What is an Explanation of Benefits (EOB)? A Breakdown of the Breakdown

If you have a Medicare Advantage or Medicare Prescription Drug Plan (Part D), you probably receive an explanation of benefits each month. Unfortunately, many people don’t understand how to use this info. With the right knowledge, however, your Explanation of Benefits can be a handy tool.

The first thing to know about an Explanation of Benefits is that it’s not a bill. Instead, it’s a summary of the claims and charges applied to your policy from the previous month.

For example, let’s say you had to visit several doctors and specialists in June because of an injury. The EOB you receive in July will reflect the claims and charges from those visits. Your EOB will show what your insurance company has agreed to pay for the services you received. With your EOB, you can check that you’re being charged correctly by your doctors and specialists when you get your bills.

Anyone enrolled in Medicare Advantage and Medicare Prescription Drug Plan (Part D) will receive an EOB when they use their policy. You don’t need to request an EOB — you automatically receive an EOB the month after a claim, whether it’s from an office visit or a prescription.

Each plan has its own EOB form; private insurance companies provide Medicare Advantage and Part D, and your EOB will come directly from them. If your MA plan and Part D plan are from different companies, you’ll receive an EOB for each.

You can expect to see a few standard terms, no matter who sends your Explanation of Benefits. They are:

• Billed Amount: what your doctor would charge for the service if you did not have insurance. Sometimes called Total Charges
• Allowed Amount: how much your insurance company has agreed to pay your doctor for the service you received
• Benefit Amount: how much your insurance company will pay for your service
• Adjusted Amount: the amount you saved by having insurance
• Copayment: the fixed amount you pay directly to your provider for medical services or prescription drugs covered in your plan
• Coinsurance: the percentage of your medical costs that you pay after you meet your deductible; your insurance company pays the remaining amount
• Deductible: the amount you pay out of pocket before your insurance company covers its portion of your medical bills

While some of these terms are most commonly used in EOBs, “copayment,” “coinsurance” and “deductible” are standard healthcare terms you should know.

If you misplaced your most recent EOB or didn’t receive it in the mail, contact your insurance company. A representative should be able to provide the information you need and verify your mailing address. Many companies also offer paperless options; if you have an internet connection, you may be able to view your EOB online at any time.

No, but you’ll receive a Medicare Summary Notice (MSN), the Medicare explanation of benefits. Like the EOB, the MSN is not a bill — it’s a monthly snapshot of the services you’ve needed and what Medicare has agreed to pay for them. You can think of these as your monthly Medicare statements.