Health insurance exists to provide a financial safety net when medical care becomes necessary. When a claim comes back denied, that safety net disappears at exactly the wrong moment. Denials are more common than most people realize, and the reasons behind them range from administrative oversights to more complex coverage disputes. Some are straightforward to resolve. Others require a closer look at policy language, federal law, and the insurer’s internal review process.
Read on to learn the ten most common reasons health insurance claims are denied, as shared by the health insurance lawyers at Kantor & Kantor.
Received a health insurance claim denial? Contact Kantor & Kantor, LLP online or call us at 818-886-2525 for a free consultation.
Key Takeaways: Health Insurance Claim Denial Reasons
- Health insurance claims are denied for a wide range of reasons, from simple administrative errors to complex coverage disputes, and not all denials are final or justified.
- Some denial reasons are procedural, meaning they can be corrected and resubmitted without a formal appeal.
- Federal law gives insured individuals the right to appeal a denied health insurance claim, and insurers are required to provide a written explanation of any denial.
- Understanding why a claim was denied is the most important first step toward deciding whether to correct, resubmit, or formally appeal.
- When a denial involves a coverage dispute, a limitations clause, or a medical necessity determination, the appeals process becomes more consequential and more complex.
How Common Are Health Insurance Claim Denials?
Denials are far more frequent than most policyholders expect. According to the most recent Kaiser Family Foundation analysis, insurers on the qualified health plans marketplace denied roughly 19 percent of in‑network claims. The same report found that 37 percent of out‑of‑network claims were denied. That figure does not capture denials from employer‑sponsored plans or individual policies outside the marketplace, which means the true scope is likely broader.
What makes that number significant is the fact that the majority of denied claims are never appealed. Less than 1 percent of denied claims were appealed, and when they were, roughly 66 percent still received the same decision. When most people receive a denial, they assume it is final and move on. In many cases, that assumption is not true.
Why Health Insurance Claims Get Denied
Insurers process millions of claims each year, and denials happen at every stage of that process. Each of the denial reasons below represents a distinct situation with its own cause and its own path forward.
1. The Service Was Deemed Not Medically Necessary
Medical necessity denials are among the most common and most contested health insurance claim denial reasons. The insurer evaluates the claim and determines that the treatment, procedure, or service was not necessary based on their internal clinical criteria. That determination does not always align with what your treating physician recommended or what your condition required.
Medical necessity denials can be appealed, and the opinion of your treating provider carries significant weight in that process. If your physician documented the clinical rationale for the treatment, that documentation becomes central to your appeal.
2. The Provider Was Out of Network
Most health insurance plans distinguish between in‑network and out‑of‑network providers. When care is received from a provider outside the plan’s network, the claim may be denied entirely or covered at a significantly reduced rate, depending on the plan type.
In some emergency situations, federal law provides protections against surprise billing and out‑of‑network denials, but those protections do not apply universally. Reviewing your plan’s network requirements before receiving non‑emergency care is one of the most effective ways to avoid this type of denial.
3. Prior Authorization Was Not Obtained
Many health insurance plans require prior authorization before certain procedures, medications, or specialist visits will be covered. If that authorization was not obtained in advance, the claim may be denied regardless of whether the service was medically appropriate.
Prior authorization denials are among the more frustrating denial reasons because the care has already been received by the time the denial arrives. In some cases, a retroactive authorization can be requested. In others, the denial must go through the formal appeals process.
4. The Claim Contains a Coding Error
Medical billing relies on a highly specific system of diagnosis and procedure codes. A single incorrect code, a transposed number, or a missing modifier can cause a claim to be denied. These are among the more straightforward denial reasons to resolve because the fix is usually a corrected claim resubmission rather than a formal appeal.
If you receive a denial that references a coding issue, contacting your provider’s billing department is the most appropriate initial step.
5. The Service Is Excluded from Your Policy
Every health insurance policy contains a list of excluded services, treatments, or categories of care that are not covered, regardless of medical necessity. Cosmetic procedures are a common example, but exclusions can extend to experimental treatments, certain therapies, and specific medications.
When a claim is denied because of a policy exclusion, the path forward depends on whether the exclusion was properly applied and whether any exceptions exist under federal or state law. Some exclusions that appear straightforward on the surface are more nuanced in practice, particularly when mental health parity rules or other federal protections are involved.
6. The Coverage Had Lapsed or Was Not Active at the Time of Service
If your coverage was not active on the date the service was rendered, the claim will be denied. This can happen because of a missed premium payment, an administrative error during an enrollment period, or a gap between losing one form of coverage and obtaining another.
These denials can sometimes be resolved if the lapse was the result of an insurer or employer error rather than a failure to pay. Verifying your coverage status before receiving non‑emergency care is advisable, particularly during any period of job transition or open enrollment.
7. A Referral Was Required but Not Obtained
Some health maintenance organization plans and certain preferred provider organization plans require a referral from a primary care physician before a specialist visit will be covered. If that referral was not in place at the time of the visit, the claim may be denied.
Like prior authorization denials, referral‑related denials can feel particularly frustrating because the oversight often happens before the claimant is even aware that a requirement exists. Checking your plan documents for referral requirements before scheduling a specialist can prevent this category of denial entirely.
