Let’s put aside all of the ACA talk for a moment and focus on another challenge facing employee benefits: the complexities in interpreting an Explanation of Benefits (EOB). After all, with so many people anticipated to be covered, it’s crucial to understand the statement that explains how the insurance plan processes the charges.
One of the most frequent calls to our Benefits Help Desk involves assisting “EOB-challenged” employees. When the insurance carrier generates the EOB, the intention is to advise the covered member and/or the provider as to what portion, if any, of the charges is eligible for payment under the insurance plan. Sounds simple—but unfortunately, all too often these code-laden statements are confusing and misleading.
I’ve spent hours familiarizing myself with EOB details, and even I find myself seeking affirmation in deciphering some statements. I’m certainly not surprised at the questions employees have—and their misconceptions. One of the biggest is that an EOB is a bill. Sure, it identifies a member’s final out-of-pocket liability for a particular service, but it doesn’t take into consideration any payment that may have already been made to the provider.
Then there’s the charged amount vs. the allowed amount. The variations depending on in-network and out-of-network will likely first confuse, and then surprise members when they realize what they’re actually responsible for paying: Accessing providers that are not in-network leaves members responsible for 100% of the difference between the allowed amount and the charged amount.
While the charged amount is the amount that the provider submits as his or her charge for the services rendered, more often than not, this is not the amount “allowed” by the carrier.
New questions are raised each day by perplexed employees, and as more people are covered we can expect to strap in for even more.