Understanding Insurance Claim Denials: Why Claims Get Denied and What You Can Do
Nearly 1 in 5 in-network claims are denied. Learn why insurance companies deny claims, how the appeals process works, and what the data shows about fighting back.
The Denial Landscape
The Kaiser Family Foundation’s 2024 report found that 19.1% of in-network claims were denied across HealthCare.gov states — approximately 8.8 million denied claims.
The denial rates vary dramatically by insurer:
- UnitedHealthcare: 32% denial rate — twice the industry average
- Industry average: 16% denial rate
- Florida: 46.7% denial rate — a record high, up 17% from 2022
In a January 2026 KFF poll, 66% of insured adults called delays and denials by insurance companies a “major problem.”
Why Claims Get Denied
Common Denial Reasons
- “Not medically necessary” — The insurer decides the treatment your doctor ordered isn’t required
- “Out of network” — The provider isn’t in your plan’s network, even in emergencies
- “Prior authorization not obtained” — A required pre-approval wasn’t completed before treatment
- “Pre-existing condition” — The insurer claims the condition existed before your coverage
- “Insufficient documentation” — The paperwork wasn’t complete enough (often after the insurer requested it multiple times)
The Algorithm Problem
Some insurers have automated the denial process. Cigna’s PxDx system rejected more than 300,000 claims in two months. Each denial took an average of 1.2 seconds. A single doctor was rubber-stamping 60,000 denials per month.
In March 2025, a federal court allowed a class-action lawsuit against the PxDx system to proceed, citing two instances where patients were sent home early because Cigna wouldn’t pay — both patients died shortly after.
The Appeal Process
The Most Important Statistic
Only 0.2% of denied claims are ever appealed. But of those that are, 44% are overturned. Nearly half of all denials were wrong from the start.
The system depends on you not fighting back.
How to Appeal
- Get the denial in writing. Request the specific reason for denial, including the policy language and medical criteria used.
- Review your policy. Understand what your plan actually covers and compare it to the denial reason.
- Internal appeal. File a formal appeal with your insurance company. Include any additional documentation from your doctor explaining medical necessity.
- External review. If the internal appeal is denied, you have the right to an independent external review. An outside reviewer examines your case — and their decision is binding on the insurer.
Prior Authorization
Doctors spend an average of 13 hours per week dealing with prior authorization requests. In a 2024 AMA survey:
- 23% of doctors said patients were hospitalized because of prior auth delays
- 18% said patients experienced a life-threatening event
- 8% said a patient suffered permanent disability or death
In 2025, 31 states passed laws limiting prior authorization, almost all with bipartisan support.
Know Your Rights
Most states have unfair claims settlement practices laws that prohibit insurers from:
- Failing to acknowledge and act on claims promptly
- Denying claims without conducting a reasonable investigation
- Misrepresenting policy provisions to avoid paying claims
- Compelling claimants to initiate litigation by offering substantially less than a claim is worth
Your state’s department of insurance is a resource for filing complaints against insurers who violate these standards.
Frequently Asked Questions
What percentage of insurance claims are denied?
According to the Kaiser Family Foundation's 2024 report, 19.1% of in-network claims were denied across HealthCare.gov states — approximately 8.8 million denied claims. UnitedHealthcare had the highest denial rate at 32%, which is twice the industry average of 16%.
What should I do if my insurance claim is denied?
You have the right to appeal. Request the denial in writing with the specific reason. Review your policy to understand what's covered. File an internal appeal with your insurer, and if that fails, request an external review by an independent third party. Only 0.2% of denied claims are appealed, but 44% of those appeals are overturned.
Can insurance companies use AI to deny my claim?
Yes. Some insurers use algorithmic systems to process claims. Cigna's PxDx system denied 300,000 claims in two months at an average of 1.2 seconds per denial. A federal court allowed a class action against this system to proceed in March 2025. Some states are beginning to restrict AI use in claim decisions.
What is 'bad faith' insurance?
Bad faith insurance occurs when an insurer unreasonably denies, delays, or underpays a valid claim. This can include failing to investigate a claim, misrepresenting policy language, or using delay tactics to pressure claimants into accepting lowball offers. Most states have laws prohibiting bad faith insurance practices.
How long does an insurance company have to respond to my claim?
Timeframes vary by state. Most states have adopted versions of the NAIC Model Unfair Claims Settlement Practices Act, which requires insurers to acknowledge claims promptly and make decisions within reasonable timeframes. Your state's insurance department can tell you the specific deadlines that apply.
Disclaimer
Before You Settle is consumer investigative journalism. Philip Ludington is not a lawyer. The content on this site is investigative reporting based on publicly available data, court records, government reports, and documented industry practices. Nothing on this website constitutes legal advice. If you have been injured or had a claim denied, consult with a licensed personal injury attorney in your state. Most offer free consultations.
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