Claim and Appeal Procedures



Fully Insured?

Although sponsors of fully insured plans are not typically responsible for claim procedures, they may want to assist their employees with claim filing or appeals.

The Employee Retirement Income Security Act of 1974 (ERISA) sets standards for administering health benefits from a health plan provided through employment in the private sector.  These ERISA standards require plans to give participants important information about the plan and to have a fair process for handling benefit claims.  If the plan denies a claim, it must give the reason for the denial in writing and in a manner participants can understand. It also must provide a reasonable opportunity for a fair and full review of the decision.

In general, the material in these Claim and Appeal Procedures applies to all health plans. The Affordable Care Act (“ACA”) added additional requirements applicable to non-grandfathered health plans offering medical coverage. These additional ACA requirements will be identified in text boxes such as this one so that it is clear they only apply to medical health plans. Note that while ERISA does not apply to church or non-federal government plans, the ACA does require those types of plans to comply with the claims rules for ERISA plans. Health plans that offer benefits other than medical coverage are generally considered excepted benefits with respect to ACA requirements.  As such, these additional ACA requirements would not apply to those plans.  The ACA does not require church plans or government plans to follow the ERISA claims procedures with respect to excepted benefits.


Claim Decisions

Group health claims are divided into four types:  pre-service claims, urgent care claims, concurrent care claims and post-service claims, with the type of claim determining how quickly a decision must be made.

The plan must decide what type of claim has been submitted, except when a physician determines that the urgent care is needed.  The plan must treat those claims as urgent-care claims.

1. Pre-service Claims

Pre-service claims are requests for approval of medical care that the plan requires a claimant to obtain before getting such medical care, such as preauthorization or a decision on whether a treatment or procedure is medically necessary.  A claim is only a pre-service claim if the plan requires preauthorization in order for the claim to be paid in full.  For example, if a plan reduces benefits because a claimant fails to pre-authorize a claim, this would be considered a pre-service claim.

NOTE: The plan must give claimants written notice that their claim has been determined to be eligible for coverage or denied before the end of the time allotted for the decision.

2. Urgent Care Claims

Urgent care claims are a special kind of pre-service claim that requires a quicker decision because a claimant’s health would be threatened if the plan took the normal time permitted to make a payment decision. If a physician with knowledge of a claimant’s medical condition tells the plan that a pre-service claim is urgent, the plan must treat it as an urgent care claim.

Urgent care claims must be decided as soon as possible, taking into account the medical needs of the patient, but no later than 72 hours after the plan receives the claim.

3. Concurrent Care Claims

If a plan has approved an ongoing course of treatment over a period of time or number of treatments, any decision to shorten the approved course of treatment or whether to extend the course of treatment is a concurrent claim decision.

If a plan decides to shorten a previously approved course of treatment, the plan must at a time sufficiently in advance of the reduction or termination to allow the claimant to appeal and obtain a determination on review of that adverse benefit determination before the benefit is reduced or terminated.

A request to extend a course of treatment must be handled as a pre-service claim or urgent care claim as applicable.  In the case of an urgent claim, the plan must notify the claimant of the benefit determination, whether adverse or not, within 24 hours after receipt of the claim by the plan, provided that any such claim is made to the plan at least 24 hours prior to the expiration of the prescribed period of time or number of treatments.

4. Post-service Claims

Post-service claims includes all other claims for benefits under a group health plan, including claims after medical services have been provided, such as requests for reimbursement or payment of the costs of the services provided.  Most claims for group health benefits are post-service claims.

Post-service health claims must be decided within a reasonable period of time, but not later than 30 days after the plan has received the claim.

The plan must give claimants notice that their claim has been denied in whole or in part (paying less than 100% of the claim) before the end of the time allotted for the decision.

Adverse Benefit Determinations (Claim Denials)

When a claim has been denied in whole or in part (“adverse benefit determination”), the plan administrator must provide a written notice to the claimant.

An adverse benefit includes a denial, reduction, or failure to provide or make a payment (in whole or in part) for a benefit, or a termination of a benefit, including any such denial, reduction, failure to provide or make a payment, or a termination of a benefit, that is based on:

ACA – Applicable to Medical Plans 

The ACA expands the list of adverse benefit determinations to include:

  • determinations of whether a participant or beneficiary is entitled to a reasonable alternative standard for a reward under a wellness program; and
  • any rescission of coverage, whether or not there is an adverse effect on any particular benefit at the time that coverage is rescinded.

