When you receive a healthcare statement detailing recent medical services, it can often be confusing. This document, known as a Medicare Explanation of Benefits (EOB), is sent by your plan provider after a claim has been processed. The EOB is an informational record that provides a detailed breakdown of the care you received and how the associated costs were handled by your insurance.
Defining the Medicare Explanation of Benefits
The Explanation of Benefits is the official statement tracking claims submitted by your healthcare providers for services you have received. It details which services were covered, the amount the provider charged, the amount your plan paid, and any remaining balance that may be your responsibility. This document is a tool for understanding the financial impact of your Medicare coverage.
It is important to understand that the EOB is an informational statement and is definitively not a bill. The actual bill for any amounts you owe will arrive separately from your healthcare provider. The EOB should be used to verify the accuracy of that eventual bill, not replace it.
While the term EOB is commonly used, beneficiaries in Original Medicare (Parts A and B) receive a document called a Medicare Summary Notice (MSN). EOB is the official term used by private companies administering Medicare Advantage (Part C) and Medicare Part D prescription drug plans. Both documents serve the identical function of explaining how medical claims were processed.
Key Sections and Terminology
The EOB is typically structured as a line-by-line breakdown of each service or item you received, with several columns detailing the financial transaction. This section provides the date you received the care and identifies the healthcare facility or professional who provided the service. Verifying the dates and provider names is the first step in confirming the document’s accuracy.
One column lists the Amount Billed, which is the total charge the provider initially submitted to Medicare for the service. This amount is reduced by the plan to an Allowed Amount, sometimes called the Medicare Approved Amount. The Allowed Amount represents the maximum fee the plan will recognize and pay for that specific service.
The next column indicates the Amount Medicare Paid, which is the portion of the Allowed Amount covered by your plan. This figure accounts for any deductibles or coinsurance you may have already satisfied. The What You May Owe section represents your financial responsibility, which includes copayments, deductibles, or coinsurance amounts.
This patient responsibility amount is the maximum you can be required to pay the provider for the covered service. Understanding the difference between the initial Amount Billed and the final What You May Owe is important for monitoring your out-of-pocket costs and confirming that your plan benefits were applied correctly.
Action Steps After Receiving the EOB
Once you receive your Explanation of Benefits, you should treat it as a financial receipt and begin a review process. The first step is to compare the listed services, dates, and providers against your personal calendar and health records. You should confirm that every item listed on the EOB corresponds to care you actually received.
The EOB serves as a reference document to use when the provider’s bill arrives later. You should never pay a provider’s bill until you have cross-referenced it with the EOB to ensure the amount you are being charged does not exceed the What You May Owe figure. If the provider’s bill is higher than the patient responsibility amount shown on your EOB, contact the provider’s billing office.
It is recommended practice to keep your EOBs and MSNs for at least one year as part of your financial and medical record-keeping. These documents are helpful for tracking your year-to-date spending, which is important for monitoring progress toward a deductible or out-of-pocket maximum. Maintaining an organized file allows you to quickly address any future billing questions or discrepancies.
Handling Discrepancies and Appeals
If your review of the EOB reveals a simple error, such as an incorrect date of service or a misspelled name, the first action is to contact the healthcare provider’s billing office. Many minor discrepancies can be resolved quickly at this level, often due to clerical errors. This initial contact saves time before pursuing a more formal process.
If the EOB indicates a claim was denied, or if you disagree with the amount determined to be your responsibility, you have the right to file a formal appeal. The appeal process is multi-level, and instructions for the first level are printed directly on the EOB or MSN you received. For Original Medicare, you have 120 days from the date you receive the notice to request a redetermination.
The EOB is a tool for detecting fraud, waste, or abuse in the Medicare system. If you see a charge for a service you never received, or services listed that your doctor did not order, you should report the suspicious activity. You can contact the plan administrator directly or call 1-800-MEDICARE to report issues to government authorities.