Health Insurance Claim Denial Rates by Plan Type: 2024 Data & Analysis

Fact-checked by the Smart Insurance 101 editorial team

What are the real health insurance claim denial rates in the U.S., and why do they vary so much depending on whether you’re on an ACA marketplace plan, Medicare, or coverage through your job? According to a KFF analysis of 2024 CMS transparency data, qualified health plans sold on HealthCare.gov denied 19% of in-network claims last year, a figure that barely budged from 2023. But that headline number masks enormous variation: some insurers denied just 3% of claims; others rejected more than a third.

This article unpacks denial rates by plan type, shows which insurers are most aggressive with rejections, and explains why so few denied claims ever get paid. You’ll also find the one number that should worry any patient with a high-deductible plan, and a practical step that can stop denials before they happen.

How Common Are Health Insurance Claim Denials Overall?

Health insurance claim denial rates are high enough that 19% of all in-network claims submitted to ACA marketplace plans in 2024 were rejected, according to KFF. That’s nearly identical to the 2023 rate, which means the system hasn’t improved, despite growing pressure on insurers to simplify prior authorization and reduce administrative friction.

For out-of-network claims, the situation gets worse fast. The average denial rate for out-of-network services in the same marketplace plans hit 37% in 2024. If you’re forced to see a specialist outside your plan’s network, something that happens more often with narrow-network HMO and EPO designs, the odds that your insurer will pay drop by nearly half.

Medicare Advantage, which now covers more than half of all Medicare beneficiaries, denies roughly 17% of initial claims, based on peer-reviewed work and earlier GAO audits. Traditional Medicare, by contrast, denies only about 8% of claims. The difference is stark and persistent. Employer-sponsored plans fall somewhere in between, but the data is far less reliable because self-funded employers are not required to report denial rates the way ACA marketplace plans must.

What’s Behind the Numbers, and What They Don’t Show

Denial rates look scary, but they’re not all created equal. A large chunk of denials in marketplace data are filed as “all other reasons” (36%) or simple administrative errors (25%), according to the KFF analysis. Only 5% of denials were explicitly coded as medical necessity. That suggests many rejected claims are due to paperwork or coding mistakes rather than a judgment that care wasn’t needed. For the average patient, that’s both a frustration and an opportunity, a corrected claim often gets paid quickly.

Denial Rates by Plan Type: Marketplace vs. Employer vs. Government

Plan type matters enormously when you’re trying to estimate your real risk of a claim being rejected. ACA marketplace plans report the most granular data, with an in-network denial rate of 19% and out-of-network rate of 37%, per CMS data analyzed by KFF. Medicare Advantage plans, according to multiple GAO reports, hover around 17% for initial medical claims. Traditional Medicare’s denial rate sits near 8%, a figure that has remained relatively stable, while Medicaid managed-care plans show denial rates in the 12% range, though state-level variation is wide.

Employer-sponsored plans are the black box. Fully-insured plans in Massachusetts reported an average overall denial rate of 20.4% in 2024, according to the Massachusetts Health Policy Commission. But that’s one state. Nationally, most large employers self-fund, and ERISA exempts them from the same transparency rules. The result: millions of workers have no easy way to compare denial rates when choosing a plan during open enrollment. If you’re weighing a PPO against an HMO, denial risk is just as relevant as the premium, but it’s hidden from view.

The table shows why some experts are wary of head-to-head comparisons. “Denial rates are not directly comparable from one health plan to another and could lead consumers to make inaccurate conclusions on the robustness of the health plan,” said Kelly Parsons, Director of media relations at the Blue Cross Blue Shield Association, as reported by ProPublica. Mila Kofman, who leads the District of Columbia’s ACA exchange, put it more bluntly: “Health plans would never do that voluntarily, would give you what their claim denial rates are, because they don’t want to attract sicker people.”

What Actually Triggers a Denial, and Why Medical Necessity Is Rarely the Reason

Most patients assume a denial means their insurer decided the treatment wasn’t medically necessary. The data says otherwise. In ACA marketplace plans, medical necessity accounted for only 5% of denial reasons, while administrative issues and “all other reasons” soaked up 25% and 36% respectively, according to KFF. Prior authorization problems contributed another 9%. That means the vast majority of denials trace back to paperwork, coding mismatches, or missing documentation, not a doctor saying no.

One of the most common, and most fixable, triggers is a medical coding error. An incorrect ICD-10 code, a missing modifier, or a mismatched diagnosis can bounce a claim automatically. This is something patients can often fix by calling the billing office and asking them to resubmit with corrected codes. For preventive care, the problem is slightly different: many denials happen because a service that is clearly preventive under the ACA (like a colonoscopy) gets billed wrong or isn’t flagged as preventive. The claim then gets processed under the deductible, which can mean a $1,500 surprise. Always confirm the billing code with your provider before the appointment.