A rescission is a cancellation or discontinuance of coverage that has retroactive effect, except to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage.  Rescission due to failure to timely pay required premiums, applies to COBRA participants.  Note however, that COBRA itself contains rules about when COBRA premiums are due and how to handle de minimis shortfalls in premium.  (Any rescission of coverage must also comply with the interim final regulations governing rescissions under the ACA.)

Notice of an Adverse Benefit Determination

(often called an explanation of benefits or EOB)

The notice must be provided within the time frames noted above for the various types of claims.  In general, the notice must:

Plans must afford claimants at least 180 days to file an appeal.   The plan must provide claimants, on request and free of charge, copies of documents, records, and other information relevant to the claim for benefits.  The plan also must identify, on a claimant’s request, any medical or vocational expert whose advice was obtained by the plan.  The plan may require that appeals be in writing, except with respect to appeals of urgent-care claims, which may be submitted orally.

Plans can impose a reasonable limitation period on the right to file a lawsuit – for example, one year after the exhaustion of all appeals.  Recently some courts have interpreted the rules to require that notice of a limitation period be part of an EOB; other courts have not adopted this interpretation and employers will want to consult with counsel on the need/desirability of including it.

ACA – Applicable to Medical Plans
Under ACA rules, the claimant has a right to see his or her claim file. The plan or issuer must provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the plan or issuer in connection with an adverse claim determination. Such evidence must be provided as soon as possible and sufficiently in advance to give the claimant a reasonable opportunity to respond prior to the date of the review decision. The plan or issuer must provide the new or additional evidence to the claimant proactively, and not just upon request of the claimant as required under existing DOL regulations. Additionally, before the plan or issuer can issue an adverse benefit determination on review based on application of a new or additional rationale to the claim decision, the claimant must be provided, free of charge, with information regarding the new rationale in advance of the determination, in order to give the claimant a reasonable opportunity to respond prior to that date. Again, the plan or issuer must provide the new or additional rationale to the claimant proactively, and not just upon request of the claimant.Additional Content for Adverse Determination Notice: The ACA requires that additional detail be provided in claim denials. The government has provided model forms to assist plans in meeting their expanded notice requirements.

Notices to claimants regarding an adverse benefit determination must provide the following additional content:

  • Information sufficient to identify the claim involved, including the date of the service, the health care provider, the claim amount (if applicable), the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning.
  • The denial code and its corresponding meaning, as well as a description of the plan’s or issuer’s standard, if any, that was used in denying the claim.  In the case of a final internal adverse benefit, this description must also include a discussion of the decision.
  • Notification of the right to request the diagnosis and treatment codes (and their meanings) in all adverse benefit determinations.  These codes must also be provided upon request and the plan or issuer must not consider such request, in itself, to be a request for (and there trigger the start of) an internal appeal or external review.
  • A description of available internal appeals and external review processes, including information regarding how to initiate an appeal.

The availability of, and contact information for, an available State office of health insurance consumer assistance or ombudsman established under the ACA.

ACA –Applicable to Medical Plans
Notices of claim denials and availability of internal and external appeals processes must be provided in a “culturally and linguistically appropriate manner.  If at least 10% of the population in a given county is literate only in a given non-English language the notices must:

  • include a statement in that non-English language clearly indicating how to access the language services provided by the plan;
  • provide oral language services (such as a telephone customer assistance hotline) that include answering questions in any applicable non-English language and providing assistance with filing claims and appeals (including external review) in any applicable non-English language; and
  • provide, upon request, a notice in any applicable non-English language.

A list of affected counties is available here.

Claim Appeal Reviews

Reviews of Adverse Benefit Determinations or Appeal

On appeal, an adverse benefit determination must be reviewed by someone other than the person who made the original claim denial and who looks at all of the information submitted and consults with qualified medical professionals if a medical judgment is involved.

Coverage Pending Appeal

A plan and issuer must provide continued coverage pending the outcome of an internal appeal. For this purpose, the plan or issuer must comply with the requirements of the DOL claims procedure regulation, which generally prohibit a plan or issuer from reducing or terminating an ongoing course of treatment without providing advance notice and an opportunity for advance review.

