What Is an EOB?
HR Professionals and Health Insurance Agents are very familiar with an Explanation of Benefits (EOB) and their purpose, but most participants are not. Below we answer the question “What is an EOB?” and offer a simplified explanation for participants and their covered benefits. Feel free to share this post with your clients or participants using the share tools below.
An Explanation of Benefits, often referred to as an EOB, is a document that describes what costs a health insurance plan will cover for incurred healthcare and related expenses. EOBs are created when an insurance provider processes a claim for services received.
An EOB is not a bill, but rather a statement of rendered services outlining the provider charges, plan discounts and/or coverages, and the remaining participant responsible balance.
While not a comprehensive list, and formatting could vary between insurance carriers, the majority of EOBs display the following information:
- Date(s) of service
- Type of service(s) or product(s) received
- Claim number
- Name of provider
- Provider total charges
- In-network discount (if applicable)
- Amount covered by Insurance coverages
- Participant responsibility (co-pay, deductible, and co-insurance)
- Remaining total balance
Now that we’ve answered the question “What is an EOB?”, we can explain their importance.
Why Should You Care About Your EOB?
Understanding how to read your EOBs can help you better understand your health care costs and ensure your provider is billing you the correct amount.
If understand EOBs can help:
- You aren’t being billed for services you didn’t receive
- You aren’t double billed for the same service (such as lab testing)
- Your insurance company covers services/expenses according to your plan
- You can compare the total amount owed on an EOB compared to the provider bill (they should match)
Why EOBs Are the Best Form of Documentation for FSAs or HRAs?
EOBs contain all the necessary information needed to substantiate a debit card transaction or submit for a reimbursement. Doctors’ statements or provider bills may be enough to approve claims but, in some cases, they could be missing key information such as the insurance in-network discount. In addition, some HRA plans only pay for expenses before the deductible is reached, which would be listed on the EOB and not on the provider bill.