What are EOBs and why are they so confusing? An EOB, or Explanation of Benefit is the communication provided by your insurance company to explain the benefits you will receive from your health plan, based on your health experiences. One component of the bewilderment is the terminology used amongst different insurance plans. Each EOB seems to use different “language” or terminology. Medicare might say “Amount Charged” while Blue Cross Blue Shield says “Submitted Charges.” Understanding your EOB, and what it is telling you about your insurance benefit, is an important part of being a smarter healthcare consumer. Understanding the terminology is a great first step.
Definitions
Billed Amount – the amount initially billed by a healthcare provider for services, treatment or products.
Adjustment – the amount a provider’s bill is adjusted based on the negotiated rate agreed upon by the provider and insurance company. This “discount” often appears on the EOB. If there is no discount listed on the EOB, check for an allowed amount. If neither an allowed amount or discount is reflected on the EOB, this provider may be out-of-network.
Allowed Amount – the amount of payment a provider has agreed to accept for a service, treatment or product under the terms of a negotiated contract with an insurance company.
Insurance Paid – the amount that your insurance company paid to the provider based on your insurance plan and benefits.
Patient Responsibility – this is the amount that you owe the provider based on information sent from your provider to your insurance company. This should include any co-payments, deductibles, co-insurance and/or excluded charges.
Remark Codes – these codes help to further explain how the insurance claim was processed. The explanation of these codes should be listed toward the bottom of your EOB. These codes can be important in understanding why your insurance company did not cover a claim.
EOB Terminology
Now that you understand the most commonly used definitions, here’s a reference list to help you identify the terminology your insurance company uses.
