ERA vs EOB: Understanding Your Insurance Payment Documentation

The insurance company paid. But what exactly did they pay, and how do you know if the payment is correct?

The Documents That Explain Insurance Payments

When an insurance company pays a claim, they do not just send money. They send documentation explaining exactly what they paid, what they adjusted, and why.

This documentation comes in two forms: the Electronic Remittance Advice (ERA) and the Explanation of Benefits (EOB). Understanding these documents is essential for accurate payment posting and effective reconciliation.

Many dental practices treat ERAs and EOBs as paperwork to file away. That is a mistake. These documents are your proof of what happened. They tell you whether you were paid correctly. They guide how you post payments and adjustments. They provide the trail you need when something goes wrong.

ERA: Electronic Remittance Advice

The ERA is the electronic version of payment explanation. It arrives digitally, typically through your clearinghouse or directly from the payer.

What an ERA Contains

A standard ERA (HIPAA 835 format) includes:

Payment information:

• Total payment amount
• Payment date
• Payment method (EFT or check)
• Trace or check number

Claim-level detail:

• Patient name and ID
• Date of service
• Claim number
• Billed amount
• Allowed amount
• Payment amount
• Patient responsibility

Line-level detail:

• Each procedure code billed
• Amount billed per procedure
• Amount allowed per procedure
• Amount paid per procedure
• Adjustment amounts and reason codes

Adjustment reason codes:

• Standardized codes explaining why amounts were adjusted
• Common codes include contractual adjustments, deductibles, maximums, and non-covered services

How ERAs Arrive

ERAs typically come through:

Clearinghouse: Your dental clearinghouse receives ERAs from payers and makes them available in their portal. Many clearinghouses can automatically post ERAs to your PMS.

Payer portal: Some payers make ERAs available through their provider portal for download.

Direct connection: Large organizations may receive ERAs directly via secure file transfer.

ERA Advantages

Speed: ERAs arrive electronically, often before or simultaneously with payment.

Accuracy: Data is structured and machine-readable, reducing manual data entry errors.

Automation: ERAs can be auto-posted to your PMS, saving significant staff time.

Completeness: All detail is in one structured file.

EOB: Explanation of Benefits

The EOB is the paper or PDF version of payment explanation. It contains similar information to an ERA but in a human-readable format.

What an EOB Contains

EOBs include:

Payment summary:

• Check number or EFT reference
• Payment amount
• Payment date

Patient and provider information:

• Patient name
• Subscriber information
• Provider name and ID
• Claim number

Service detail:

• Date of service
• Procedure codes and descriptions
• Billed charges
• Allowed amounts
• Payments
• Adjustments
• Patient responsibility

Remarks and messages:

• Explanation of any denials
• Notes about adjustments
• Information about remaining benefits

How EOBs Arrive

EOBs arrive by:

Mail: Paper EOBs mailed with checks or separately.

Portal: PDF EOBs available for download from payer websites.

Fax: Some payers still fax EOBs.

EOB Limitations

Manual processing: Someone must read and enter EOB information into your PMS.

Delay: Paper EOBs arrive days after electronic payment.

Error prone: Manual data entry from EOBs introduces errors.

Storage: Paper EOBs require physical or scanned storage.

ERA vs EOB: Key Differences

Feature	ERA	EOB
Format	Electronic (HIPAA 835)	Paper or PDF
Delivery	Digital via clearinghouse or portal	Mail, fax, or portal
Timing	Immediate or same-day	Days to weeks delayed
Processing	Can be auto-posted	Requires manual entry
Error risk	Low (machine-readable)	Higher (manual entry)
Storage	Digital, searchable	Physical or scanned

For practices processing significant insurance volume, ERAs are far more efficient than EOBs.

Reading and Interpreting Payment Documentation

Whether you are working with an ERA or EOB, you need to understand what the numbers mean.

Billed Amount

The amount your practice charged for the service. This is based on your fee schedule.

Allowed Amount

The amount the insurance contract says you can collect for this service. This is typically less than your billed amount.

The allowed amount is the total that can be collected from all sources (insurance payment plus patient responsibility).

Payment Amount

What the insurance company is actually paying. This may be less than the allowed amount if the patient has deductible, coinsurance, or copay responsibility.

Adjustment Amount

The difference between your billed amount and the allowed amount. This is the contractual write-off required by your insurance contract.

