What Is an Explanation of Benefits
An Explanation of Benefits (EOB) is a document your insurance company sends after processing a medical claim. It itemizes what your provider billed, what your plan allowed, how much your insurer paid, and what balance remains your responsibility. The EOB is not a bill, though patients often confuse it with one.
You typically receive an EOB within 10 to 30 days of your provider submitting a claim to insurance. The document breaks down each service or procedure separately, showing the provider's charge, the negotiated allowed amount, any deductible applied, coinsurance percentages, and the insurer's payment to the provider.
Critical Information on Your EOB
- Billed amount: What your provider charged before any insurance adjustments.
- Allowed amount: The maximum your plan will recognize for that service, often lower than billed charges. See Allowed Amount for details.
- Insurance payment: What your plan actually paid the provider, typically a percentage after deductible and coinsurance.
- Your responsibility: Deductible, copay, coinsurance, or the full charge if the service wasn't covered.
- Reason codes: Codes explaining why your claim was approved, partially approved, or denied. Codes like "Exceeds medical policy guidelines" signal a potential denial to appeal.
- Claim status: Approved, denied, or pending additional information from your provider.
How EOBs Connect to Claim Denials
An EOB showing a denial or partial denial is often your first clue to file an appeal. Common denial reasons include lack of prior authorization, medical necessity questions, or out-of-network status. State insurance regulations require insurers to include appeals instructions on the EOB or within 30 days of the denial decision.
Many denials are recoverable through internal appeals, where you submit additional clinical documentation or your doctor's notes proving medical necessity. If your internal appeal fails, most states allow an external appeal to an independent third party within 60 to 180 days of the denial.
EOB vs. Remittance Advice
Patients often receive both an EOB and a Remittance Advice (RA). The EOB goes to you as the patient and explains your financial responsibility. The Remittance Advice goes to your provider and details payment details and any claim adjustments. Both documents should align, but discrepancies require investigation with your provider's billing department.
Common Questions
- What do I do if my EOB shows a claim was denied? Review the reason code carefully. If it cites medical policy or prior authorization issues, gather supporting documentation from your doctor and file an internal appeal with your insurance company. Include clinical notes proving the service was medically necessary. You typically have 60 days from the denial date to appeal.
- Can I dispute an EOB if my provider's charge exceeds the allowed amount? No, but this is not a problem. Your provider agreed to your plan's negotiated rates when they contracted with your insurer. The difference between billed and allowed amounts is typically written off by the provider. You only owe your coinsurance or deductible based on the allowed amount.
- How long should I keep my EOBs? Keep EOBs for at least 3 to 7 years. If you file an appeal or dispute a claim, the EOB is your primary evidence. Some states require insurers to honor appeals based on EOBs issued years earlier if the provider continues to dispute payment.