Understanding Your Explanation of Benefits (EOB)
It looks like a bill, it says "This is not a bill," and it's confusing. Here is how to read it.
The Golden Rule of EOBs
Never pay a medical bill until you have compared it with your Insurance EOB.
The EOB tells you exactly what your insurance company agreed to pay and exactly what you owe. If the hospital bill says you owe $500, but your EOB says "Patient Responsibility: $100," you only owe $100.
Key Terms Decoded
Billed Amount
This is the "sticker price" the doctor or hospital charged. It is usually very high and almost made up. You rarely pay this amount if you have insurance.
Allowed Amount
This is the real price. It is the negotiated rate your insurance company promised to pay the doctor. The doctor cannot charge you the difference between the Billed Amount and the Allowed Amount (this is called "Balance Billing" and is usually illegal for in-network providers).
Deductible
The amount you must pay 100% of out of your own pocket before your insurance starts sharing the cost. If your deductible is $1,000, you pay the first $1,000 of medical bills each year.
Coinsurance
Your share of the cost after you meet your deductible. Common splits are 80/20 (Insurance pays 80%, you pay 20%).
Copay
A flat fee you pay for specific visits (e.g., $25 for a family doctor, $150 for ER). Copays usually do not count toward your deductible.
Patient Responsibility
The Bottom Line. This is the total amount you owe the doctor. It is the sum of your Deductible + Coinsurance + Copay.
Example Calculation
Scenario: You go to the ER. You have a $1,000 deductible (which you haven't met yet) and 20% coinsurance.
Hospital Billing Price: $5,000 (Scary label price)
Insurance Allowed Amount: $2,000 (The real negotiated price)
You Pay (Deductible): $1,000 (You pay the first $1k)
Remaining Cost: $1,000 (Allowed Amount - Deductible)
You Pay (Coinsurance 20%): $200 (20% of the remaining $1k)
Insurance Pays (80%): $800
Your Total Bill: $1,200