8. The Claim Was Filed After the Deadline
Health insurance policies and provider agreements include filing deadlines, meaning claims must be submitted within a defined window after the date of service. Claims submitted after that deadline may be denied regardless of their validity. These deadlines vary by plan and by state, and they apply to both providers submitting claims on your behalf and to situations where you may be submitting a claim directly.
If a deadline denial involves a circumstance outside your control—such as a delay caused by the provider or an administrative error—that context may be relevant to an appeal.
9. The Treatment Was Considered Experimental or Investigational
Insurers often deny claims for treatments they classify as experimental or investigational, meaning the treatment has not yet been widely accepted as a standard of care. This category of denial is particularly significant for patients pursuing newer therapies, clinical trial treatments, or procedures that are standard practice in some parts of the medical community but not yet universally recognized by insurers.
When facing this denial, the medical literature supporting a treatment’s efficacy can play an important role in the outcome of an appeal.
10. The Insurer Determined a Condition Was Pre‑Existing
While the Affordable Care Act prohibits most health insurers from denying claims based on pre‑existing conditions, this protection does not apply universally across all plan types. Short‑term health plans and certain grandfathered plans may still apply pre‑existing condition exclusions. When a claim is denied on this basis, determining which type of plan is involved and which federal or state protections apply is an important first step.
Practical Guidance for Responding to a Health Insurance Claim Denial
A denial does not require immediate action, but it does require a thoughtful response. The following guidance reflects what many claimants find helpful when handling the process.
- Request your complete claim file from the insurer. Many claimants find it helpful to review every document the insurer relied on when making its denial decision, including any internal clinical criteria used to evaluate medical necessity.
- Contact your provider’s billing department before filing an appeal. In cases involving coding errors, missing information, or referral oversights, the provider can often correct and resubmit the claim without requiring a formal appeal.
- Document everything in writing. Phone calls with insurers do not create a reliable record. Following up conversations in writing and keeping copies of all correspondence protects you throughout the process.
- Obtain a letter of medical necessity from your treating physician. When a denial is based on a medical necessity determination, a detailed letter from your doctor explaining the clinical rationale for the treatment can significantly strengthen an appeal.
- Review your policy documents carefully before filing an appeal. Understanding the specific language the insurer is relying on and whether it was correctly applied is more useful than responding to a denial in general terms.
- Pay attention to appeal deadlines. The window to file an internal appeal is often shorter than people expect. Acting promptly is key to preserving your options. Review your adverse benefit determination letter carefully for plan‑specific deadlines.
Health Insurance Claim Denial FAQs
Can my insurer deny a claim without explaining why?
Federal law requires insurers to provide a written explanation for any claim denial, including the specific reason for the denial and information about your right to appeal. That explanation usually appears in your explanation of benefits and in a separate denial letter. If the explanation is unclear or does not reference a specific policy provision, you have the right to request additional information.
What is an independent external review, and when does it apply?
An independent external review lets a neutral third party, not affiliated with your insurer, review a denied claim and issue a binding decision. It is available after you complete the internal appeals process and generally applies to denials based on medical necessity, appropriateness of care, or experimental treatment. The external reviewer’s decision is final and binding on the insurer.
Does filing an appeal affect my relationship with my insurer?
Filing an appeal is a legal right, and insurers are prohibited from retaliating against policyholders for exercising that right. Appealing a denial does not put your coverage at risk and does not change the terms of your policy. It is a standard, expected part of the claims process that insurers are required to accommodate.
If my employer’s health insurance plan denied my claim, does ERISA apply?
If your health insurance is provided through an employer‑sponsored group plan, ERISA will likely govern the claims and appeals process. That means specific federal rules apply to how the insurer must handle your claim, what information they must provide, and what your appeal rights are. ERISA also affects what remedies are available if an appeal is unsuccessful, which is one reason why understanding the governing law early is recommended.
What happens if both my primary and secondary insurance deny a claim?
When you are covered by more than one health insurance plan, a coordination of benefits process determines which plan pays first and how the remaining balance is handled. If both plans deny the claim, the denial reasons may differ, and each plan’s appeals process applies separately. Managing dual denials can be challenging, and the interaction between the two plans warrants careful review.
Can a health insurer deny a claim after it has already been pre‑authorized?
Yes. A prior authorization confirms that a service appears covered, but it is not always a final guarantee of payment. An insurer can still deny the claim later on other grounds, such as a coding issue or a coverage change. When that happens, the denial can be appealed, and the prior authorization becomes useful evidence that the care was approved.
What Comes Next
A denied health insurance claim begins a process governed by legal protections that may allow further review. As a policyholder, you have the right to have a decision reviewed by someone who was not involved in making it.
At Kantor & Kantor, we are people helping people. We believe that people facing insurance denials should have knowledgeable, committed representation from attorneys who understand the system and are willing to engage with it fully. If you have received a health insurance claim denial and are not sure what to do next, contact us today to get started.
A health insurance claim denial is not always the final word. Contact Kantor & Kantor, LLP online or call us at 818-886-2525 to discuss how we may be able to help you appeal your denial and secure the benefits you deserve.
