Understanding Explanation of Benefits (EOB) — reading the paperwork
This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.
Understanding the Basics
The envelope arrives and your parent calls in panic. They don't understand why they're being asked to pay for something that should have been covered. You're looking at an Explanation of Benefits, and you're not sure what it means either. This happens so often that you might think EOBs are intentionally designed to confuse, but the real problem is simpler: these documents are written for insurance companies and healthcare providers, not for patients. They're packed with codes, industry terminology, and financial logic that makes sense in a billing department but looks like gibberish in your parent's kitchen.
An Explanation of Benefits is your parent's itemized receipt from their health insurance plan. It shows what happened when they received medical care, what the provider charged, what the insurance company paid, what your parent owes, and why. Think of it like a detailed receipt you might get after a restaurant meal, except this receipt explains decisions made by an insurance company rather than a point-of-sale system. Your parent receives one every time they use their insurance, which means you're both likely to encounter several of these confusing documents each year.
The critical distinction is this: an EOB is not a bill. When your parent receives an EOB, they are not necessarily being asked to pay that amount. The insurance company is explaining what happened—what was charged, what they paid, and what your parent might owe. The actual bill, if your parent owes anything, comes separately, usually from the healthcare provider's billing department. Some adult children make the mistake of thinking the EOB itself is a bill and either panic or prepare to pay, when actually they should just be reading and understanding what it says.
Every EOB contains the same basic information, though the layout differs by company. At the top, you'll see your parent's name, policy number, and the dates covered by this particular explanation. Then there's a section listing each medical service or visit processed during that time period. For each service, the EOB shows the date it occurred, who provided the service, what was done (described in medical billing codes and plain language), what the provider charged, what your parent's insurance company negotiated as the allowable amount, what the insurance paid, and what your parent owes.
The most important thing to understand is the difference between what was charged and what was allowable. If your parent's doctor charges $500 for a visit but the insurance company has negotiated a rate of $300 for that visit, the EOB will show both numbers. Your parent is not responsible for the $200 difference—that's a write-off, a negotiated discount that the insurance company secured. Your parent only pays their share of the $300 allowable amount. This is the biggest source of confusion. A parent looks at the charged amount, thinks that's what they owe, and worries they're responsible for a much larger bill than they actually are.
Each line on an EOB also shows how much your parent pays, based on their plan. If your parent has a deductible, the first medical bills might show them owing the full allowable amount until the deductible is met. Once the deductible is met, your parent usually pays a copay for office visits or a percentage (called coinsurance) for larger services. If your parent has reached their out-of-pocket maximum for the year, the insurance company pays 100% and your parent owes nothing. All of this should be reflected on the EOB, and understanding how it works means you can predict what your parent will actually owe before the bill arrives.
The EOB also explains what happens with claims that were denied or partially paid. A claim might be denied because the service wasn't covered under your parent's plan, because it wasn't properly authorized, or because the provider is out of network. A claim might be partially paid if the insurance company determined that part of the charge exceeded the allowable amount. These decisions appear on the EOB with explanation codes,short abbreviations that mean specific things. Finding and understanding these codes is where many people get stuck, but learning to decode them gives you enormous power to spot potential errors and decide whether to appeal.
Your Parent's Specific Situation
To help your parent with their EOBs, you need to know a few things about their coverage. First, what type of insurance do they have? Medicare, a private plan, both? If they have both, they'll receive separate EOBs from each carrier. You should know what your parent's deductible is, what their copays are for different types of service, and what their out-of-pocket maximum is. This information is on their insurance card or in their plan documents. When you're reading an EOB together, you can reference these numbers to check if your parent is paying the right amount.
Second, you need to know what medical care your parent has actually received. Look at the dates on the EOB and match them to the medical visits or services you know about. If your parent doesn't recognize a charge, don't assume it's an error,they might just have forgotten about a test or follow-up visit. But if they absolutely do not remember receiving the service, that's worth investigating. Ask your parent for clarity before deciding to appeal.
Third, ask your parent whether they kept any paperwork from the medical visit itself. Sometimes healthcare providers give patients a form at the time of service that explains what's being done and what the expected cost is. If your parent has that, compare it to what appears on the EOB. Also ask whether the insurance company sent any paperwork before the EOB arrived. Hospitals and specialty clinics sometimes request pre-authorization before certain procedures, and that authorization paperwork can help explain what's on the EOB.
You should also ask your parent directly what confused them. They may have looked at the wrong number or misunderstood a section header. Or they may have a real question about why something was or wasn't covered. If your parent received an EOB for a service they don't think they should have had to pay for, if they remember different information about what should have been covered, or if they have questions about the numbers, those are all reasons to look more closely at the document and potentially reach out to the insurance company.
As your parent ages and you become more involved in their healthcare and finances, consider asking permission to receive copies of their EOBs along with them. If your parent is comfortable sharing, you can monitor their healthcare charges and usage alongside them, which can help you catch issues early and understand their healthcare patterns over time. You're not looking for something to go wrong,you're just being a second set of eyes in a system that often requires it.
Taking Next Steps
Once you've read through an EOB with your parent and understand what it says, you need to decide whether any action is necessary. Most EOBs don't require any action beyond your parent understanding what they're looking at. If the explanation makes sense, the charges match your parent's memory of the visit, and the amounts your parent owes are in line with their deductible and copay structure, then you're done. Your parent can file the EOB for their records and wait for any bill that might follow if they owe a balance.
If something is confusing or seems incorrect, your next step depends on what the problem is. If your parent doesn't understand a charge and wants explanation, they can contact the healthcare provider's billing department to ask what service that charge is for. If your parent doesn't think a service should have been charged to them at all, they should speak directly with their healthcare provider before going to the insurance company,it's possible the provider has them confused with another patient or billed the wrong insurance. If your parent believes the insurance company made an error in how they processed the claim, that's when you contact the insurance company directly.
The insurance company's contact information is on the EOB itself and also on your parent's insurance card. When you call, be ready with your parent's policy number, the date of service in question, and a clear explanation of what you believe the problem is. You may be able to resolve it in one phone call if it's something simple like a data entry error. If it's something more complex,like your parent believing they shouldn't have to pay for a service because of their plan coverage,the insurance company might need to review your parent's plan and the claim in detail. That process can take several days or weeks.
If the insurance company denies your parent's request or you believe they've made an error, your parent has the right to appeal. The EOB should contain information about how to file an appeal, or you can ask the insurance company customer service line what their appeal process is. Appeals typically require you to submit information in writing within a certain time window, usually 30 to 60 days from when your parent received the EOB or the bill. You'll need to explain why you believe the insurance company should reconsider their decision. If your parent has documentation from their healthcare provider supporting their position,such as information about what was covered under their plan at the time of service or a statement from the provider about what should have been billed,include that with your appeal.
If your parent is very concerned about a charge or has received multiple conflicting explanations, consulting with someone outside the insurance and healthcare system can help. Some nonprofit agencies offer free help with insurance questions, and elder law attorneys can review complex situations if there's a significant amount of money at stake. These aren't usually necessary for routine questions, but they can be helpful when your parent is genuinely stuck or feels like they're being run in circles.
Understanding EOBs takes time. The first few you read through together will feel confusing, but they start to make sense once you understand the basic structure. The documents themselves don't get clearer, but your ability to extract the information you actually need improves quickly. After you've helped your parent with a handful of EOBs, you'll develop a rhythm,you'll know what to look for, what questions to ask, and when something looks genuinely wrong. That knowledge is worth having.
How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's healthcare coverage or insurance questions, consult with their healthcare provider, insurance company, or contact your local Area Agency on Aging for guidance and support.