Understanding Your Explanation of Benefits (EOB)

What is an Explanation of Benefits?

An Explanation of Benefits (EOB) is a document your health insurance company sends after processing a medical claim. It is not a bill — it is a summary of how your insurer processed the claim and what portion, if any, you are responsible for paying. Understanding your EOB is the first step to verifying that you are being charged correctly.

Key fields on an EOB

Billed amount: The amount the provider charged before any adjustments. This is the chargemaster rate — an inflated list price that almost nobody actually pays.

Allowed amount (contracted rate): The negotiated rate your insurer has agreed to pay for this service. The provider must write off the difference between the billed amount and the allowed amount. This write-off is not your responsibility.

Plan paid: The amount your insurer paid directly to the provider.

Your responsibility: The amount you owe — this is the only number that matters to you. It reflects your deductible, coinsurance, and copay obligations under your plan.

Why is the billed amount so much higher than the allowed amount?

Hospitals set their chargemaster prices artificially high as a starting point for negotiations with insurers. Each insurer negotiates its own contracted rate, which is typically 30–80% below the billed amount. Uninsured patients who do not negotiate are often charged the full billed amount — which is why it is critical to always ask for a self-pay discount if you are uninsured.

What to do if something looks wrong

If the "your responsibility" amount on the EOB does not match what the hospital is billing you, contact the hospital billing department first. If the discrepancy is not resolved, file a formal complaint with your insurer. If you believe a service was incorrectly denied, you have the right to appeal the denial — the EOB will include instructions for filing an appeal.