Medicare Explanation of Benefits Decoded: Simple Tricks Help You Catch Errors and Cut Costs

After a doctor’s visit, it’s typical for your insurance company to send an Explanation of Benefits​ (EOB), which is an explanation of what your bill will be—and it usually arrives before the bill itself. But many Medicare users say understanding the EOB can be difficult, especially since there are a variety of added fees and costs a lot of people don’t understand. Below, we break down how to understand your Medicare Explanation of Benefits​ and find out if there are any ways you can reduce your bills. 

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What is a Medicare Explanation of Benefits​? 

The Medicare EOB is “is a summary of your healthcare services that Original Medicare or your Medicare Advantage plan sends you after you receive care,” explains Stephanie Jones, CEO and founder of iTAV, a software solution that aims to simplify the Medicare process. 

“It tells you what services you got, how much Medicare paid and what you might owe,” Jones continues. “Understanding your EOB is important so you don’t end up overpaying. Since it’s not a bill, it’s your chance to double-check charges before you pay anything!” 

Why is it important to view your Medicare Explanation of Benefits​? 

Most people get their Medicare EOB, quickly scan it and then make a payment. But  Jones says taking a few minutes to review it carefully can save you money. 

“Looking at your EOB regularly can help you spot errors, like being charged for services you didn’t receive. It also helps you keep track of your medical expenses, allowing you to plan better and avoid unexpected costs that can add up,” she explains. “If you spot an error, like charges for services you didn’t receive, or if your bill seems higher than what’s listed on your EOB, it’s time to reach out! Contact Medicare or your supplemental insurer when this happens. If your provider’s bill doesn’t match your EOB, give them a call too. The sooner you act, the better chance you have of correcting the issue.” 

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How to read your Medicare EOB and save

When it comes to reading your EOB, Jones says the first step should be to make sure the doctor or provider listed is someone you actually say for treatment. “”This helps confirm that the charge corresponds to the right healthcare professional or facility,” she explains. 

“Second, check the service description to see if you actually received what they billed you for.” Next, look at the amount charged and compare it to what Medicare approved. “Finally, review the patient responsibility section to know what you owe. Although this is not a bill, this helps catch any mistakes and will help you budget for future bills.” 

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With that reading does come some confusion though, especially around the terms ‘allowed allowance,’ ‘coinsurance’ and ‘copayment.’ To help understand them, Jones defines them as: 

• Allowed amount: This is the maximum amount Medicare will pay for a service. Understanding this can help you avoid surprise fees and bills. 
• Coinsurance: This is your share of the costs after the deductible has been met. It’s calculated by Medicare allowance, not the physician’s charge, and understanding it can help ensure you only pay what you need to be paying. 
• Copayment: This is a fixed amount you pay for specific services. Knowing the amount can help you eliminate surprise bills at the doctor office. 

“Understanding these terms helps you question any incorrect charges and avoid paying more than you should,” says Jones. “By focusing on the allowed amounts rather than the physician’s charges, you can better manage your healthcare expenses.”