The Medicare Explanation of Benefits outlines the health care services and products received by the policyholder.

The Explanation of Benefits can be used by policyholders to understand how their health insurance plan works and verify whether they have been overcharged for services.

Understanding Explanation of Benefits

An Explanation of Benefits can be confusing to read, especially if you’re not familiar with the terminology used. However, a few things will make it easier to understand:

  1. Take some time to review the Explanation of Benefits before deciphering it. This will help give you a general idea of what to look for in reference to your Medicare
  2. If there are any services that you do not understand, be sure to ask your insurance company or health care provider for more information.
  3. Use online resources such as the Glossary of Health Insurance Terms on the Centers for Medicare & Medicaid Services website to help decipher terminology used in Explanations of Benefits.

What does an Explanation of Benefits Include?

An Explanation of Benefits includes a summary of the health care services and products received by the policyholder.

It will list the dates of service, the provider’s name, and the amount charged for each service. In addition, Explanations of Benefits may also include information such as:

  • The insurance company’s payment to the provider
  • Explanations of how the policyholder’s insurance plan works
  • Explanation of why a particular service was not covered by the policyholder’s insurance plan

Section 1: The EOB summarizes all of the drug purchases since the last EOB.

Section 2: Summarizes your year-to-date costs, your total out-of-pocket costs, and your total drug costs.

It also has basic plan information including your deductible, any coverage gaps, and your initial coverage amounts.

Section 3: If you have changed Part D plans, the EOB will also summarize your out-of-pocket and total drug costs transferred from your previous plan.

It should be laid out in an easy-to-decipher manner.

Section 4: The Explanation of Benefits will also note any adjustments to your out-of-pocket and total drug costs if necessary.

For example, if you have a reversed claim or a supplemental wrap-around payment, the EOB form will display them.

Section 5: The EOB will also list any updates to your drug plan’s formulary that overlap with the drugs you take.

This should be kept by the beneficiary.

Section 6: Finally, the EOB includes a section with contact information as well as instructions in case you want to appeal any decisions made by Medicare regarding your drug coverage.

Multiple charts

If Section 1 of your Explanation of Benefits statement features more than one chart, this means that some of your prescription drugs are provided under your Medicare Part D plan’s supplemental drug coverage. Medicare displays these drugs on a separate chart in order to reduce confusion and emphasize that any payments made for these prescriptions do not count toward your out-of-pocket costs or your total drug costs.

The drugs do not count toward your totals because they are typically not covered by Medicare’s original plan, hence the supplementary status. The supplemental chart is organized exactly like the main chart, with four vertical columns displaying the drug, the plan payments, your payments, and other organization payments.

Section 1 of your Explanation of Benefits form may also note formulary changes for your drugs as necessary. For example, column one of the first chart will tell you if the drug in question is scheduled for removal from the plan’s drug list at a future date.

If that is the case, you will need to consult with your doctor to determine a suitable replacement. Medicare may also move drugs into different cost tiers on a formulary plan. If so, this will also be noted in Section 1 of your Explanation of Benefits form.

If No Deductible Stage

Section 2 of your Explanation of Benefits chart may look a bit different if your Part D does not have a deductible stage. In this case, the first column (usually reserved for deductible information) will say the following: “Because there is no deductible for the plan, this payment stage does not apply to you.”

Depending on your Part D plan, there are dozens of possible variations in terms of how your individualized EOB Section 2 will appear. It will follow the general format listed above, but it may look slightly different based on whether or not you have brand name deductibles, Low Income Subsidy services, etc. For a complete listing of possible examples, reference the following PDF.

A Detailed Description of Formulary Changes

Section four of your Explanation of Benefits form will provide a detailed description of formulary changes that alter your coverage or dosages. This section may include subsections on step therapy changes. This will instruct you to try an alternative drug, or multiple alternative drugs in a certain order if your drug of choice becomes unavailable or moved to a different tier.

Section four will also inform you of any quantity limit changes. For example, a drug you have previously had a prescription for may change to feature a quantity limit. This means that there are restrictions in terms of how much you may order. The date and exact nature of the change will be specified in section four.

Section four will specify any or all of these changes as they apply to your particular case. It also includes a sub-section titled “what you and your doctor can do” which offers recommendations for you and your physician when it comes to obtaining alternative drugs or dosages.

How Do I Get An Explanation of Benefits?

You should receive an Explanation of Benefits for every month. It’ll include every service or product billed to your insurance plan.

What does Medicare Advantage and Medigap Explanation of Benefits Include?

A Medicare Advantage and Medicare Supplement’s Explanation of Benefits is similar to a standard Explanation of Benefits. Still, it includes additional information specifically for those with Medicare Advantage or Medicare Supplement plans. This document will include:

  • A list of the health care services and products that your policyholder receives
  • The dates of service
  • The provider’s name
  • The amount charged for each service
  • The insurance company’s payment to the provider
  • Explanations of how the Medicare Advantage or Medicare Supplement plan works
  • Explanation of why the policyholder’s insurance doesn’t cover a particular service

FAQs

What is an Explanation of Benefits?

The Explanation of Benefits outlines the health care services and products received by the policyholder and the insurance company’s payment to the provider. This also includes any other medical services.

How does an Explanation of Benefits work?

You can use an Explanation of Benefits to your advantage by reviewing it for accuracy keeping track of your deductible and out-of-pocket expenses such as your copayment and coinsurance.

Where can I find additional information regarding the Explanation of Benefits?

Glossaries of Health Insurance Terms on the Centers for Medicare and Medicaid Services website provide more information about Explanations of Benefits and covered services. Medicare.gov is also a good resource.

What does an Explanation of Benefits Include?

An Explanation of Benefits includes a summary of the health care services and products received by the policyholder. It will list the dates of service, the provider’s name, and the amount charged for each service.

What is the difference between an Explanation of Benefits and a Statement of Benefits?

A Statement of Benefits is similar to an Explanation of Benefits. Still, it includes additional information specifically for those with enrollment in Medicare Advantage (Part C) or Medicare Supplement plans.

How often will I receive an Explanation of Benefits?

You’ll receive an Explanation of Benefits after each time you receive health care services. For Medicare beneficiaries, you can expect an Explanation of Benefits monthly.

What do I do if I disagree with my Explanation of Benefits?

If you find any errors in your Explanation of Benefits, be sure to contact your insurance company or health care provider.

Is there an Explanation of Benefits for Part A or Part B?

Yes. Part A and Part B, known as Original Medicare, do receive an Explanation of Benefits. The Explanation of Benefits does also have additional information for those with a Medicare Advantage plan or Part D prescription drug plan.

How long should you keep Medicare Explanation of Benefits?

A good practice is to keep any Medicare Explanation of Benefits for a year from the date issued. This is in case any issues arise later.

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Written By:
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Lindsay Malzone, Lindsay Malzone is the Medicare editor for Medigap.com. She's been contributing to many well-known publications since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.
Reviewed By:
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Rodolfo Marrero, Rodolfo Marrero is one of the co-founders at Medigap.com. He has been helping consumers find the right coverage since the site was founded in 2013. Rodolfo is a licensed insurance agent that works hand-in-hand with the team to ensure the accuracy of the content.