Health Insurance Claim Denied? Understanding Your Rights and Next Steps

Health insurance is supposed to provide financial protection when medical care becomes necessary. Unfortunately, having coverage does not always mean an insurance company will immediately agree to pay for a treatment, procedure, prescription, or other medical service.

A health insurance claim denial can leave patients facing an unexpected medical bill while simultaneously trying to determine why their insurer refused coverage. The good news is that a denial is not necessarily the final word. Federal law provides important protections for many insured patients, including the ability to appeal certain insurance company decisions.

Understanding why claims are denied and what options may be available afterward can help policyholders protect their rights.

Why Do Health Insurance Companies Deny Claims?

Health insurers may deny claims for many different reasons. Some denials involve relatively straightforward administrative problems, while others involve disagreements over whether particular medical care should be covered.

Common reasons can include services being classified as not medically necessary, treatment being considered experimental or investigational, receiving care outside of the plan’s network, questions about eligibility, missing prior authorization, coding or paperwork problems, or a determination that a particular benefit is excluded under the policy.

According to HealthCare.gov’s guidance on insurance appeals, insurers must explain why a claim or coverage decision has been denied and provide information about how the policyholder can challenge that decision.

Because the reason for the denial can determine the best next step, consumers should carefully review both the denial letter and their Explanation of Benefits rather than assuming they are personally responsible for the entire bill.

You May Have the Right to File an Internal Appeal

One of the most important protections available to health insurance consumers is the right to ask an insurance company to reconsider its decision.

An internal appeal gives the insurer an opportunity to conduct another review of the claim, including additional medical documentation or other information supplied by the patient or health care provider.

HealthCare.gov states that consumers generally have 180 days from receiving notice of a claim denial to file an internal appeal. Supporting evidence can include medical records, a physician’s explanation of why treatment was necessary, copies of the Explanation of Benefits, correspondence with the insurer, and other documents related to the claim.

Keeping detailed records throughout this process can be extremely important. Policyholders should consider retaining:

• Copies of denial letters and Explanation of Benefits documents;
• Medical records and letters from treating physicians;
• Copies of the insurance policy and Summary of Benefits and Coverage;
• Prior authorization documents;
• Records of communications with the insurer; and
• Notes showing the dates, names, and details of telephone conversations about the claim.

These records can help establish exactly what was requested, why the insurer denied it, and what information was supplied during an appeal.

An Independent External Review May Also Be Available

If the insurance company upholds its decision after an internal appeal, some consumers have another important option: external review.

Unlike an internal appeal, an external review is performed by an independent party rather than the insurance company itself. HealthCare.gov explains that external review can apply to certain denials involving medical judgment, including disputes over medical necessity and treatments classified as experimental or investigational.

When an external reviewer overturns an eligible denial, the insurance company must generally accept that decision. Consumers typically must request external review within four months after receiving the insurer’s final determination. Standard external reviews are generally completed within 45 days, while qualifying expedited reviews may be completed much faster when a patient’s medical situation is urgent.

The rules can vary depending on the type of health plan and the state where coverage is issued, so consumers should carefully review the appeal instructions included with their denial.

Employer-Sponsored Health Plans Can Involve Additional Federal Rules

Health insurance obtained through employment can involve another important area of federal law.

Many private-sector employer-sponsored benefit plans are governed by the Employee Retirement Income Security Act of 1974, commonly known as ERISA. The U.S. Department of Labor’s Employee Benefits Security Administration oversees many of the federal requirements applicable to these plans.

The U.S. Department of Labor’s guidance for filing health benefit claims explains that participants generally have at least 180 days to appeal a denied health benefit claim and may request documents, records, and other information relevant to the claim. The Department also notes that policyholders may consider obtaining legal advice when an appeal remains denied or when a plan fails to follow required claims procedures.

The precise legal options available can depend heavily on whether a plan is fully insured, self-funded, governed by ERISA, or subject to another state or federal regulatory structure.

Surprise Medical Bills Have Separate Federal Protections

Claim disputes are not the only health insurance issue consumers may encounter.

The federal No Surprises Act, which took effect in 2022, established significant protections against certain unexpected out-of-network medical bills. The law generally protects people with many forms of private insurance from surprise bills involving emergency services, certain out-of-network providers providing services at in-network facilities, and out-of-network air ambulance services.

The Centers for Medicare & Medicaid Services maintains updated information about No Surprises Act protections for patients, insurers, health care providers, and consumer advocates.

A billing dispute involving these protections can be different from an ordinary coverage denial, making it especially important to determine exactly why the insurer or medical provider says money is owed.

When a Health Insurance Dispute Becomes a Legal Issue

Not every denied claim requires an attorney. Some disputes can be corrected by supplying additional paperwork, fixing a billing error, obtaining information from a medical provider, or completing the insurer’s normal appeal procedure.

Other disputes can become considerably more complicated.

Large medical expenses, repeated denials, medically necessary treatments, disagreements involving policy exclusions, ERISA-governed plans, or insurers that fail to follow applicable claims procedures may raise legal questions that are difficult for consumers to navigate alone.

Deadlines can also matter. Waiting too long to dispute a decision may affect a policyholder’s ability to pursue an internal appeal, external review, or other available remedy.

Consumers facing a significant health insurance dispute should carefully review their policy documents, preserve correspondence with the insurer, obtain relevant medical records, and pay close attention to all appeal deadlines.

For individuals who believe a health insurance company has improperly denied benefits or who need help understanding their legal options, speaking with an attorney familiar with insurance claim disputes may provide additional clarity. Visit our website today to learn more about assistance available for health insurance claims.

Health insurance disputes can be frustrating, particularly when they arise during an already difficult medical situation. Knowing that appeal rights and federal consumer protections exist can help patients make informed decisions and challenge questionable insurance determinations rather than simply accepting a denial.