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One of the biggest challenges in “getting sick” or having an unplanned procedure, is understanding your insurance – in-network or out -of-network – and then how to read the explanation of benefits/EOB after the healthcare provider has submitted the bill. Every insurance plan has their own system for communicating what was billed by the healthcare provider, what they allowed and what you will owe out of pocket toward your deductible or your co-insurance- if the deductible has been met. Wow! This can be highly challenging as you will need to have the healthcare provider’s itemized statement which lists every item that was billed and compare it against the insurance plan’s EOB. Unfortunately, every provider, every insurance plan can have their own system that the patient is left trying to sort thru. In this two -part series, we will explain how to read an EOB while comparing it against the healthcare provider’s itemized statement.

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Let’s look at two insurance plan’s Explanation of Benefits/EOBs and provide keys to understanding.

Insurance A: Example oneColumn headings are unique to each insurance company.

Date of service, Service code and description (This includes a revenue code/used by hospitals to identify department-specific charges. EX: 301 laboratory- Hematology. The individual lab tests are not listed -just the categories. 352 CT Scan- Body Scan.) Billed charges, Allowed amount. The allowed amount is the amount that is a result of the in-network contract. The difference between billed and allowed is ‘absorbed’ by the provider. The total amount due by either the insurance plan or the patient is the allowed amount, not billed charges. Plan paid, deductible and copayment. The deductible must be met first before the copayment amount is due. The amount Plan Paid is the net result of allowed – deductible -copayment (if applicable). Non-covered charges. If there were services that are not covered by the insurance plan, they will be listed. It takes a little math plus always reading the ‘remark codes and description’ to further clarify the EOB.

EX) 99214 Office/Outpatient Visit, Established. Physician’s name is at the top of the EOB. Billed charges: $201. Allowed $145. Plan paid $95 Deductible $0 Copayment $50/due from the patient. Adding: $95 Insurance pd + $50 copayment = total amount payable to the healthcare provider = $145. The healthcare provider must absorb $56 difference. $145 + 56 = $201 billed charges.

Insurance B: Example twoColumn heading are unique to each insurance company.

Date of care. Care description (This is a more general description- Medical, imaging, radiology, office visit. No additional narrative is included.) Amount billed by provider, amount not covered, your discounted rate. (The difference between billed and discounted rate/in-network rate is the not covered amount. ) Amount we paid, applied to your deductible, your copayment, what you may owe. Using the ‘your discounted rate – any deductible – the copayment = amount we paid. What you owe is the deductible and/or copayment amount. Any ‘remarks’ are at the end of each charge item.

EX) Medical (sometimes patients have services and do not remember what was actually done. This was a pre-operative EKG interpretation done by a physician/unknown to the patient. Physician’s name is listed for each line item.) Amount billed: $18 Amount not covered: $5 Your discounted rate $13.

Applied to your deductible $13. Amount we paid $0 as the deductible of $3500 was not met so the insurance plan paid zero. The total amount that is due to the healthcare provider is $13/in-network discounted rate/contracted rate.

In Part two, we will show how to reconcile the EOBs against the provider’s itemized statements. Each provider can have their own statements/individual format. We will practice tying it all together. Onward.







Day Egusquiza

Day Egusquiza




Day Egusquiza is the president and founder of the Patient Financial Navigator Foundation Inc. — an Idaho-based family foundation. For more information, call 208-423-9036 or go to pfnfinc.com. Do you have a topic for Health Care Buzz? Please share at daylee1@mindspring.com.

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