Which Insurers Deny the Most Claims, and Where You Live Matters

Not all insurers play by the same rulebook. In the ACA marketplace, denial rates ranged from a low of 3% (affiliated with integrated health systems like Kaiser Permanente) to a high of 36% for some plans, KFF found. Insurers like Oscar Health posted denial rates near 25% in 2024, while some Blue Cross affiliates sat in the 10–15% range. The parent company isn’t the whole story, state-specific subsidiaries often report wildly different numbers. A plan that denies aggressively in Texas might deny far less in Colorado, simply because of different network configurations and state insurance department pressures.

Geography also drives denial frequency. Hawaii had one of the highest marketplace denial rates at 27%, while South Dakota sat at 7%. There’s no simple explanation: a mix of provider concentration, prior-authorization requirements, and the dominant insurers in each state creates a patchwork. For Medicare Advantage, skilled nursing facility prior-authorization requests were denied 12% of the time in June 2024, as HHS OIG data showed. And when those denials were appealed, nearly all were overturned, a sign that initial rejections are often algorithmic rather than clinical.

The real problem is that denial rates alone don’t capture the patient’s financial exposure. If you’re enrolled in a high-deductible plan and your insurer denies a $5,000 MRI, you could be on the hook for the full amount, even if the denial is later reversed. That’s when understanding the difference between liability coverage and protection against medical debt becomes personal.

How Often Do Patients Appeal Denials and What Are the Outcomes?

Almost no one appeals. In 2024, only 0.2% of denied in-network marketplace claims were appealed, KFF data shows. That’s fewer than 1 in 500 rejected claims. The appeals that do get filed mostly stay within the insurer’s own review process, and the insurer upholds its original decision 66% of the time on those internal appeals. But there’s a critical asterisk: when a case makes it to an independent external reviewer, the denial is overturned in more than half of all cases. That statistic should be front and center for anyone staring at a denial letter.

Why don’t people appeal? The process is confusing, deadlines are tight, and many consumers don’t even know appeals exist. “This is life and death for people: If your insurance won’t cover the care you need, you could die,” said Karen Pollitz, senior fellow at KFF, as quoted by ProPublica. That emotional weight causes many patients to give up or pay out of pocket. For self-employed individuals who rely on marketplace plans, the financial impact of a single large denial can be catastrophic, medical debt is the leading cause of bankruptcy in the U.S.

Employer-sponsored plans add another layer of complexity. Self-funded plans governed by ERISA have their own appeal procedures, but external review is often less accessible than in the ACA marketplace. And because denial outcomes aren’t publicly reported, we don’t know how often those appeals succeed. The lack of transparency means an employee with a denied claim could be in a worse position than someone on the marketplace, with fewer tools to challenge the decision.

The bottom line: if your claim is denied, always request a written explanation, get the coding verified, and file an appeal promptly. The data is clear, the system is built on the assumption you won’t fight back. And when you do, you win more often than you’d think.

Frequently Asked Questions

What is the average health insurance claim denial rate?

The average in-network denial rate for ACA marketplace plans is 19%, according to 2024 CMS data analyzed by KFF. Across other plan types, the figure varies: Medicare Advantage around 17%, traditional Medicare near 8%, and employer plans in at least one state reporting 20.4%.

Which health insurance plan type has the highest denial rate?

Out-of-network claims on ACA marketplace plans have the highest documented denial rate at 37%. For in-network care, ACA marketplace and employer fully-insured plans both show denial rates near or above 20%, while traditional Medicare’s rate is notably lower.

Why do health insurers deny so many claims?

Contrary to common belief, medical necessity is listed as the reason in only 5% of ACA marketplace denials. The majority result from administrative errors, documentation gaps, and “other” reasons. Prior authorization issues account for 9%. Many denials are fixable with corrected coding or resubmission.

Do people appeal denied claims, and do they win?

Fewer than 1% of denied marketplace claims are appealed. When an insurer handles the appeal internally, the denial is upheld 66% of the time. But external review overturns the decision in more than half of all reviewed cases, per KFF.

Are employer-sponsored health insurance denial rates lower than marketplace plans?

We don’t truly know. Massachusetts data suggests fully-insured employer plans have a 20.4% overall denial rate, but self-funded plans, which cover most large-company workers, are not required to report this data. The lack of transparency means direct comparisons with ACA marketplace plans are unreliable.

Does where I live affect my chance of a claim denial?

Yes. Marketplace denial rates ranged from 7% in South Dakota to 27% in Hawaii. State-level variation reflects differences in insurers, provider reimbursement practices, and regulatory oversight. Even within the same insurer, denial rates can differ dramatically by state.