Most people are never given instructions on how to interpret the medical bills, statements, and information they receive in the mail. Of the many types of paperwork they might receive, an Explanation of Benefits is one of the most common. An Explanation of Benefits (EOB) is a summary of charges billed to the insurance plan during a period of time. It shows the amounts of those charges that the insurance covered, as well as why coverage was or was not offered for those services. Explanation of Benefits statements are not bills.

Explanation of Benefits and Medicare Supplemental Insurance

In the case of a Medicare Supplemental insurance plan, an Explanation of Benefits will show:

• the total amount billed
• the amount excluded from coverage
• the amount paid by the insurance plan
• the amount that the patient or beneficiary of the insurance still owes to any providers.

For each claim within the Explanation of Benefits, the statement should give:

• the name of the provider
• the date of the service or procedure
• a code to describe the type of service provided
• and the amounts billed, excluded, and owed after copays, deductible payments, and coinsurance.

When you receive an Explanation of Benefits, compare it against any corresponding bills from the providers. Be sure the two match up before submitting more payments.

Explanation of Benefits for Long Term Care

In the case of a Long Term Care insurance plan, an Explanation of Benefits statement will list the details of the policy first. These include:

• the daily maximum benefit (the highest amount the plan will pay or reimburse the beneficiary for services on any given day)
• the elimination period (the amount of time the beneficiary must pay for services out of pocket before the insurance begins to pay) and when it was completed
• the lifetime maximum benefit (the grand total amount or period of time that the insurance plan will pay for services for the beneficiary).

The Explanation of Benefits will provide a summary of the total amount billed to the plan for a period of time. Following this is the amount excluded from that total, and then the amount that the policy did pay.

There will likely be a section of the statement giving more detail about why the plan paid the amount it did, as well as why it excluded any charges. The most common reasons that charges are excluded are that they exceed the daily maximum benefit of the policy, or that the services themselves are not covered under the policy.

Finally, some Long Term Care Insurance companies will also give an itemized list of the services that were billed to the policy for the period of time listed on the Explanation of Benefits statement.

To understand and make better use of a Long Term Care insurance policy, it is helpful to track:

• services submitted
• the amounts billed and covered
• the amounts excluded

Rarely are beneficiaries given information on how to interpret Explanation of Benefits summaries. It is important to be able to understand documents like these. It ensures that beneficiaries receive the coverage and services they need without paying more than necessary.

At New York Financial Organizers, Inc. we provide our clients and their families with financial peace of mind by keeping records of all medical bills and insurance paperwork. This helps to ensure that their insurance plans cover the services they are designed to cover. It also safeguards our clients against late payments or confusing correspondence from their Medicare Supplemental Insurance or Long Term Care insurance policy documentation.