For example:

• Billed: $200
• Allowed: $150
• Adjustment: $50 (the $50 you cannot collect due to contract)

Patient Responsibility

What the patient owes after insurance pays:

• Deductible amounts
• Coinsurance percentages
• Copay amounts
• Non-covered services

Denial

When insurance refuses to pay a claim or portion of a claim. Denials include reason codes explaining why.

Common denial reasons:

• Not a covered benefit
• Maximum reached
• Pre-authorization not obtained
• Timely filing exceeded
• Coordination of benefits issue

Adjustment Reason Codes

ERAs and EOBs include standardized reason codes (Claim Adjustment Reason Codes or CARCs) explaining adjustments.

Common Codes You Will See

CO-45: Charge exceeds fee schedule/maximum allowable. This is the standard contractual adjustment.

PR-1: Deductible amount. Patient owes this toward their annual deductible.

PR-2: Coinsurance amount. Patient owes this percentage of allowed amount.

PR-3: Copay amount. Patient owes this flat copay.

CO-4: Procedure code is inconsistent with modifier or not covered together.

CO-50: Non-covered service. Not a benefit under the patient's plan.

CO-97: Payment adjusted based on already paid amount. Duplicate or overlap.

CO-109: Claim not covered by this payer. Bill another payer.

Using Codes for Posting

When posting payments, use the reason codes to:

• Apply correct contractual adjustments
• Identify patient responsibility amounts
• Recognize denials that need follow-up
• Catch potential payer errors

Reconciling ERA/EOB to Bank Deposits

The payment documentation should match your bank deposits. Here is how to verify:

Match Totals

The total payment on the ERA or EOB should equal:

• The EFT deposit amount, or
• The check amount deposited

If they do not match exactly, investigate before posting.

Verify Payment Method

Confirm the payment arrived as expected:

• If ERA shows EFT, verify EFT hit your bank account
• If ERA shows check, verify check was received and deposited

Account for Multiple ERAs

Sometimes multiple ERAs combine into a single deposit. Add ERA totals to match the deposit.

Watch for Take-Backs

If the deposit is less than the ERA total, look for take-backs or adjustments. The ERA should show negative amounts if previous payments are being recouped.

Auto-Posting ERAs: Benefits and Risks

Most modern PMS platforms can automatically post ERA data. This saves significant time but requires oversight.

Auto-Posting Benefits

• Dramatically faster than manual posting
• Fewer data entry errors
• Consistent adjustment application
• Staff time freed for higher-value work

Auto-Posting Risks

• Patient matching errors (wrong patient credited)
• Date of service mismatches
• Adjustment codes mapped incorrectly
• Errors in ERA data from payer

Best Practices for Auto-Posting

Review before finalizing. Auto-post to a holding queue, review the batch, then finalize.

Verify patient matching. Check that payments went to correct patients, especially for common names.

Spot-check amounts. Randomly verify that payment and adjustment amounts are correct.

Monitor rejections. Items that could not auto-post need manual attention.

Audit periodically. Regularly audit auto-posted payments for accuracy.

When ERA and EOB Disagree

Occasionally, you may have both an ERA and EOB for the same payment, and they show different information.

Trust the ERA for posting. The ERA is the official electronic record and should match the actual payment.

Investigate discrepancies. If the EOB shows something different, contact the payer to clarify.

Document the issue. Keep records of any discrepancies and resolutions.

Building Good Documentation Habits

Save Everything

Retain all ERAs and EOBs for at least seven years. You may need them for:

• Patient inquiries
• Audit support
• Claim disputes
• Legal issues

Organize by Date and Payer

Create a logical filing system, whether digital or physical:

• By payer, then date
• By date, then payer
• Searchable by patient name or claim number

Link Documents to Postings

Your PMS should connect posted payments to source documentation. Use reference numbers to create the link.

Review Before Filing

Before archiving, verify:

• Payment was posted correctly
• Adjustments were applied
• Patient balance is accurate
• Any denials are flagged for follow-up

Whether you are a practice owner tracking your own payments, a bookkeeper managing dental clients, or a DSO finance team overseeing multiple locations, Zeldent automatically matches insurance deposits to your PMS records. Stop manually hunting through ERAs and let automation do the reconciliation. Schedule a demo to see Zeldent in action.