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 19% of in-network claims in 2024 — roughly 85 million denied claims on HealthCare.gov 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: most patients do not file formal appeals, even when appeal rights exist. KFF data shows that fewer than 1% of denied in-network ACA marketplace claims were formally appealed. That makes it especially important to understand the stated denial reason, the deadline, and the evidence the plan is asking for.
Your 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
Non-grandfathered individual and group health plans generally must provide an internal appeal process and access to independent external review for eligible adverse benefit determinations. The exact external-review pathway depends on the plan type and denial issue, so follow the rights and deadlines in your notice. The insurer must also provide a written explanation of the denial, the plan provision relied upon, and appeal instructions. Urgent claims may qualify for an expedited process.
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, the plan must give you at least 180 days to file an appeal after receiving a denial, and it may allow longer. 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 can request, at no charge, the documents, records, and other information relevant to the benefit claim.
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. For an ERISA health claim, the plan must allow at least 180 days after you receive the denial, and it may allow longer. Other plan types can use different deadlines. 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, check the final notice to see whether your plan and denial qualify for external review. Non-grandfathered plans generally must provide an independent external-review process, but eligibility and the applicable state or federal pathway depend on the plan and the issue. When a case qualifies, an independent organization reviews it under that process.
Under the federal external-review process, the request deadline is generally four months after the final internal denial; state processes may use different timelines. Follow the deadline and submission instructions in your notice.
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."
Why an appeal may be worth reviewing
The data shows why an appeal is worth reviewing carefully. It does not mean every appeal should be filed, and it does not predict any individual result.
According to KFF, fewer than 1% of denied in-network ACA marketplace claims were formally appealed in 2024. Insurers upheld 66% of internal appeals, which also means a meaningful minority were not upheld.
Source: KFF ACA marketplace transparency data for 2024. Individual results vary based on denial type, evidence submitted, plan terms, and insurer.
Denied claims can involve significant charges, and prior authorization denials often turn on documentation, plan criteria, and clinical evidence. For high-value denials — surgeries, extended hospital stays, specialty treatments — the stakes can be $10,000 to $100,000 or more. Yet fewer than 1% of denied in-network ACA marketplace claims were formally appealed in KFF's 2024 data. Individual results vary based on denial type, evidence submitted, and insurer.
Common denial reasons and how to answer 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 and Summary of Benefits and Coverage. Non-grandfathered individual and small-group plans generally must cover 10 essential-health-benefit categories, but that does not require coverage of every service within a category. Compare the exclusion with your plan and state benchmark, and check whether a coding error made 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.
Additional 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.
- If ERISA or applicable ACA claims rules govern the plan, request the documents, records, and other information relevant to the benefit claim at no charge.
- 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, check whether federal or state parity rules apply to the plan and benefits involved.
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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