The following post is by MPFJ staff writer Travis. Travis is a customer blogger for Care One Debt Relief Services, and also appears weekly at Enemy of Debt. Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family. Note: Terms used are taken directly from the author’s explanation of benefits statement. Equivalent terms used by other insurance companies may be slightly different. Please refer to the glossary generally included with your explanation of benefits statement for further clarification.
A person flips through the mail, stopping at an envelope from their medical insurance provider. The envelope is ripped open, and after a brief glance it appears the mailing describes the charges for a recent doctor visit. However, the words “THIS IS NOT A BILL,” are plastered across the top of the page. Looking closer, there is no amount due or due date. The information is crumpled up and thrown in the trash in favor of waiting for the actual bill from the medical center.
Does this sound like you, or anybody you know?
The discarded document was an Explanation of Benefits Statement, which supplies patients with detailed information about the charges incurred during a visit to the doctor. In fact, it contains much more detail than the actual bill that will be received from the medical center’s billing department. A bill which likely won’t show up for several more weeks.
It’s important to understand how to read an Explanation of Benefits Statement. They provide us the opportunity to review what charges were incurred, how they were categorized, and how much we will be responsible to pay out of pocket. It can be inspected for errors, and the amount owed can be determined such that a patient can begin to plan financially to pay the bill when it finally does arrive.
Let’s take a look at some of the more important parts of an Explanation Of Benefits Statement:
Basic Information
Your name, policy number, and claim number should be easily located on the form. They should be verified to ensure the information is correct. The date of the medical visit should also be listed.
Description
A very brief description of each service provided. Example descriptions include Lab Tests and Medical Care. Many times there will be several itemized services for a single visit. For example, my explanation of benefits statement listed three several Lab Test services, one for each classification of blood tests that were performed. Additionally, there was another service labeled Medical Care that referred to the actual consultation and exam with the doctor.
Patients should look over each service provided and call their insurance company if they have any questions regarding specific medical services listed. For example, I once saw a sport’s medicine doctor for problems I was having with my feet while running. My explanation of benefits listed a charge labeled as surgery. During the office visit, the doctor taped my arches to try to hold them in place. Because he altered my body in some way, the service was classified as Surgery.
Amount Charged
This is the amount the medical provider charges for the service performed before any insurance benefits are applied. Think of this as the sticker price, or what you would pay for the service if you didn’t have any insurance.
Allowable Charges
This is the amount you are actually charged for the service based upon an agreement between your medical provider and your insurance company. It’s usually a discounted rate given to the insurance company because they bring volume business to the medical provider.
Copay
If your specific insurance plan specifies a set amount you will owe for a service, that will be shown here. This is common for Health Maintenance Organizations (HMOs). For example, if your plan specifies that you pay $15 for each office visit, that copay amount would be listed here. You are responsible to pay this amount.
Coinsurance
If your insurance plan specifies that you pay a percentage of each service, that will be shown here. This is common for Preferred Provider Organizations (PPOs). For example, if your plan specifies you pay 30% of each office visit, that amount would be listed here. You will have to pay this amount.
Applied to Deductible
Medical insurance plans have a deductible amount of varying sizes that patients are responsible for as medical bills accumulate during a calendar year. After that deductible has been fulfilled, generally plans then apply a higher level of coverage. For example, let’s say a plan has a deductible of $3200 for charges in that category. Once the patient has incurred $3200 of out of pocket expenses, the plan may then cover 100% of the charges. You are responsible for any amount listed here.
Amounts Not Covered
This column is reserved for services that are just not covered by your policy. You are responsible to pay this amount.
Amount Paid
Once the insurance benefits have been applied, the insurance company will send funds to the medical provider. This column shows the amount of insurance benefit sent to your medical provider.
How much will I owe?
You can determine your actual medical bill by adding up the liability columns for each service:
- Applied to Deductible
- Copay
- Coinsurance
- Amounts Not Covered
I typically write down the total on the bottom of the explanation of benefits document, and tuck the form away. When I receive the medical bill, I compare how much I owe to what I thought I would owe from the explanation of benefits.
The ability to read an explanation of benefits form is a skill that everyone should have. It allows patients to be informed as to how their medical benefits are being applied, and to review that it has been done correctly. If anything seems incorrect, it’s best to call the insurance company and ask questions as soon as possible.
How about you all? Do you carefully review your explanation of benefits forms, or do you just throw them in the trash and pay the bill when it comes? What are your habits in terms of reviewing benefits forms?
Share your experiences by commenting below.
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