What are the odds of a major insurance claim being denied or severely underpaid?
Evidence quality 4.13/5
Eight-dimension review score against the quality rubric . Each dimension scored 1–5.
- D1 Source grounding
- 3/5
- D2 Source authority
- 5/5
- D3 Arithmetic
- 4/5
- D4 Uncertainty
- 3/5
- D5 Scope
- 4/5
- D6 Prose
- 5/5
- D7 Perception honesty
- 4/5
- D8 Caveat completeness
- 5/5
Lifetime probability · lifetime, US adult
1 in 1.4
70% lifetime chance
Most people underestimate this.
range 1 in 2.0 to 1 in 1.2
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≈ As likely as
Perceived
Insurance claim denials occupy a peculiar place in public consciousness: everyone has heard a horror story, but most policyholders assume their own claims will be paid. The complexity of insurance contracts and the opacity of denial reasons contribute to a learned helplessness — denial rates are high, but because each individual encounters the system infrequently, the base rate remains poorly calibrated. Health insurance denials receive the most media attention, particularly after the 2024 UnitedHealthcare shooting brought insurer practices into national conversation, but denial rates for disability, long-term care, and property insurance are often higher and less visible.
Rough estimate: ~15-20% of health claims denied
Source: editorial intuition, not polled
Actual
~19% of in-network health claims denied (ACA marketplace, 2024)
ACA marketplace plan enrollees (HealthCare.gov, 2024)
Show derivation
The 19% headline denial rate (KFF, 2024) includes administrative denials (coding errors, duplicates) alongside substantive denials (medical necessity, prior authorization). Some administrative denials are corrected on resubmission, but with an appeal rate of less than 1% (about 263,000 appeals out of 85 million denials), the vast majority of denials — whether administrative or substantive — go unchallenged. The "major denial" concept used here is narrower: denials involving claims above $1,000 that result in unanticipated out-of-pocket costs. The effective major-denial rate is estimated at roughly 1-2% per significant claim encounter, reflecting that while many denials are for small amounts or duplicates, the low appeal rate means even correctable denials often stick. Over a 59-year adult life, the average adult files approximately 2 major-eligible claims per year across health, auto, property, and disability insurance, yielding roughly 118 claim encounters. With a 1% per-encounter major-denial probability, the chance of never experiencing a major denial is (1 - 0.01)^118 = (0.99)^118 ≈ 0.31, giving ~69% lifetime probability. However, the 1% per-encounter rate is an author estimate, not directly sourced from any study. The true per-encounter rate for costly, unresolved denials is unknown. The 70% lifetime figure should be understood as a rough order-of-magnitude estimate with high uncertainty. SSDI initial denial rates of 62% represent a separate, severe category not folded into the per-claim rate used here.
Caveats: The 19% headline denial rate includes administrative denials (coding errors, dup…
The 19% headline denial rate includes administrative denials (coding errors, duplicate submissions, missing information) alongside substantive denials (medical necessity, prior authorization). While some administrative denials can be corrected on resubmission, the <1% appeal rate (about 263,000 out of 85 million denied claims) means most denials of all types go unchallenged. The "major denial" concept used in the normalized estimate is not a standard metric — it is constructed for this entry, and the 1% per-encounter rate is an author assumption, not a directly sourced figure. The 70% lifetime figure should be understood as an order-of-magnitude estimate, not a precise calculation. Denial rates vary enormously by insurer (3-36% in the KFF data), by plan type (marketplace vs. employer vs. Medicaid), and by clinical context. The SSDI denial rate is a fundamentally different system from commercial health insurance and is included here to illustrate the breadth of insurance-denial risk, not because the two systems are comparable. Among those who do appeal, overturn rates are substantially higher, suggesting that many denials would be reversed if challenged.
Regional breakdown
The headline figure averages across very different populations. Here’s how the probability varies by geography or context:
| Region / context | Lifetime probability | Notes |
|---|---|---|
| ACA marketplace enrollees | 1 in 1.3 |
Higher denial rates in marketplace plans; 19% per-claim denial rate compounds rapidly over years of coverage |
| Employer-sponsored insurance | 1 in 1.7 |
Employer plans generally have lower denial rates and more robust HR support for appeals |
| SSDI applicants | 1 in 1.6 |
62% initial denial rate for Social Security Disability Insurance; most applicants experience at least one denial |
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Insurers denied 19% of in-network health claims in 2024 across ACA marketplace plans, according to KFF’s analysis of CMS transparency filings. The rate ranged from 3% to 36% depending on the insurer, and 37% of out-of-network claims were denied. These are not edge cases or coding errors: while administrative denials (missing information, duplicate submissions) account for a share, the sheer volume — approximately 85 million denied in-network claims in a single year out of 451 million filed — means that millions of policyholders absorb costs they expected their insurance to cover. The most remarkable statistic is not the denial rate itself but what happens afterward: only under 1% of denied claims were formally appealed (about 263,000 out of 85 million). The system functions, in practice, as a one-sided negotiation in which the insurer’s initial decision is almost always final.
