When you receive a medical service or procedure that is billed to your insurance, your insurance company will send you a statement called an “Explanation of Benefits,” or EOB. This document has information relating to how much was paid on your recent treatment and how much is still owed. There is also another line item you’ll see on your EOB called an allowed amount, which is the amount considered payment-in-full by your insurer and any providers in their network for the cost of your medical procedure or doctor visit. Understanding the charges is an important part of being an informed participant in your care.

The Purpose of an Explanation of Benefits

The purpose of an EOB is to let you, the policyholder, know how much was paid and what procedures were paid for. The document includes the patient name, name of the policyholder, summary of claims paid, and an overview of charges.

When you review your EOB, you’ll be able to double-check that the procedures listed are correct and that the amount you owe is what you expect. The EOB is not a bill, however. If you owe anything more than the insurance paid, you will be billed separately from the medical provider.

If there are any concerns on an EOB, you will want to contact the insurance company right away. They can help you understand what a specific procedure term means or why a certain amount was charged. They will also need to know immediately if your EOB reflects a procedure or visit that you did not actually receive.

Understanding the Allowed Amount on Your EOB

In the summary of charges, you’ll notice that the provider’s charged amount will be provided, along with an “allowed amount.” The allowed amount reflects how much the insurer has decided to pay for the procedure or visit. Sometimes insurers will use the term “usual and customary charges” or another term in place of “allowed amount.”

Providers who have agreed to accept the insurance company’s allowed amount for visits and procedures are considered “in-network” providers. If you visited an in-network provider, you will not be charged the difference if the provider’s charge is higher than the allowed amount.

Some out-of-network providers do not agree to accept the insurance company’s allowed amount as full payment for a visit or service. If this is the case, you will likely be required to pay the difference between the doctor’s fee for a service and the allowed amount the insurance will pay. In some cases, the insurer does not provide any coverage for out-of-network care and you may find yourself paying the full charged price of the care you received.

Reviewing your EOB when you receive it is an important way of making sure that you receive the coverage you are paying for from your insurance company. Make sure the charged procedures match the care you receive, and take note if any additional cost is passed along to you above the allowed amount for the care you receive.

To learn more about your EOB, read Explanation of Benefits Explained.