Health Insurance Denials Are Common—and Commonly Overturned
Health insurers deny millions of claims each year, and many of those denials are wrong or at least contestable. According to federal data, insurers overturn a meaningful percentage of their own denials during internal appeals, and independent external reviewers side with policyholders in a significant portion of cases they review. The key is knowing how to appeal effectively within the required time limits.
Common denial reasons include: "not medically necessary"; "experimental or investigational"; out-of-network provider; prior authorization not obtained; billing code errors; and "exceeds plan limits." Each type of denial requires a different appeal strategy.
Step 1: Request an Explanation of Benefits (EOB)
Your insurer must provide an Explanation of Benefits detailing why the claim was denied and the specific policy basis for the denial. If you only got a notice of denial without specific reasons, request the full EOB and the plan documents relevant to the denied claim. Understanding exactly what was denied and why is essential before crafting an effective appeal.
Step 2: Internal Appeal
Federal law (the ACA) requires health plans to maintain an internal appeals process. You generally have 180 days from the denial to file an internal appeal. Your attorneyseal should include: a letter explaining why the denial was wrong; supporting documentation from your treating physician (letters of medical necessity are crucial for "not medically necessary" denials); relevant clinical guidelines showing your treatment is standard of care; and peer-reviewed literature if the denial was based on "experimental" grounds.
Step 3: External Review
If your internal appeal fails, you have the right to an independent external review by a neutral third party under federal law. External reviewers are independent of your insurer and decide solely based on the clinical evidence and plan terms. Studies show external reviewers overturn insurer denials in 40–50% of completed reviews. You must generally request external review within 60 days of the internal appeal denial.
State Insurance Commissioner Complaints
Filing a complaint with your state's insurance regulator is an additional pressure point. State insurance departments investigate patterns of improper denials and can sanction health insurers. Individual complaints sometimes result in the insurer revisiting and reversing the denial, particularly when the complaint documents clear policy misapplication. For employer-sponsored plans governed by ERISA, the Department of Labor handles complaints.
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Frequently asked questions
What is a "letter of medical necessity" and how important is it?
A letter of medical necessity (LMN) is a document from your treating physician explaining why a specific treatment, medication, or service is medically necessary for your specific condition. It is the single most important document in appealing a "not medically necessary" denial. The LMN should address the insurer's specific denial rationale and reference clinical guidelines supporting the treatment.
What if my employer's health plan denies my claim?
Most employer-sponsored health plans are governed by ERISA (Employee Retirement Income Security Act), a federal law that supersedes state insurance law. ERISA provides an internal appeals process and then federal court review, but limits damages—you generally cannot recover pain and suffering or bad faith damages under ERISA, only the benefits owed. This is a significant limitation compared to individually purchased health plans subject to state law.
Does appealing a health insurance denial affect my coverage?
Filing an appeal cannot legally result in retaliation or coverage cancellation. Your right to appeal is protected by the ACA and, for employer plans, ERISA. Do not delay treatment needed to preserve health while an appeal is pending—seek care and document the insurer's failure to authorize timely treatment, as this can strengthen the appeal.