Disability insurance tells an even starker story. The Social Security Administration denied 62% of initial SSDI applications in 2024, and the rate ticked up to a 64% denial rate in fiscal year 2025. At the reconsideration stage, 84% are denied again. Only at the Administrative Law Judge hearing — which takes one to three years to reach — does the approval rate climb to 51%. The multi-stage process is designed as a filter, and it works: many applicants give up before reaching a hearing, and those who persist spend years without disability income while they wait. The financial harm is not the denial itself but the gap it creates between the onset of disability and the eventual (if it comes) approval.
Over a 59-year adult life, the probability of encountering at least one major insurance claim denial — defined here as a denial involving more than $1,000 in disputed costs — is estimated at roughly 70%. This figure is constructed from an assumed 1% per-encounter major-denial rate over ~118 lifetime claim encounters; the per-encounter rate itself is an author estimate, not drawn from a single published source, and carries substantial uncertainty (the true lifetime probability could plausibly range from 50% to 85%). The estimate excludes minor administrative denials but accounts for the fact that the under 1% appeal rate means even correctable denials usually go unchallenged and result in out-of-pocket cost. Among those who do appeal, overturn rates are substantially higher, suggesting that many denials are indefensible on the merits but profitable because they are never challenged.
Claim ledger
Every number below is what each source reported, with the verbatim quote we relied on and how we arrived at our figure. Click any link to verify directly.
-
[1] KFF (Kaiser Family Foundation) — Claims Denials and Appeals in ACA Marketplace Plans in 2024
Claims Denials and Appeals in ACA Marketplace Plans in 2024See all 2 Likelier entries citing this source →
- Statistic
19% of in-network claims denied in 2024 (~85 million); 37% of out-of-network claims denied; less than 1% of denied claims appealed- Excerpt
“"Of these in-network claims, approximately 85 million were ultimately denied, resulting in an average in-network denial rate of 19%. [...] Of the approximately 85 million in-network denied claims in 2024, HealthCare.gov consumers appealed at least 262,982 — an appeal rate of less than 1%." ”
- Source data from
- 2026-03-24
- Accessed
- 2026-04-24 · archived copy
- Calculation
- KFF's analysis of the CMS Transparency in Coverage Public Use File provides the most comprehensive data on ACA marketplace denial rates. The 19% in-network denial rate is the basis for the native estimate. The strikingly low appeal rate (<1%) suggests that the vast majority of denials go unchallenged, meaning the effective denial rate — denials that result in the policyholder bearing the cost — is very close to the raw denial rate. The 19% figure covers all claim types (administrative, medical necessity, prior auth); the subset of denials for medical necessity is roughly 5% of all denials.
- Independence
- KFF's analysis uses CMS-mandated insurer transparency filings, independent from individual insurer self-reports and from the SSA's disability claims data.
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[2] Urban Institute — The SSA Says It's Reduced the Disability Claims Backlog. Fewer New Claims and a Higher Denial Rate Could Be Driving the Reduction
The SSA Says It's Reduced the Disability Claims Backlog. Fewer New Claims and a Higher Denial Rate Could Be Driving the Reduction- Statistic
62% of SSDI claims denied at initial application in 2024; approval rate fell to 36% in FY2025- Excerpt
“"The SSA's approval rate fell from 38.7 percent in fiscal year 2024 to an average of 36.0 percent in fiscal year 2025. While the number of approved claims remained flat at about 812,000 from 2024 to 2025, denials account for the entire increase in total decisions." ”
- Source data from
- 2025-09-12
- Accessed
- 2026-04-24 · archived copy
- Calculation
- The SSDI initial denial rate of 62% represents one of the highest denial rates in any insurance-adjacent system. At reconsideration, 84% are denied again; at the ALJ hearing level, 51% are finally approved. The multi-stage process means that a claimant who persists through all appeals has roughly a 50% chance of eventual approval, but the process takes 1-3 years — during which the claimant has no disability income. This is included as a separate data point because disability insurance denial is a distinct and severe category of financial harm.
- Independence
- The Urban Institute analysis uses SSA administrative data, independent from the KFF health insurance claims analysis which uses CMS marketplace data.
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[3] American Journal of Managed Care — How Insurance Claim Denials Harm Patients' Health, Finances
How Insurance Claim Denials Harm Patients' Health, Finances- Statistic
Patients who experience claim denials report delayed care, medical debt, and reduced trust in the insurance system- Excerpt
“"Insurance claim denials harm patients' health and finances, leading to delayed or foregone care, unexpected medical debt, and erosion of trust in the insurance system. The financial impact falls disproportionately on lower-income and chronically ill patients." ”
- Source data from
- 2025-01-15
- Accessed
- 2026-04-24 · archived copy
- Calculation
- AJMC provides qualitative context on the downstream effects of denials. While not a quantitative source for denial rates, it documents the mechanism by which denials translate into financial harm: patients who cannot afford to pay out-of-pocket either forgo care (creating future health costs) or incur medical debt. This supports the framing of denials as a financial risk, not merely an administrative inconvenience.