Health Insurance Navigator

By Lisa Zamosky

In response to a recent blog post about common mistakes people make when it comes to their health care bills, one reader commented: “You have to know a lot about medical terms to figure out what they’ve billed you for sometimes.”

To illustrate this reader’s point, I’ve included the image of a fairly standard Explanation of Benefits (EOB) – the document your insurance company sends you after your doctor has submitted a claim:

This particular example shows 42 pieces of information housed on one EOB. Can you make sense of it all?

Not many of us can. Yet getting at least a basic grasp on the meaning of common documents sent to us by our insurers and health care providers can have a big impact on how much we ultimately pay for our care.

What an EOB is and What it Isn’t

In short, an explanation of benefits lays out how much of your doctor’s bill your insurance company is going to pay, as well as who is responsible for what amount.

It is not a bill. Rather, the document should be used to make comparisons between the care you know you got from your doctor or while in the hospital and what you’re being charged for.

Here’s the basic information an EOB aims to deliver:

• CPT code – The medical service(s) for which your doctor or hospital is charging
• Charge amount – What your doctor and/or hospital has billed your insurance company
• Allowed amount – The total amount of money your insurance company will reimburse your healthcare providers; usually this is a contracted or what’s called the usual and customary rate
• Payment amount – How much the insurance company paid (keep in mind that the dollar amount your doctor bills is not the same as the amount he or she will be paid by your insurance company)
• Due from the patient – The portion of the bill that you are responsible for paying

But obviously, with 42 data points shown on the illustration above, there is a lot more information included that would be helpful to understand.

Keeping Track of Medical Expenses

One of the most common issues health care consumers have is that they find it virtually impossible to know where their health care dollars are going, says Tomer Shoval, co-founder and CEO of Simplee.com, a new website that bills itself as the Mint.com for health finances.

The good news is that if you’re serious about getting a handle on medical bills, there are resources available to help.

The nonprofit Patient Advocate Organization has created an EOB page on its website that does a nice job of connecting each of the dots with an explanation of the terms commonly found on these forms. It’s a good page to bookmark and refer back to the next time you receive an EOB in the mail.

I’ve talked before about using online tools and medical billing experts in an effort to take the headache out of the medical billing process. Sites like Quicken Health Expense Tracker and Smart Medical Consumer help consumers keep track of all medical billing paperwork and spot billing errors, among other things.

And sites like CakeHealth and Simplee.com pull all of your health care accounts – your insurance plan, health savings accounts, etc. – into one dashboard so you can easily see where your money is being spent, what your insurer will cover, where you are with respect to meeting your deductible and whether a billing error has occurred.

The sites also simplify terms and paperwork. For example, take a look at an image of an insurer’s EOB that’s been altered for simplicity on Simplee.com:

Financial Awareness

With consumers shouldering more of the financial burden of their medical care, we’ve entered an age when being financially literate means understanding health care finances and how they impact our overall financial well-being.

What terms and billing processes do you find most challenging when it comes to your health care? Have you found ways of simplifying the process? Sound off in the comments section below.