What Is an Explanation of Benefits (EOB)? Complete Guide
An Explanation of Benefits (EOB) is a statement from your insurance showing what was billed, covered, and what you owe. Learn how to read and use your EOB to catch billing errors.
What Is an Explanation of Benefits (EOB)?
An Explanation of Benefits (EOB) is a document your health insurance company sends after you receive medical or dental care. It is NOT a bill—it's a detailed breakdown of what your provider charged, what your insurance agreed to pay, what they actually paid, and what amount (if any) you may owe. EOBs help you understand how your insurance benefits were applied and can reveal billing errors that cost you money.
Key Sections of an EOB
Every EOB contains the same core information, though formats vary by insurer. Understanding each section helps you verify accuracy and catch potential overcharges before paying.
- Patient and provider information (names, dates, service location)
- Claim number and date of service
- Amount billed (what your provider charged)
- Allowed amount (the negotiated rate your insurance agreed to)
- Amount paid by insurance (what they actually sent to the provider)
- Adjustments (discounts from network pricing)
- Patient responsibility (deductible, copay, coinsurance you owe)
- Reason codes explaining any denials or adjustments
EOB vs. Medical Bill: What's the Difference?
An EOB is an informational statement from your insurance, not a request for payment. A medical bill comes from your healthcare provider requesting payment for the patient responsibility amount shown on your EOB. Always wait for your EOB before paying a bill to ensure the amounts match. If your bill is higher than what your EOB shows you owe, contact your provider—there may be an error.
How to Read Your EOB Step by Step
Reading an EOB can feel overwhelming, but focusing on key numbers makes it manageable. Start by matching the date of service and provider name to your records. Then follow the money: billed amount → allowed amount → insurance payment → your responsibility. The difference between billed and allowed amounts is the "write-off" you get from in-network pricing.
Common EOB Codes and What They Mean
EOBs use standardized reason codes to explain how claims were processed. Understanding common codes helps you know when to appeal or take action.
- CO-4: Procedure code inconsistent with modifier (coding error)
- CO-45: Charges exceed contracted rate (adjustment applied)
- CO-97: Payment based on allowable amount (normal processing)
- PR-1: Deductible amount (your responsibility)
- PR-2: Coinsurance amount (your percentage share)
- PR-3: Copay amount (fixed payment you owe)
- CO-50: Not covered by plan (service excluded)
- CO-197: Precertification/authorization not obtained (may be appealable)
Using Your EOB to Catch Billing Errors
Studies show up to 80% of medical bills contain errors. Your EOB is your first line of defense. Compare every EOB against your records: Did you receive the services listed? Were you charged for the correct codes? Did your insurance apply your benefits correctly? If you spot discrepancies, contact your insurance company first, then your provider if needed.
How to Use Your EOB to Verify Medical Bills
Collect your documents
Gather your EOB from your insurance company, the bill from your provider, and any receipts from payments you've already made.
Match dates and services
Verify the date of service, provider name, and procedure descriptions match what you actually received. Flag any services you don't recognize.
Compare amounts
Check that the "patient responsibility" on your EOB matches what your provider is billing you. Your bill should never exceed your EOB amount.
Review reason codes
Look up any unfamiliar reason codes. Codes starting with "CO" are adjustments by the insurer; codes starting with "PR" are your responsibility.
Take action on discrepancies
If amounts don't match or services are incorrect, call your insurance first. If it's a provider billing error, contact their billing department with your EOB as proof.
Frequently Asked Questions
What is an Explanation of Benefits (EOB)?
An Explanation of Benefits (EOB) is a document from your health insurance company that explains how a medical claim was processed. It shows what was billed, what insurance covered, and what you may owe—but it is not a bill.
Is an EOB the same as a bill?
No. An EOB is an informational statement from your insurance company explaining how your claim was processed. A bill is a payment request from your healthcare provider. Always compare your EOB to any bills before paying.
Should I pay my medical bill before receiving an EOB?
No. Always wait for your EOB before paying a medical bill. The EOB shows the exact amount you owe based on your insurance coverage. Paying before receiving an EOB may result in overpayment.
What does "allowed amount" mean on an EOB?
The allowed amount is the maximum your insurance will pay for a service based on their negotiated rate with in-network providers. Providers cannot charge you more than this amount for covered services when in-network.
Why did my insurance deny a claim on my EOB?
Common denial reasons include: service not covered by your plan, prior authorization not obtained, out-of-network provider, or coding errors. Check the reason code on your EOB—many denials can be appealed successfully.
How long should I keep my EOBs?
Keep EOBs for at least one year for tax purposes, or longer if you have ongoing medical conditions. They serve as proof of payment and can be needed for disputes, tax deductions, or FSA/HSA reimbursements.
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