What Is an Explanation of Benefits?
After you receive medical care, your insurance company processes the claim and sends you an Explanation of Benefits (EOB). The EOB shows what was billed, what your insurer allowed (their negotiated rate), what they paid, and what you owe. It is not a bill — it's a statement of how your insurance handled the claim. Your actual bill comes separately from the provider.
EOBs can be confusing because they involve several different amounts that are easy to conflate. Understanding the difference between each line item is essential for catching errors and knowing whether a provider's bill is accurate.
Key Terms Explained
Billed amount: What the provider charged — usually the chargemaster (list) price. This number is almost always higher than what anyone actually pays and is not meaningful for most purposes.
Allowed amount (or eligible amount): The maximum your insurer will pay for that service, based on their contract with the provider. This is the negotiated rate if the provider is in-network. If out-of-network, it may be based on a "usual, customary, and reasonable" calculation that is often lower than what the provider charges.
Plan paid: What your insurance company actually paid to the provider.
Your responsibility: What you owe. This may be broken into deductible applied (the amount counted toward your deductible), copay, and coinsurance (your percentage share after the deductible).
Deductible, Copay, and Coinsurance
Your deductible is the amount you pay each year before your insurance starts covering costs. If your deductible is $2,000 and you've paid $500 so far this year, you'll owe $1,500 more before your insurer starts sharing costs — even for in-network services.
A copay is a fixed dollar amount you pay at the time of service (like $30 for a primary care visit). Coinsurance is your percentage share of the allowed amount after your deductible is met — for example, 20% coinsurance means your insurer pays 80% and you pay 20%. Your out-of-pocket maximum caps your total annual spending on deductibles, copays, and coinsurance — after you hit it, your insurance covers 100% of covered services.
How to Spot Errors on Your EOB
Compare the EOB to your itemized bill from the provider. The CPT codes, dates of service, and allowed amounts should match. Common errors include: services billed that weren't provided, wrong procedure codes, services processed as out-of-network when the provider is in-network, and incorrect application of deductible or copay.
If something looks wrong, call your insurer first — use the member services number on your insurance card. Ask them to explain each charge you don't understand. If you believe a claim was processed incorrectly, file an appeal. All insurers are required to have a formal appeals process, and many errors are corrected at the first-level appeal.
Using Your EOB to Verify Bills
When you receive a bill from a provider, match it against the corresponding EOB. The amount you owe on the bill should match the "your responsibility" column on the EOB. If the provider is billing you for more than the EOB says you owe — especially for an in-network provider — that's often a billing error. Don't pay it until you've resolved the discrepancy.
Keep EOBs for at least three to five years. They serve as records of medical expenses for tax purposes (if you itemize deductions or use an HSA/FSA), and they're essential documentation if billing disputes arise. Your insurer's member portal typically keeps EOBs online for several years.