What is an insurance denial and why are they so common?
An insurance denial (also called a claim denial or adverse benefit determination) happens when your health insurer refuses to pay for a medical service, procedure, or prescription. You receive a letter — sometimes called an Explanation of Benefits (EOB) — stating the claim has been denied and citing a reason code.
Denials are extremely common. According to KFF (Kaiser Family Foundation), ACA marketplace insurers denied approximately 17% of in-network claims in 2023, resulting in roughly 8.8 million denied claims across marketplace plans alone. When you include employer-sponsored plans, Medicare Advantage, and Medicaid managed care, the total number of denials each year is far higher.
Why are there so many denials? Several factors drive the volume:
- Administrative errors account for a significant share — wrong codes, missing information, or claims filed after the timely filing deadline. These are often the easiest to overturn.
- Prior authorization failures occur when a service that required pre-approval was delivered without it — or when the authorization was requested but denied in advance.
- Medical necessity disputes are the most contentious. The insurer's medical reviewers determine that a treatment was not “medically necessary” under the plan's definition — even when your treating physician disagrees.
- Experimental or investigational exclusions are used when insurers classify a treatment as not yet proven, even when clinical evidence and medical society guidelines support its use.
- Out-of-network billing issues arise when you receive care from a provider your insurer does not contract with, sometimes without your knowledge (such as an out-of-network anesthesiologist during an in-network surgery).
The critical insight is this: insurers know that the vast majority of patients will accept a denial without question. KFF data shows that fewer than 1 in 500 denied claims are ever appealed. This low challenge rate creates a financial incentive to deny borderline claims — because the cost of occasional appeal losses is far less than the savings from unchallenged denials.
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Analyze your denial — freeYour legal rights when your claim is denied
Federal and state laws give you specific, enforceable rights when an insurance claim is denied. Understanding these rights is essential because citing them in your appeal puts the insurer on notice that you understand the legal framework and intend to hold them accountable.
Affordable Care Act (ACA) Section 2719
If you have an ACA-compliant plan (most individual and employer plans purchased after 2010), you are guaranteed the right to an internal appeal and, if that is denied, an independent external review. The insurer must provide you with a clear written explanation of why the claim was denied, the specific plan provision relied upon, and instructions for how to appeal. For urgent claims involving ongoing treatment, the insurer must offer an expedited review process with a decision within 72 hours.
Employee Retirement Income Security Act (ERISA)
If your insurance comes through your employer, it is likely governed by ERISA, a federal law that requires plans to provide “full and fair review” of denied claims. Under ERISA, you have 180 days to file an appeal after receiving a denial. The plan must respond within 30 days for pre-service claims and 60 days for post-service claims. Importantly, ERISA requires the insurer to identify the specific clinical guidelines or plan criteria used to deny the claim, and you have the right to request and review the complete claim file.
Mental Health Parity and Addiction Equity Act (MHPAEA)
If your denied claim involves mental health or substance use disorder treatment, this federal law prohibits insurers from applying stricter limits on mental health benefits than on medical/surgical benefits. If your insurer applies different prior authorization requirements, visit limits, or medical necessity criteria to mental health claims, that may constitute a parity violation — a powerful argument in an appeal.
State Insurance Laws
Every state has its own insurance regulations and a department of insurance that oversees insurer conduct. Many states offer additional protections beyond federal law — including independent review panels, specific appeal timelines, and the right to file complaints with state regulators. For example, California, New York, Texas, and Illinois all have robust external review programs with independent medical reviewers.
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Get Started FreeThe step-by-step appeal process
The appeal process follows a predictable structure. At each level, you have an opportunity to present additional evidence and arguments. Here is the path from denial to resolution:
Read and understand your denial letter
Before you do anything else, read the denial letter carefully. Identify three critical pieces of information: (1) the specific reason for denial, usually expressed as a CARC (Claim Adjustment Reason Code) or a plain-language explanation; (2) the plan provision or clinical guideline the insurer relied upon; and (3) the deadline for filing your appeal. Most denials include instructions for how and where to submit an appeal. If any of this information is missing, you can cite ACA Section 2719 to require the insurer to provide it.
Gather your supporting evidence
The strength of your appeal depends heavily on the evidence you submit. Collect:
- A letter of medical necessity from your treating physician explaining why the treatment is needed for your specific condition
- Relevant medical records, test results, and clinical notes
- Published clinical guidelines from medical societies (e.g., AMA, ASCO, APA) supporting the treatment
- Peer-reviewed research articles if the denial cites "experimental" or "investigational"
- Your complete plan document — specifically the section defining the coverage criteria
- Any prior authorization approval, if the service was previously approved but later denied on claims review
File your internal appeal
Submit a written appeal to your insurer within the deadline specified in your denial letter (typically 180 days under ERISA, though some plans allow less). Your appeal letter should be structured, specific, and evidence-based. Include your policy number, claim number, date of service, the specific denial reason you are contesting, your legal argument (citing ACA, ERISA, or state law as applicable), and references to the clinical evidence you are attaching.
Send the appeal via certified mail with return receipt requested, or through the insurer's secure online portal if available. Keep copies of everything. Under ACA regulations, the insurer must review your appeal using a reviewer who was not involved in the original denial decision.
Request an external review (if internal appeal is denied)
If your internal appeal is denied, you have the right under the ACA to an independent external review. This review is conducted by a third-party organization that is not affiliated with your insurer. The external reviewer — typically a physician specializing in the relevant medical field — examines your case independently and makes a binding decision.
