Benefits (EOB)

The medical provider submits a claim for the patients visit to the health insurance company and the insurer processes the claim. The patient is responsible for the amount shown on the EOB. Annual deductible, co-payment, and co-insurance amounts are typically listed on the EOB. Most EOB’s list the patient responsibility amount, which is the amount the patient owes to the medical provider after insurance payments have been applied. Assuming the patient has visited an in-network provider, the amount owed will reflect the pre-determined negotiated rate (Allowed Amount) for services provided.

Allowed Amount:

Imagine for a moment that you have allergies and decide to get an allergy shot. You schedule an appointment. Arriving at the doctor’s office, the medication is prepared and administered. Afterward a claim is submitted, reviewed, and processed. You receive a bill and an EOB. Your payment to the doctor must be processed as well by the provider. That is a lot of work for approximately fifteen dollars! Sure, the doctor will submit a claim for fifty dollars, but after the Allowed Amount is applied they will likely receive around fifteen dollars for the shot. Of course, at the other end of the spectrum are the big ticket items. Need a pacemaker? For a mere $70,000 it is all yours. Hep C injections? Tens of thousands of dollars, with each injection requiring the same paperwork as an allergy shot.

It is important to understand your health insurance benefits first and foremost. Understanding when and how deductibles, co-insurance, and co-pays are applied will go a long way in understanding EOB’s. You will be in a better position to catch mistakes as well. Not all medical claims are handled the same way. As an example, maternity claims are typically processed through “global” billing. All office visits leading up to the birth likely require just one office visit co-pay, not a separate co-pay for each visit.