Six Common Reasons Why Insurance Claims Get Denied

Insurance

Insurance

Learn about the major reasons why your insurance claims might get denied

Insurance is a policy or contract between an insurer and their client, guaranteeing coverage in times of need. In exchange, their client, also known as the insured, has the responsibility to pay a fee called the premium for a fixed period of time. There are many kinds of insurance, and they can cover life, liability, and property.

It’s a convenient option for those who have extra money to manage their risks, provide protection for the family in case of accidents, aid financially in times of sickness and health-related problems, and an overall backup to cover any possible financial loss that might arise. However, there are times when you’ll experience denied insurance claims because of the following reasons:

 

1. If The Client Failed To Abide With Timely Filing

Many insurance companies enforce a policy of timely filing or deadline for submitting insurance claims. It may vary depending on the state law, the plan sponsor, the type of service, and the provider’s network status.

Suppose the client submitted the claim with helpful information and other documents but didn’t submit it on time without a valid reason. The claim will automatically be denied based on the precedent that you failed to abide by the timely filing of your claims. However, you still have a chance to contest this denial by submitting an appeal to reconsider your claim with a valid explanation of why you weren’t able to file it on time.

 

2. If The Client Is Claiming For Non-Covered Services

Denied insurance claims are usually caused by claiming for non-covered services that you may have assumed to be covered by your insurance company. Moreover, it could also be proven that the service isn’t medically necessary based on the diagnosis submitted. In addition, laboratory tests are usually the underlying cause for a claim to be denied, because the results of these tests are actual pieces of evidence to approve the claims or not.

 

3. If The Client Has Limited Plan Coverage

Many insurance companies work with their providers under a network system. You can determine them under two types: in and out of network.

Clients who ask for in-network provider services receive more perks than out-of-network, with coverage ranging from 70-100% depending on the plan, while out-of-network provider services offer coverage ranging from 30-60%.

Also, some programs allow coverage for in-network services only. If the member asks for an out-of-network service from one of these plans, they’ll need to solely shoulder the payment.

In addition, some policies have limited coverage for services. For example, many health insurances exclude coverage for members who sustained an occupational-related injury because they need to submit the claim for payment instead of the workers’ compensation insurance. If they insist on filing the claim, it will be denied for having no coverage.

 

4. If The Client Provided Incorrect Data

Insurance companies record their client and provider data. They save their personal information, insurance plan, contribution status, and claim history.

Basically, clients need to submit their insurance claims with their member’s ID and other information to help the insurance company identify their plan and premium based on their policy. However, if they aren’t able to find the necessary member’s information due to the incorrect client’s data provided, the claim will be denied for having no coverage.

 

5. If The Coordination Of Benefits Are Not Updated

A child can be a registered dependent by both parents’ insurance, so both insurance plans can pay the child’s medical claim. However, the primary insurance plan of the child needs to pay first. Although the problem occurs when there is no clear identification of which insurance is the primary, thus it’s important to verify the order of policies before even scheduling an appointment. It’s advisable to update your coordination of benefits (COB) to prevent experiencing denied claims.

 

6. If The Client Filed Duplicate Claims

Often than not, people file their claims more than once. It can be because they are afraid that the insurance didn’t receive it, and filing it again gives them peace of mind. That is a decent idea, but it can make the processing time longer because the insurance is tediously checking for the claims they receive and they don’t want to pay twice for a single claim. It may be put on hold to check if the new claim they received is a corrected claim or added more computation. One of the common results of this situation is that the insurance denies the claim as a duplicate.

 

Conclusion

Insurance is a suitable investment for individuals who want to secure their future and family. It gives a guarantee amidst financial loss and coverage for emergencies. Even so, some inconveniences happen in the process, such as getting the claims denied. By being mindful of the common reasons for insurance denials, you can avert them through the information mentioned above.