Every month, you receive a letter from your insurer. It’s not a bill, and it doesn’t require a response, so you might be tempted to toss it aside and forget about it. That would be a bad idea. The monthly explanation of benefits contains important information. Once you understand how to read it, you’ll see why it’s smart to do so.
The details and format of your statement will vary depending on your insurer and the type of policy you have. Here are some of the main section you’re likely to see.
Your Prescriptions or Services for the Last Month
You should receive a list of all the services and prescriptions you received, including any medication, doctor visits and tests that you used the insurance for.
For each service or prescription, you should see the following:
- A description
- The amount paid by the plan
- Any amount paid by another insurer or organization
- The amount that you’re responsible for, which could include the deductible, the copay and any amount not covered by the plan
While this statement is not a bill, if you have not already paid the amount you are responsible for, you can expect to receive a bill for it.
Your Out-of-Pocket Costs
This section contains two important pieces of information:
- The amount you have paid out of pocket for the year so far
- Your out-of-pocket limit
When deciding whether to keep or change your insurance during the next enrollment period, it will be helpful to know what your total out-of-pocket costs were and whether you maxed out.
The deductible is the amount you have to pay before the insurer starts paying. On your statement, you should see a section that shows the deductible for the plan and how much of it you have paid so far. Some services and prescriptions may be covered before the deductible is met.
If your plan does not have a deductible, this section will be a little different. For example, it might show which stage of coverage you’re in:
- Initial coverage, when the plan’s normal payments apply
- Coverage gap, often called the donut hole in Medicare Part D, when you may pay a higher out-of-pocket cost
- Catastrophic coverage, when you reach your out-of-pocket maximum and become responsible for only a small copay
This information can help you anticipate future costs for the rest of the year. For example, knowing that you’ve paid you deductible will tell you that some of your costs may go down. Seeing that you’re entering the coverage gap will tell you that your costs will go up.
This information will also be helpful during the next enrollment plan. If, for example, you have problem meeting a high deductible or struggled with the coverage gap, you might want to look for another plan that will better suit your needs.
Updates or Changes
If there are any upcoming changes that will affect you, you will see them here. For example, if the drug list or formulary is changing, which could impact coverage for prescriptions you take, you should be notified.
Appealing or Reporting Mistakes
Make sure the services, prescriptions and costs are accurate. If you see anything you did not receive – a test you turned down, for example – you will need to notify your insurer of the mistake.
You can also appeal if you believe coverage was incorrectly denied. To see why the claim was denied, look for the explanation, which will probably be given using a code. If the denial was made in error, you will need to follow up to have to error fixed or to provide evidence of why the claim should be covered.