Insurers of Affordable Care Act (ACA) marketplace plans denied an average of 20% of in-network claims in 2023, with rates for out-of-network claims reaching as high as 37%. While initial denial rates for commercial payers are around 14–16%, consumers rarely appeal these decisions, despite data suggesting up to 80% of appeals can succeed.
In private payer insurance, claims denials rose from 8% to 11% between 2021 and 2023. (Aspirion) According to MDClarity, a survey of 516 hospitals found private payer denial rates averaged 15%. (MDClarity)
Moreover, among insurers submitting complete 2023 claims data to Covered California, the in-network denial rate was 21%. Awareness of the common pitfalls can help you navigate the process more effectively and ensure you receive the benefits you're entitled to.
Insurer-level Claims Denials Data
Of these in-network claims, 73 million were ultimately denied, resulting in an average in-network denial rate of 19% (Figure 1). Out-of-network claims totaled 33 million, with an overall higher denial rate of 37%.
Claim not filed on time (aka: Timely Filing)
If a proper claim is submitted, but it's not within the timing window, it may result in a denial. It is recommended that you check with your Payers regarding their filing deadlines.
The 80/20 rule in insurance refers to two main concepts: the Medical Loss Ratio (MLR) under the Affordable Care Act (ACA), requiring insurers to spend 80% (85% for large groups) of premiums on care or refund the rest, and a common home insurance clause where you must insure your home for at least 80% of its replacement cost to receive full coverage for partial losses, preventing underinsurance. In health insurance, it limits administrative costs and profits, while in homeowners insurance, it ensures adequate dwelling coverage to avoid penalties on claims.
Since insurers base premiums on how likely policyholders are to file a claim, a claim that's denied can cause your rates to go up — though not as much as if the claim was approved. Even discussing a claim with an agent, without actually filing it, can impact your premiums.
When talking to an insurance adjuster, avoid admitting fault, speculating on the cause or extent of injuries/damages, giving recorded statements without legal advice, and volunteering extra information like past injuries or unrelated details, as anything said can be used to minimize your claim; instead, stick to basic facts, remain polite but brief, and consider getting legal counsel. Don't sign anything without review, and avoid saying you're "fine" or "okay" immediately after an incident.
Does a denied home insurance claim count against you? A denied home insurance claim typically doesn't affect your credit score, but multiple denials or a pattern of claims may raise concerns for insurers. Understanding the reasons for the claim denial will enable you to take steps to prevent future denials.
The 3 D's of insurance are “delay, deny, and defend.” They represent the 3-part strategy insurance companies use to avoid paying policyholders what they may be owed. These tactics may pressure some Americans into accepting lowball settlements, and they can result in claims being held up in court for years.
Here, we discuss the first five most common medical coding and billing mistakes that cause claim denials so you can avoid them in your business:
Denial code 4 is used when the procedure code is inconsistent with the modifier that was used. This means that the modifier attached to the procedure code does not match the requirements or guidelines set by the payer.
Legal Roadblocks. Another thing to watch out for is how accepting a settlement locks you into its terms. Once you sign on the dotted line, you're often waiving your right to make any further claims. That means even if new damages or issues come up later, you're stuck with what was originally agreed upon.
In 2023, roughly one third of all in-network claims made to AvMed were denied by the medical insurance company. In this year, AvMed and United HealthCare were the medical insurance companies with the highest denial rate for in-network claims in the United States, at 33 percent each.
Straightforward cases involving minor injuries and clear liability may resolve in about three to six months. More complex cases, especially those involving serious injuries, unclear liability, or uncooperative insurance companies, may take one to two years or more to settle.
Coverage limits of $250,000 / $500,000 (often written as 250/500) mean your auto liability insurance pays up to $250,000 for bodily injury to one person and up to $500,000 total for all people injured in a single accident, with a third number (e.g., $100,000) usually covering property damage (e.g., 250/500/100). This is a "split limit" policy, defining maximum payouts for specific injury/damage categories, leaving you personally liable for costs exceeding these amounts.
Full coverage isn't worth it when the annual cost of collision/comprehensive exceeds a significant portion (e.g., 10%) of your car's low market value, you have enough savings to replace or repair it out-of-pocket, or if you have a clear title and don't need it for work/family, while it's still required for leased/financed cars. Key factors include your car's depreciated value, your emergency fund, and your risk tolerance for paying for repairs/replacement yourself.
Insurance companies deny claims for many reasons, such as insufficient evidence, missed deadlines, or policy exclusions. If your insurance company denied your claim, you can file an appeal, agree to mediation or arbitration, or take the insurance company to court for bad faith.
The most frequent home insurance claims are caused by wind and hail damage, followed by water damage and fires. Fires are the most expensive cause of loss for homeowners, resulting in the highest average claim amount.
Pay the premium on time. Insurance companies only settle active claims. If your policy has lapsed because of non-payment of premium, the insurer will reject the claim request. In case you missed paying the premium on due date, make the payment within the grace period.