Personal Finance

This simple form can keep you from overpaying for medical care

Key Points
  • Mistakes in medical billing include improper coding or incorrect insurance benefits being applied to a claim.
  • Even if the explanation of benefits looks accurate, it should be compared with bills you receive from a doctor or other provider to make sure they match up.
  • If you see a mistake, start by calling your insurer.

You know that "explanation of benefits" form you get from your insurance company? Resist the urge to toss it in the trash.

Even if it looks like a bewildering mess of numbers, codes and abbreviations, there's a good reason to learn how to make sense of it.

Basically, this EOB, as it's known, could be what keeps you from overpaying for your medical care.

"You have to make sure the EOB is right and compare it with the bill from your provider to make sure they match, because they don't always," said Mitch Rothschild, founder and chairman of consumer health-care site

Photo by Minerva Studio via Getty Images

As health-care costs continue climbing and patients take on a larger share of those expenses, containing the effect on your budget is worth it.

Annual premiums for employer-sponsored family coverage reached $18,764 in 2017, with workers paying an average $5,714 out of pocket, according to the Kaiser Family Foundation.

That amount does not include what you might spend to actually go to a doctor. Depending on the specifics of the care you receive and your insurance coverage, using the health-care system could add hundreds or thousands of dollars to your annual outlay.

Insurers are required by law to send you an EOB every time your doctor or other provider files a claim for treating you. As its name implies, the form's intent is to show you what your insurance plan is covering for care you've received.

Yet mistakes happen in the medical billing process. Exactly how often, however, is hard to come by.

While research from the American Medical Association showed that 7.1 percent of all claims paid by insurers in 2013 contained a mistake, patient advocates and other professionals who review medical claims for accuracy put the frequency of billing errors at more like 80 percent or even 90 percent.

"You'd be shocked by how often mistakes are made," said Missy Conley, director of consumer claims for, which reviews medical bills on behalf of clients.


Of course, to figure out whether your provider or insurance company flubbed, you have to know what to look for on the EOB.

While federal and state laws dictate the information included, each insurance company can choose exactly how to present it. Generally, though, there are some things you should look for.

  1. The full-price amount the provider would charge for the service you received. Assuming your doctor is in-network, this amount is typically higher than what the insurance company permits the provider to charge as a participating provider.
  2. The rate that the insurance company allows the provider to charge. This is a discounted price that the provider and insurance company have agreed to. In other words, for your doctors to be part of your plan's network, they agreed to lower compensation for a particular service or procedure.
  3. The amount of the negotiated rate getting covered by your plan. This number depends on the specifics of your coverage, such as whether you have a deductible to meet, or a copay (the flat rate you pay each time for, say, a doctor's visit) or coinsurance (a percentage of the amount you are responsible for).
  4. The patient's responsibility. This is your share of the total cost.
Avoiding health care
Avoiding health care

It's important to note that the discounted rate for your in-network doctor or other provider should be the starting point for any coinsurance or deductible you are responsible for.

For example, if the doctor's full rate is $200 and the discounted cost is $100, the lower price is what would count against any deductible you have to meet. Or if you have coinsurance of, say, 20 percent, you're responsible for that percentage of $100, not $200.

"Sometimes there's the mistake of not basing your share on the discounted rate,"'s Rothschild said.

Coding errors also can be the culprit. For instance, if a routine screening that is 100 percent covered by your insurance plan is coded incorrectly, your insurer might note on the EOB that you owe the full amount.

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If you believe there's an error on your EOB, you should start by calling your insurance company, said Conley at

"If the claim was processed incorrectly, they'll get on a conference call with your provider to correct the billing," she said.

Some companies offer billing advocacy services for workers who need help making sense of their bill or getting errors fixed. If your employer has this perk, take advantage of it. You also can hire a specialized advocacy firm, which typically reviews bills for free and takes a cut of whatever amount they save you.

Even if everything on an EOB looks accurate, make sure you hold on to it to compare with the bill you get from your provider before you pay it. Sometimes, the doctor's bill will say you owe a higher amount than what's on the EOB.

"Go by what the insurance company says, not the bill," said Jeanne Woodward, vice president of consumer claims at Medliminal.

Errors tend to be more prevalent when you end up in the hospital. Due to the variety of doctors who tend to you and tests or procedures ordered, there can be many different individual providers that end up filing a claim with your insurance company.

"Inevitably, there will be mistakes," Rothschild said.