When a claim is denied: reading the letter properly

Claim denials are common, appeals succeed at meaningful rates, and most policyholders never appeal.

The first step is reading the denial letter as a document that tells you what to do next.

What the letter must contain

Requirements vary by insurance type and jurisdiction, and generally a denial should state the specific reason, the policy provision or criteria relied upon, and your appeal rights with deadlines.

For health plans, federal rules require specific content including the reason, the standard used, and information about internal and external review.

If the letter is vague — "not medically necessary" with no further explanation — request the specific criteria applied and the clinical rationale, in writing. You are generally entitled to it.

Categorizing the denial

The right response depends entirely on which type it is.

Administrative or procedural. Wrong code, missing information, filed late, wrong provider identification, eligibility not on file.

These are the most common and the easiest to fix. A corrected submission usually resolves them.

Medical necessity. The insurer says the service was not necessary under their criteria.

Addressed with clinical documentation demonstrating the criteria are met, and frequently resolved by a peer-to-peer review between your physician and theirs.

Not a covered benefit. A contractual position — the policy excludes it.

Harder, because it turns on policy language rather than clinical facts. The argument is that the exclusion does not apply, or that the service falls within a covered category.

Pre-existing condition or misrepresentation. Serious, particularly on life and disability claims, and frequently requires legal help.

Late notice or failure to cooperate. Procedural, and often curable with an explanation.

The appeal itself

Address the stated reason directly. The single most important point.

An appeal that argues generally about fairness, or explains why you need the treatment, without addressing the specific basis for denial, will be denied again.

If the denial says criteria were not met, go through the criteria one by one with evidence for each.

Get the criteria. Most insurers publish medical policies. Request the specific policy applied to your claim.

Get supporting documentation. A letter of medical necessity from the treating physician, addressing the criteria and the clinical situation specifically. Records showing prior treatments and outcomes. Peer-reviewed literature where relevant.

Meet the deadline. Appeal windows are strict — commonly one hundred eighty days for health plans, and shorter for some other lines.

Keep it organized. A cover letter stating the claim number, the denial reason and your position, followed by numbered supporting documents.

Reviewers process volume. Make the argument easy to follow.

The external review

For most health plans, after internal appeals are exhausted, you have a right to independent external review by an organization not affiliated with the insurer.

The decision is generally binding on the insurer.

External reviewers overturn a meaningful proportion of denials, and this right is substantially underused.

The process is generally free to the consumer and initiated through the insurer or the state regulator.

Expedited external review is available for urgent situations.

The regulator

Every state has a department of insurance that accepts consumer complaints.

Insurers must respond formally to regulator inquiries, which changes the internal handling of a file considerably.

For employer-sponsored self-funded health plans, which are governed by federal law rather than state insurance regulation, the Department of Labor has jurisdiction.

Knowing which applies matters, and the plan documents indicate whether a plan is insured or self-funded.

When to get help

Large claims. Where the amount justifies professional assistance.

Life and disability denials, which frequently involve complex policy language and where specialist attorneys work on contingency.

Rescission, where an insurer attempts to void a policy for alleged misrepresentation. This is serious and warrants legal advice.

Bad faith conduct, where an insurer has unreasonably delayed, failed to investigate, or denied without a reasonable basis. Bad faith law varies by state and remedies can exceed the policy limit.

Property claims of significant size, where a public adjuster may be worth the percentage fee.

Practical points that improve outcomes

Everything in writing. Confirm phone conversations by email.

Keep a chronological log of every contact.

Be persistent but not abusive. The person reading your file did not write the policy.

Escalate methodically: adjuster, supervisor, formal appeal, external review, regulator.

And do not accept the first denial as final. A meaningful share of denials are overturned by people who simply continued.

General information about insurance disputes, not legal or insurance advice. Appeal rights, deadlines and regulatory jurisdiction vary by insurance type and state. Consult a qualified attorney or your state insurance department.