Shortly after you receive medical care from a service provider using your insurance coverage, you'll receive an Explanation of Benefits (EOB) statement in the mail. It's not a bill (and typically says something to that effect in bold letters at the top of the document). The EOB is a summary statement sent from your insurance company, that includes a list of claims processed since the last EOB was sent, as well as a summary of year-to-date costs in the plan, including deductible, coverage, total out-of- pocket costs and drug costs.

TUTORIAL: Intro To Insurance

While your typical habit may be to toss the EOB in the garbage, it contains valuable information that could save you money in the future, and assure that you're not overpaying for medical services in the present. Here are five reasons to check your EOB statement every time you receive it. (For more information on insurance, check out Health Insurance: Paying For Pre-Existing Conditions.)

1. Data/Coding Errors
According to Medical Billing Advocates of America (MBAA), 8 out of 10 hospital bills contain errors. Check every EOB for simple data accuracy like your name and the insurance group number, compared to the information on your insurance card. Simple data inaccuracies like one incorrect digit in the group insurance plan number can lead to serious billing issues that could take months to resolve. Further, because the plan indicated by the wrong digit could have different coverage for service and providers than your own, you could unknowingly be paying far more for medical services than you should be.

2. Unnecessary Materials
Review each EOB carefully to ensure that the services and supplies that are reflected actually occurred, and make sure that no tests that may have been ordered and then cancelled or deemed unnecessary by your doctor appear.

Consumer Reports also recommends checking the EOB for words like "kit," "tray" or "room fees," particularly if you were recently treated at a hospital. These bundled services often include a grouping of supplies needed for a specific service or treatment, for a more cost-efficient way of dispensing patient materials. (For example, aftercare kits for mothers who just gave birth will include supplies needed for sanitary care, topical pain relief, and basic postnatal hygiene). While the kits are intended to be more efficient for both the medical industry and patient, itemized charges in addition to bundled fees are often indication of duplicate charges that could be grouped into the "bundle" to lower the bill. Inquire with your insurance provider if line item charges seem suspect.

If your statement shows grouped charges under broad categories, making it difficult to tell what charges are contributing to total costs, contact the biller for specific charges. Under the American Hospital Association's Patient's Bill of Rights, hospital billing departments must send you a free, detailed bill upon request. (To help you find the right policy, read Buying Private Health Insurance.)

3. Prescription Drug Plan Changes
If you or a covered family member takes prescription medication regularly, the EOB will track drug plan costs to indicate the remaining amount that must be paid in the current drug payment stage, before it will progress to the next level. It will also announce changes to the prescription drug plan that might impact current coverage, resulting in higher out-of-pocket costs. Some EOB's provide a list of "like" medications for the patient to consider in the case of such an event. Take the EOB to your medical provider, who can confirm whether the suggested medications may be an appropriate alternative to medication that is no longer covered.

4. Understand Jargon
If there are any charges on your EOB that you don't understand or don't recall, contact your insurance provider for assistance. If they cannot provide a satisfactory explanation, request the doctor's notes and your patient chart to compare what was ordered in your treatment to charges billed. The Patient's Bill of Rights also ensures that "the patient has the right to review the records pertaining to his/her medical care and to have the information explained or interpreted as necessary, except when restricted by law."

While some errors are honest mistakes, fraud does occur; it is your right as a patient to understand the language of the medical industry. MBAA gives examples of bogus charges hidden by medical jargon, like a "disposable mucus recovery system." The term referred to a pack of tissues, and was billed for $11!

5. Tax Purposes
The EOB serves as formal documentation of family care services and medical expenses that you paid during the year. Although you do not need to submit the physical EOB with your taxes, retain it as documentation for tax purposes and to support and substantiate healthcare spending account reimbursements and transactions.

The Bottom Line
EOB statements can be tempting to toss into the garbage, but failing to review them could result in lost opportunities to double-check billing accuracy, and potentially spend less money on healthcare. If you find an error, call your provider and take detailed notes of the conversations until the matter is resolved. (For more on health care, check out How To Choose A Healthcare Plan.)

Related Articles
  1. Insurance

    What's The Difference Between Medicare And Medicaid?

    One program is for the poor; the other is for the elderly. Learn which is which.
  2. Entrepreneurship

    Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
  3. Insurance

    Cashing in Your Life Insurance Policy

    Tough times call for desperate measures, but is raiding your life insurance policy even worth considering?
  4. Personal Finance

    10 Reasons It Is Time to Look for a New Job

    Learn 10 good reasons for switching jobs, such as major life changes, ethical concerns, job description creep and upwards mobility.
  5. Insurance

    Avoiding The Modified Endowment Contract Trap

    To avoid MEC status, flexible-premium policies must cap the amount that can be paid into the policy over a period of seven years.
  6. Retirement

    How 401(k) Matching Works

    Find out how employer matching of your 401(k) contributions works, including how employer contributions are calculated and annual contribution limits.
  7. Savings

    A Quick List of FSA Eligible Expenses

    The ABCs of FSAs: What you can and can't use your Flexible Spending Account funds for.
  8. Retirement

    Top Signs You Aren’t Ready to Retire Yet

    Think you are prepared to retire? These warning signs may indicate otherwise.
  9. Insurance

    Health Open Enrollment: Read This Before You Renew

    Time to renew your health plan – or shop for a new one for 2016. Here's how to get the most from marketplace open enrollment for the Affordable Care Act.
  10. Insurance

    5 Ways to Ace 2016's Health Insurance Marketplace

    Not sure how the Health Insurance Marketplace/Exchange works? Here are 5 ways to avoid frustration when enrolling through the federal or state exchanges.
  1. Are Flexible Spending Account (FSA) contributions tax deductible?

    The contributions you make to your Flexible Spending Account (FSA) are not tax-deductible because the accounts are funded ... Read Full Answer >>
  2. Does a Flexible Spending Account (FSA) cover massages?

    Flexible Spending Accounts (FSAs) cover massages for certain medical treatments. These treatments must be approved and prescribed ... Read Full Answer >>
  3. Does a Flexible Spending Account (FSA) cover Lasik?

    Flexible spending accounts (FSA) can be used to pay for qualifying LASIK procedures. LASIK is not the only laser eye surgery ... Read Full Answer >>
  4. Are Flexible Spending Account (FSA) expenses tax deductible?

    Flexible Spending Account (FSA) expenses are not tax deductible. The U.S. Internal Revenue Service (IRS) states you cannot ... Read Full Answer >>
  5. Does a Flexible Spending Account (FSA) cover acupuncture?

    A Flexible Spending Account (FSA) covers acupuncture. The Internal Revenue Service (IRS) has defined acupuncture as a qualifying ... Read Full Answer >>
  6. Do Flexible Spending Accounts (FSAs) expire?

    Flexible Spending Accounts (FSAs) do expire and are considered to be a "use it or lose it" type of plan. They are savings ... Read Full Answer >>

You May Also Like

Trading Center