Why Your Health Insurance Claim Got Denied — and What You Can Do About It
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In this article
Claim denials are more common than most people expect. Learn the typical reasons insurers deny claims and how to navigate the appeals process.
Key Takeaways
- Claim denials often result from avoidable administrative errors like missing codes or outdated referrals.
- You have a legal right to appeal a denied health insurance claim under federal law.
- Understanding your Explanation of Benefits (EOB) is essential to building a successful appeal.
- Deadlines for appeals are strict — acting quickly after a denial is critical.
- An external review by an independent third party is available if your internal appeal is rejected.
Why Claim Denials Happen More Than You Think
A health insurance claim denial can feel like a dead end, especially when you're already managing a medical situation. But denials are a routine part of how the insurance system operates — and they are far more common than most policyholders realize. If you're new to how insurance works, our Insurance 101 guide offers a solid foundation before diving into the claims process.
Denials generally fall into a few broad categories: administrative errors, coverage exclusions, network issues, and medical necessity disputes. The good news is that many denials — particularly those driven by paperwork problems — are reversible. Understanding why your claim was denied is the critical first step toward resolving it.
Don't Ignore Your Explanation of Benefits
Many policyholders discard their Explanation of Benefits (EOB) without reading it. The EOB is not a bill — it's the insurer's record of how your claim was processed and why any portion was denied. Misunderstanding or ignoring this document is one of the most common reasons people miss appeal opportunities and end up paying out of pocket unnecessarily.
The Most Common Mistakes That Lead to Denials
Most claim denials are not the result of insurers acting in bad faith. A large share stem from errors that occur before or during the claims submission process — errors that policyholders can often prevent or correct. Review each of the common mistakes below and consider whether any applied to your situation.
Receiving care from an out-of-network provider without realizing it.
Why it happens: Patients often assume that because a hospital is in-network, every physician practicing there is too. In reality, specialists such as anesthesiologists or radiologists may bill independently and may not participate in the same network.
Skipping required prior authorization before a procedure or service.
Why it happens: Patients frequently rely on their doctor's office to handle pre-authorization, not realizing the responsibility ultimately falls on the policyholder to confirm it was obtained and approved.
Filing a claim with incorrect or mismatched billing codes.
Why it happens: Medical billing is highly technical. A single wrong diagnosis or procedure code — sometimes a clerical error by the provider's billing department — can trigger an automatic denial.
Failing to meet the plan's definition of medical necessity.
Why it happens: Insurers use their own clinical criteria — which may differ from your doctor's judgment — to determine whether a treatment is medically necessary. Patients are rarely aware of these specific standards ahead of time.
Missing the deadline to file a claim or submit an appeal.
Why it happens: People dealing with illness or recovery are often focused on health, not administrative timelines. Denial notices and appeal windows can easily be overlooked.
Accepting the first denial without exercising your right to appeal.
Why it happens: Many policyholders assume a denial is final, or feel intimidated by the appeals process and give up without attempting to challenge the decision.
If you want to understand the process from the beginning, see our step-by-step claims walkthrough, which covers what to do immediately after a loss or medical event.
How to Build a Successful Appeal
An appeal is a formal request for your insurer to reconsider its decision. The process typically involves two stages: an internal appeal (reviewed by the insurer) and, if that fails, an external review conducted by an independent third-party organization.
Appeal Deadlines Are Non-Negotiable
Most health insurers require you to file an internal appeal within 180 days of receiving a denial notice, though some plans set shorter windows. Missing this deadline can permanently forfeit your right to challenge the decision. Read your denial letter immediately and note the appeal deadline before taking any other action.
To strengthen your appeal, gather the following before submitting:
- The denial letter, which must state the specific reason for denial and cite the relevant plan provision.
- Your Explanation of Benefits (EOB), detailing how the claim was processed.
- A letter of medical necessity from your treating physician, referencing clinical guidelines where applicable.
- Relevant medical records supporting the treatment decision.
- Any prior authorization confirmation you received.
Submit your appeal in writing, keep copies of everything, and send materials via certified mail or a method that provides a delivery confirmation. Your insurer is required to respond within specific timeframes set by federal law — generally 60 days for standard appeals and 72 hours for urgent care situations.
17%
Average marketplace plan claim denial rate
According to KFF (Kaiser Family Foundation) analysis of federal data, marketplace insurers denied roughly 17% of in-network claims on average, though rates varied widely by insurer.
Less than 1%
Share of denied claims that are appealed
KFF research found that consumers formally appealed fewer than 1% of denied claims, suggesting most people do not exercise their right to challenge denials.
~40%
Internal appeals decided in enrollee's favor
Federal data indicates that a meaningful portion of internal appeals result in the insurer reversing or partially reversing its original denial decision.
It's also worth reviewing your coverage regularly so gaps don't catch you off guard. Our article on keeping your coverage current as life changes explains how to stay ahead of common coverage gaps. And if you've noticed persistent confusion about what your policy does and doesn't cover, common insurance myths may clarify some widespread misconceptions.
This article is for general informational purposes only and does not constitute personalized insurance, legal, or financial advice. Policy terms, appeal rights, and procedures vary by plan and state. Consult a licensed insurance professional or your state's insurance commissioner for guidance specific to your situation.
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Money & Finance Editorial Team
Money & Finance Editorial Team is the collective byline for our editorial team and contributor network. Articles published under this byline or an editorial pen name are researched, written, and reviewed according to our editorial standards for clarity, consistency, and independence before publication.
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