2026 Update — Why Claim Denials Are Up, and What You Can Do About It
Why more people than ever are seeing a denied health insurance claim — and how to fight back.
If you’ve recently received a denied health insurance claim, you’re not alone. As we move into 2026, consumers across the United States are facing the highest rate of claim denials in nearly a decade. Rising healthcare costs, tighter insurer policies, and the expanded use of AI-driven claim reviews have created a perfect storm for patients — and many are shocked to learn that a claim they assumed would be covered is suddenly denied.
The good news?
A denied claim is not the end of the road. In fact, many claims are overturned when the patient files a proper appeal. This guide explains the current trends behind the rise in denied health insurance claims, what 2026 policy changes mean for you, and how to appeal a denied claim the right way.
Why Are Health Insurance Claim Denials Increasing in 2025–2026?
Between policy shifts, technology changes, and skyrocketing medical costs, insurers are under intense pressure to limit payouts. That pressure is now translating directly into denial rates. Here are the main forces driving the trend:
1. AI and Automation Are Leading to Faster — and More Frequent — Denials
One of the biggest shifts in the insurance world is the rapid adoption of algorithm-based claim review. Medicare is launching its pilot program, known as WISeR, in 2026, which introduces AI into the prior-authorization process. Private insurers have already been experimenting with similar systems.
AI allows insurers to:
Deny claims in seconds
Flag claims as “not medically necessary” without human review
Reject claims for coding mismatches
Auto-deny claims lacking specific documentation
For patients, this means the first response from insurance is more likely to be “denied.” Even claims that would have been approved just a few years ago now require additional steps to fix or appeal.
2. Marketplace Plans Continue to Show High Denial Rates
Recent nationwide data shows troubling numbers:
18% of in-network claims submitted to ACA Marketplace plans were denied
37% of out-of-network claims were denied
Some insurers denied over 50% of in-network claims
Fewer than 1% of consumers appeal
You read that correctly: less than 1% of people challenge a denied health insurance claim — even though many denials can be overturned with a strong appeal.
This means insurers benefit from the public’s lack of knowledge. Deny claims upfront → see who fights back → pay only those who appeal.
3. Increased Use of Prior Authorization Requirements
Insurance companies are expanding prior authorization rules across more services, including routine care. This leads to higher denial rates for:
Imaging (MRI, CT scans)
Physical therapy
Mental health treatment
Genetic testing
Specialty medications
If prior authorization wasn’t obtained — or the insurer claims it wasn’t — the claim is often denied automatically.
4. Administrative Denials Are Skyrocketing
Not all denials are about coverage. Many fall under “administrative,” meaning:
Wrong payer billed
Missing or incorrect coding
Claim filed too late
Documentation mismatch
Coordination of benefits issues
Insurance information outdated
These denials are common and highly appealable.
This includes denial codes like:
Administrative reasons are frustrating because the patient did nothing wrong — but they also offer the highest chance of reversal during appeal.
How AI and Automation Affect You — The Patient
AI-driven denials sound efficient on paper… but they often harm patients:
❌ Higher rate of mistaken denials
Algorithms cannot interpret medical nuance. They frequently deny medically necessary care that clearly meets criteria.
❌ Denials based on missing documentation — even when documentation exists
If a code or keyword is missing, AI can deny instantly.
❌ More responsibility placed on patients
Patients must now gather documentation, challenge the denial, and push insurers to conduct human review.
❌ Delays in treatment
A denied health insurance claim can delay surgery, medication, cancer care, mental health care, and critical diagnostics.
But here’s the empowering truth:
A strong appeal letter forces insurers to conduct human review — and many denials are overturned.
Why You Should Appeal a Denied Health Insurance Claim in 2026
1. Insurers count on patients not appealing
With fewer than 1% of people appealing, insurers know most denials will never be challenged.
2. Appeals work
Studies and case law show that 40–60% of appealed denials are reversed.
3. Your appeal becomes the legal record
If your case ever goes to an external review or court, the judge examines the appeal file, not what you say later.
Your appeal letter is your one opportunity to:
Present medical evidence
Correct insurer mistakes
Cite policy language
Challenge incorrect denial codes
4. ERISA and state-law protections are stronger than most people realize
Most employer-provided plans fall under ERISA, which requires a “full and fair” review of appeals.
Insurers must:
Explain denial reasons
Consider all evidence you submit
Allow access to the claim file
Follow deadlines
When they fail, it strengthens your case.
Common Denial Codes You May See in 2026 — and What They Mean
CO-109 — Claim Not Covered by This Payer
Often caused by coordination of benefits mistakes or incorrect insurance information. Very appealable.
CO-96 — Non-Covered Charges
Used broadly, sometimes incorrectly. Often related to coding issues or insurer misinterpretation.
CO-167 — Diagnosis/Procedure Mismatch
AI-driven denials are increasing this one. Frequently appealable with a corrected bill, doctor letter, or medical records.
PR-1 — Deductible Not Met
Sometimes correct, sometimes caused by billing errors or incorrect application of deductible rules.
PR-204 — Not Covered Under Patient’s Plan
Frequently applied incorrectly, especially when care should be covered under essential health benefits.
If you receive any of these, appealing is usually worth it.
How to Appeal a Denied Health Insurance Claim in 2026 (Step-by-Step)
Insurers are denying more claims — but they must legally allow you to appeal. Here’s how to do it effectively.
Step 1: Read the Denial Letter Carefully
Identify:
Denial code
Denial reason
Appeal deadline
Whether they want documents, coding corrections, or prior authorization
Many letters use vague language. Highlight anything unclear.
Step 2: Gather Supporting Documentation
You may need:
Doctor’s notes
Medical records
Corrected claims
CPT/ICD codes
Prior authorization records
Benefits handbook (policy/EOC)
Explanation of Benefits (EOB)
Step 3: Write a Strong Appeal Letter
Your appeal should:
Identify the claim
Cite the denial code
Explain why the denial is incorrect
Provide medical and policy support
Request full reconsideration
Attach evidence
A weak, generic letter is often ignored.
A structured, attorney-style letter is taken seriously.
Step 4: Submit Before the Deadline
Most appeals require:
180 days for employer-sponsored plans (ERISA)
60 days for Medicare
Varies for Medicaid and individual plans
Submit via certified mail or upload portal when available.
Step 5: Track Your Appeal
Follow up every 7–10 days. Insurers frequently misplace documents — persistence matters.
Your Best Defense in 2026: A Professional Appeal Letter
With automation increasing denials, the appeal process now requires more clarity, more documentation, and more strategic argumentation than ever before.
Your appeal letter should not be emotional or vague. It should read like a legal document:
Clear
Evidence-supported
Policy-based
Correctly formatted
Professionally structured
This is exactly why attorney-written appeal templates are so valuable — they give ordinary consumers the power of legal-quality advocacy at a fraction of the cost.
Denials Are Rising — But So Is Your Ability to Fight Back
The rise in denied health insurance claims is not your fault.
The system is becoming more automated, more restrictive, and more confusing.
But here is the truth:
Most patients can overturn a denial if they appeal.
A denied claim is not the end of your healthcare — it’s the beginning of your right to challenge your insurer.
If you’ve received a denial code like CO-109, CO-96, CO-167, PR-1, or any other, now is the time to act.
Use a strong appeal letter, gather evidence, and submit on time.
You can win.
Need help getting started?
Download an attorney-written appeal letter template customized for your denial code — and file a strong appeal today.
👉 Shop Legal Appeal Templates
👉 Get the Free Appeal Guide
👉 Learn more about denial codes
Take control of your claim — and get the coverage you deserve.
