I am semi-retired after more than 20 years in the healthcare field. For the majority of that time, I managed an orthopedic surgery office.
I Got a Bill From My Insurance
First of all, the statement you got from your health insurance is not a bill. It's an explanation of the benefits they provided for your recent visit to the doctor. The doctor will get a similar piece of paper and probably a check, and then they will send you a bill!
Your insurance pays your bill (or part of your bill) on your behalf, and the doctor sends you a bill for whatever the insurance did not pay. The Explanation of Benefits, or EOB, tells you what the insurance did on your behalf. Reviewing it carefully is your way of making sure the insurance company did what they are supposed to do.
Above is a copy of an insurance EOB. There's a lot of writing on it, but don't panic. Instead, start reading!
Again, remember that this is not a bill. So, what is it for? This EOB is from Blue Cross. Usually, the top of the EOB will show the patient's name, the date of the treatment, and who the doctor or other provider was (in this case, it was a physical therapy clinic).
Look closely at this EOB:
- "A" shows the patient's name.
- "B" shows the date(s) of the service.
- "C" shows who the doctor was (in this case, Advanced Medical Imaging).
- "A" also shows that the check was sent to Advanced Medical Imaging, so you know they received the insurance payment. Sometimes the check gets sent to you, the insured person. The EOB will tell you that, too, and then you'll know you have to send that payment to the provider.
Important Insurance Terms
The portion you must pay before your insurance pays its share
A flat amount you pay when you see the doctor
How you and your insurance company share the cost of your services
Maximum out of pocket
The most you will have to pay in one year
The total amount your insurance company will ever pay for your care over the course of your life
A doctor or other provider who has contracted with your insurance to save you money
Before getting too far into the EOB itself, there are some terms you need to understand.
Deductible: This is an annual amount that you must pay before the insurance company starts paying anything. When they receive a bill and you have not met your deductible, they will keep track of what the charges and credit your deductible amount. One the deductible has been reached the insurance will start paying at their usual rate. Most plans have annual deductibles that run by calendar year, so you start over at zero every January 1. Most policies have individual and family deductibles. For example, if there is a $500 per-person deductible, a family of 4 might only have to reach a total of $1,500 family deductible, rather than $500 for everyone.
Copayment: This is a fixed amount that your insurance requires you to pay at each doctor visit, probably $25 or $30. Copays will most likely be higher if you are seeing a specialist. Most insurance cards tell you what your copay is - check the back, or look at your policy booklet.
Coinsurance: Co-insurance is the way you and your health insurer share the costs of your care. A common split is to have the insurance company pay 80% of the cost, leaving you responsible for the remaining 20%. However, less expensive insurance plans may have a 70%/30% split, or even 50%/50%.
Health Insurance Maximums: Maximum Out-Of-Pocket is the largest amount of money you will be responsible for during one calendar year. You won't pay more than a set amount in a year, no matter how high your medical expenses are. However, most policies do include a Lifetime Maximum, which is the largest amount your insurance company will ever pay for your health costs during your entire lifetime. If you meet your lifetime maximum, your coverage ends.
Preferred Provider: Doctors may contract with certain insurance companies, making them preferred providers. Payment will usually be higher if you see a preferred provider, meaning you will owe less out of your own pocket. Your insurance company may charge you a higher deductible, copay or coinsurance if you see a non-preferred provider They will provide you with a directory (usually on-line) that lists preferred providers. Picking one on the list will save you money.
What Did They Pay, and What Do I Owe?
Below is the payment detail portion of the EOB shown above. This is the part that tells you what the doctor charged, what the insurance paid, and what you owe. It also explains why all that is the case. Each column is labeled so you can follow along.
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A: This is the amount of charges that the doctor's office submitted. This EOB shows that $1400.00 in X-Ray charges were billed (this was for an MRI), and $43.50 in supplies, for a total amount billed of $1,443.50.
B: This is the amount the insurance allowed. All insurances have tables and data giving them the maximum amount that they think should be charged for services. In this case, they only allowed $600.00 on the charges of $1443.50, essentially stating that, in their opinion, the provider charged too much for this MRI. Notice that they didn't allow anything for the $43.50 supply. This means they think that should have just been a part of the total charge, not billed separately. The coinsurance amount you owe will be calculated based on the allowable amount, not the total charge.
C: Remark codes. These are important because they tell you why the Plan Allowance in Column "B" is what it is. Remark code 610 goes with the $1400.00 charge, of which $600 was allowed. This shows where using a preferred provider will save you a lot of money because 610 says that, even though the submitted charges exceeded their allowed amount because the provider is preferred, you are not responsible for the difference. Whew! Code 502 basically says the $43.50 line should not have been billed, and, again, you are not responsible.
D: This patient's annual deductible had not been met. $293.52 of the yearly amount was left, so that much was held out of the $600 allowed amount before the insurance began to pay.
E: Coinsurance or copay. This insurance policy requires the patient to pay 15%, while they cover 85%. However, you have to take the deductible out of the allowed amount before calculating your 15% due. $600 - $293.52 = $306.48. 15% of $306.48 is the $45.97 the EOB says is Coinsurance.
F: This is the amount the insurance paid. Note that $260.51 (their payment amount) is 85% of that $306.48, which was left after the deductible was subtracted from the allowed amount.
G: Finally, we get down to what you were probably most interested in in the first place – what the patient owes. This patient owes $339.49, which is the $293.52 deductible plus the 15% coinsurance of $45.97.
It's a good idea to save this notice and compare it to the doctor's bill when it arrives. In this case, if they are not billing for $339.49, there is something going wrong, and a phone call to the doctor is in order!
What’s All That Gibberish at the Bottom?
Below is a zoomed in view of the bottom of the EOB, which is very appropriately labeled "Summary of Out-of-Pocket Expenses for 2014."
This explains how much of your deductible and out-of-pocket maximum have been met. It also shows you what that maximum is, in case you didn't know or can't remember.
It shows what you have paid in Deductible and Catastrophic Protection. Catastrophic Protection is another term for your maximum out-of-pocket coinsurance expense, probably because the figure you'll never reach it unless you have a catastrophe.
In this case, "A" shows what you have actually paid. "B" shows what the maximum is.
$350 in the individual and family deductibles have been paid, toward an individual deductible of $350 and a family deductible of $700.
$545 toward the catastrophic limit has been paid, toward a maximum of $6,000. This means that once those 15% coinsurance payments add up to $6,000, the insurance will start paying 100%. Notice that the $6,000 is in a column labeled "Preferred." The column next to that, labeled "Non/Preferred," is $8,000, indicating that you have to reach a higher amount before the out-of-pocket maximum is reached if you are using non-preferred providers.
Column "C" shows a summary of your expenses that were shown in the main section above – deductible, coinsurance, non-covered charges, and any penalties that might have been assessed, such as if no one called to precertify this MRI.
Key Things to Remember
- The notice from your insurance company is not a bill. Don't panic!
- Understanding the terms on your EOB – deductible, coinsurance, copayment – is important.
- Your insurance company has a rhyme and reason for what they are telling you they paid. Review the EOB carefully to be sure that what they say you owe is correct.
- Use your EOBs to keep track of how close to meeting your deductibles and out-of-pocket maximums you are.
- Compare your EOB to the doctor's bill when it comes to make sure they are billing you for the correct amount.
This content is for informational purposes only and does not substitute for formal and individualized diagnosis, prognosis, treatment, prescription, and/or dietary advice from a licensed medical professional. Do not stop or alter your current course of treatment. If pregnant or nursing, consult with a qualified provider on an individual basis. Seek immediate help if you are experiencing a medical emergency.