External review is where appeal success rates climb significantly. Because the reviewer is independent, cases that were denied due to insurer cost pressure or overly narrow medical necessity criteria often get overturned. You typically have 4 months after receiving your internal appeal denial to request external review, though timelines vary by state.
File a complaint with your state insurance department
You can file a complaint with your state's department of insurance at any point in the process — you do not need to wait for appeals to conclude. State regulators can investigate whether the insurer followed proper procedures, applied plan terms correctly, and complied with state insurance laws. A regulatory complaint creates additional pressure on the insurer and creates a paper trail that can be valuable if litigation becomes necessary.
Additionally, if your plan is through the ACA marketplace, you can report the issue to CMS (Centers for Medicare & Medicaid Services), which oversees marketplace plan compliance.
What to include in your appeal letter
A strong appeal letter is not emotional — it is structured, factual, and built on evidence. Here is what your letter should contain:
- 1
Header information
Your name, policy number, claim number, date of service, and the date of the denial letter. Address it to the appeals department listed in your denial notice.
- 2
Clear statement of what you are appealing
State the specific denial you are contesting and the dollar amount at issue. Be precise — reference the denial letter date and the exact denial reason code or language.
- 3
Your legal basis
Cite the specific law that entitles you to the service or to the appeal itself. For example: "Under ACA Section 2719 and 45 CFR 147.136, I am entitled to a full and fair internal review of this adverse benefit determination."
- 4
Clinical argument
Explain why the denied service is medically necessary for your specific condition, referencing your physician's letter and any relevant clinical guidelines or peer-reviewed research.
- 5
Plan language
Quote the specific section of your plan document that covers the service, and explain why the denial misapplies the plan's own criteria. If the plan language is ambiguous, the general legal principle is that ambiguities are construed in favor of coverage.
- 6
List of enclosed evidence
Number and list every document you are attaching — physician letter, medical records, clinical guidelines, research articles, etc.
- 7
Specific request
End with a clear request: "I request that you reverse this denial and authorize coverage for [specific service] as a covered benefit under my plan."
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Get your appeal letter — freeWhy you should always appeal: the success rate data
The data overwhelmingly shows that appealing is worth it. The problem is not that appeals fail — it is that almost no one files them.
According to KFF, only about 0.2% of denied in-network claims on ACA marketplace plans were appealed in 2023. Yet when patients did appeal, the overturn rates were significant:
Sources: KFF ACA marketplace transparency data (2023-2024), HHS Office of Inspector General Medicare Advantage appeal reports, ERISA Advisory Council reports. Individual results vary based on denial type, evidence submitted, and insurer.
The average recovery per successful insurance appeal is approximately $3,400, according to industry data compiled by AHIP. For high-value denials — surgeries, extended hospital stays, specialty treatments — recoveries can be $10,000 to $100,000 or more. Even for lower-value claims, the financial return on the time invested in an appeal is substantial.
Common denial reasons and how to fight each one
“Not medically necessary”
CARC 50 / CO-50This is the most common clinical denial. Counter it with a detailed letter of medical necessity from your treating physician, plus published clinical practice guidelines from relevant medical societies. If the insurer used an internal medical director to deny the claim, request the name and specialty of the reviewing physician — they must be a specialist in the relevant area under many state laws.
“Prior authorization not obtained”
CARC 197If the service was urgent or emergent, prior authorization may not apply — cite ACA emergency care provisions. If the authorization was requested but delayed by the insurer, document the request timeline. If a retroactive authorization is allowed under your plan, request one with supporting medical documentation.
“Out-of-network provider”
CARC 151The No Surprises Act (effective January 2022) protects you from surprise out-of-network bills for emergency services and certain non-emergency services at in-network facilities. If you had no choice of provider (emergency, anesthesiology, radiology), you may be protected. Also check if your plan offers an out-of-network exception for services not available in-network.
“Service not covered under plan”
CARC 96Review your actual plan document (Summary of Benefits and Coverage), not just a summary. ACA-compliant plans must cover 10 essential health benefits. If the service falls under one of these categories, the exclusion may violate ACA requirements. Also check if the billing code is wrong — a coding error can make a covered service appear uncovered.
“Experimental or investigational”
CARC 56Gather peer-reviewed studies, FDA approvals or clearances, clinical trial data, and endorsements from major medical societies. Many treatments labeled "experimental" by insurers are well-established in medical practice. If the treatment has been recognized by NCCN, AMA, or equivalent professional bodies, cite those guidelines directly.
“Timely filing limit exceeded”
CARC 29This is typically a provider-side error, not yours. Contact your provider and ask them to resubmit with proof of timely filing. If the delay was caused by the insurer (e.g., slow processing of a prior authorization), document the timeline and argue that the filing deadline should be tolled.
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Get Started FreeAdditional tips for a stronger appeal
- Always send appeals in writing (not just by phone). Written appeals create a legal record.
- Keep a log of every phone call — date, time, representative name, and what was said.
- Request your complete claim file from the insurer. Under ERISA and the ACA, they must provide it.
- Meet every deadline. Missing an appeal deadline can forfeit your right to challenge the denial.
- If your employer provides the plan, contact your HR department. They can sometimes intervene directly with the insurer.
- Consider consulting a patient advocate or health insurance attorney for high-value denials (over $10,000).
- If the denial involves mental health or substance use treatment, always check for parity violations under the MHPAEA.
Disclaimer: This guide provides general information about insurance appeals. It is not legal or medical advice. Laws vary by state and plan. For personal advice, talk to a licensed professional.
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