As the Best Medical Billing company, we often get asked questions like, “How long should providers keep EOBs (Explanation of Benefits)?” Let us quickly answer this question in this post.
Providers should keep Explanation of Benefits (EOBs) for a period of 7 to 10 years. This timeframe aligns with the general recommendation for retaining medical financial documents, including those necessary for IRS or other audits.
Since EOBs support your financial records, maintaining them for the same duration ensures compliance with record-keeping standards and audit requirements.
Keep in mind that the required retention period for EOBs also depends on your city, state, country or local laws. Generally, most healthcare providers and medical practices keep EOBs for 10 years just out of caution.
What is EOB in Medical Billing
An EOB is not a bill but rather a statement that outlines how a medical claim has been processed. It shows the total charges of your patient’s visit. And it’s sent to both the patient and the healthcare provider to offer transparency about the claim’s status.
EOB is a crucial document issued by your health insurance company after a claim has been processed. It serves several important functions and provides detailed information about the healthcare services provided.
Majorly, EOB breaks down:
- The medical procedures or treatments patients received on specific dates.
- The amount charged by the provider, what the insurance covered, and what patients owe.
But no action is required by the provider or patient when EOB is generated. Both the parties can and should review it for errors. The provider may send a bill to the patient if they owe some financial responsibility.
Understanding the Importance of EOBs for IRS 🌟
The Internal Revenue Service (IRS) is the part of the US government that collects taxes and enforces the law. Taxpayers who want to reduce medical costs need to have EOBs. These records give details about the services provided, the insurance payouts received, and any out-of-pocket costs. This helps taxpayers back up what they say on their tax returns.
In addition to the IRS, state health departments or insurance companies may also audit healthcare workers to make sure they are following the rules when it comes to billing. EOBs may also be asked to confirm claims and payments as part of these audits.
Example Scenario:
A person can subtract a large amount of their medical costs from their taxes. To back up this claim, the IRS might want to see proof that the costs were actually paid for and reported correctly. For example, EOBs from companies could be asked to show proof.
Importance of EOBs in Medical Billing
Explanation of Benefits (EOBs) offer these benefits for healthcare providers:
- EOBs ensure the accuracy of healthcare services provided.
- They help identify medical billing errors, avoiding the potential claim denials.
- EOBs offer financial clarity for effective planning.
- They can help provide clear medical records in case of disputes and appeals.
- EOBs help comply with the federal tax regulations and other audit requirements.
Now that you know how crucial EOBs are, let us share how long to hang on your EOBs in detail.
How Long Should Providers Keep EOBs?
The length of time to keep EOBs can depend on many factors, including IRS guidelines, personal record-keeping needs, nature of the medical care received, and local laws.
Here’s a detailed guide to help you determine how long to retain your EOBs.
General Recommendations
Medical billing specialists at BMB advise keeping EOBs for three to eight years from the date of the medical service. Retaining EOBs helps ensure you have adequate documentation for financial records and potential disputes or audits.
IRS Guidelines
For tax purposes, the IRS recommends the following retention periods for EOBs:
If you plan to claim a refund, keep EOBs and related tax documents for three years from the filing date of your original return or two years from when you paid your taxes, whichever is later.
If you failed to report income that should have been reported, the IRS advises hanging on documents for six years to cover potential audits.
Health-Specific Guidelines
The retention period for EOBs can also vary based on the nature of the health condition:
1. Standard Health Conditions (For routine or one-time treatments)
Store EOBs and related medical bills securely. Compare them for accuracy, track your deductible, and ensure there are no duplicate charges.
If you are not claiming a medical tax deduction, all payments have been settled, and your condition has been resolved, you can safely destroy the EOBs.
If there are outstanding payments or billing discrepancies, file EOBs securely and revisit them the following year to ensure all issues are addressed.
2. Serious or Recurring Health Conditions (For chronic or serious health issues)
Keep all medical bills and EOBs on file, and ensure they are stored securely and in chronological order for easy reference.
In the case of serious or recurring conditions, retain EOBs for at least five years after the last treatment date, or for seven years after claiming a medical tax deduction, whichever is longer. This extended period helps in managing ongoing medical concerns.
Federal / Legal Requirements
Here’s how long to keep EOBs as providers depends on regulations by HIPAA, CMS, and state authorities.
HIPAA
Health Insurance Portability and Accountability Act (HIPAA) requires providers to hold medical documentation for six years from the date of creation or the last effective date, whichever is later.
CMS
Centers for Medicare & Medicaid Services (CMS) require providers to keep patient records for at least five years after the closure of the cost report.
State Regulations
State laws may vary and can sometimes require longer EOBs or other medical record retention periods than usual.
How Long Should Doctors Keep Medical Records?
In addition to Explanation of Benefits (EOBs), you may have various other medical records, such as prescription receipts and medical bills. The retention period for these documents can vary based on their purpose and relevance.
Here’s a detailed guide on how long to keep these additional medical records.
Prescription Receipts
Keep routine prescription receipts for at least one year. This duration ensures you have documentation in case your insurance company needs to review or verify the prescription costs.
If you have claimed prescription costs as part of your tax deductions, retain these receipts for seven years. The longer period aligns with the IRS’s recommendation to keep records related to tax claims, allowing for audits or verification of deductions.
Medical Bills
You should keep your medical bills for at least a year for filing your income tax return. Keep medical bills for at least three years to comply with IRS audit regulations. And retain ongoing medical treatment bills until the issue is resolved.
Other Medical Records
Providers should keep other medical records for one to seven years, depending on the importance and scenario of each medical record.
Final Words: Secure EOBs Storage and Disposal
Keeping EOBs for seven to ten years helps ensure providers are prepared for any financial or medical issues that may arise.
Regardless of the retention period, ensure that EOBs are stored securely to protect your patient’s personal information. Use locked files or secure digital storage for physical and electronic records. When the retention period expires, shred digital or physical documents to prevent unauthorized access.