ACA – Applicable to Medical Plans 
Individuals in urgent care situations and individuals receiving an ongoing course of treatment may be allowed to proceed with expedited external review simultaneously with completing the internal appeals process, under either a State external review process or the Federal external review process, in accordance with the Uniform Health Carrier External Review Model Act, commonly known as the NAIC Model Act.


Normally, claimants must complete a plan’s claim process before filing an action in court to challenge the denial of a claim for benefits.

ACA – Applicable to Medical Plans
External Review: The ACA requires medical plans to permit external review of certain claims denials by an external review organization.Health insurers must follow the rules of applicable state review requirements if those requirements meet the minimum standards imposed by ACA rules. Any plan or issuer not subject to a State external review process must comply with the Federal external review process.Due to the broad scope of ERISA preemption, most claims under self-insured ERISA plans will be subject to the Federal external review process. In addition, a plan or issuer is subject to the Federal external review process where the State external review process does not meet, at a minimum, the consumer protections in the NAIC Uniform Model Act, as well as where there is no applicable State external review process. Self-insured nonfederal governmental plans must use the Federal external review process or a private accredited independent review process.  Self-insured church plans must follow rules similar to those that apply to self-insured ERISA plans.A self-insured plan may also use an existing state external review process that has been expanded to include self-insured plans.External Review Requirements

STATE: For a State external review process to apply to a health plan or issuer instead of the Federal external review process, the Affordable Care Act provides that the State external review process must include, at a minimum, the consumer protections of the NAIC Uniform Model Act. A list of States with compliant external review processes may be found here.

FEDERALThe Federal external review process will generally apply to self-insured plans .  The scope of the external review process extends to claims that involve:

  1. medical judgment (excluding those that involve only contractual or legal interpretation without an use of medical judgment, as determined by the external reviewer); or
  2. a rescission of coverage.


A plan generally only provides 30 physical therapy visits but will provide more with an approved treatment plan.  The plan’s rejection of a treatment plan submitted by a provider for the 31st visit based on a failure to meet the plan’s standard for medical necessity involves medical judgment and, therefore, the claim is eligible for external review.

Similarly, a plan that generally does not provide coverage for services provided on an out-of-network basis, but will provide coverage if the service cannot effectively be provided in-network.  In this example, again, the plan’s rejection of a claim for out-of-network services involves medical judgment.

Additional examples of situations in which a claim is considered to involve medical judgment include adverse benefit determinations based on:

  • The appropriate health care setting for providing medical care to an individual (such as outpatient versus inpatient care or home care versus rehabilitation facility);
  • Whether treatment by a specialist is medically necessary or appropriate (pursuant to the plan’s standard for medical necessity or appropriateness);
  • Whether treatment involved “emergency care” or “urgent care”, affecting coverage or the level of coinsurance;
  • A determination that a medical condition is a preexisting condition;
  • A plan’s general exclusion of an item or service (such as speech therapy), if the plan covers the item or service in certain circumstances based on a medical condition (such as, to aid in the restoration of speech loss or impairment of speech resulting from a medical condition);
  • Whether a participant or beneficiary is entitled to a reasonable alternative standard for a standard-based reward under the plan’s wellness program;
  • The frequency, method, treatment, or setting for a recommended preventive service, to the extent not specified, in the recommendation or guideline of the U.S. Preventive Services Task Force, the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention, or the Health Resources and Services Administration (as described in PHS Section 2713 and its implementing regulations); and
  • Whether a plan is complying with the non-quantitative treatment limitation provisions of the Mental Health Parity and Addiction Equity Act and its implementing regulations, which generally require, among other things, parity in the application of medical management techniques.

Benefits Following External Review

A plan must immediately provide benefits (including payment on the claim) pursuant to a final external review decision without delay, regardless of whether the plan or issuer intends to seek judicial review of the external review decision and unless or until there is a judicial decision otherwise

ACA – Applicable to Medical Plans
Avoiding Conflicts of Interest
The plan or issuer must ensure that all claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. Accordingly, decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual (such as a claims adjudicator or medical expert) must not be made based upon the likelihood that the individual will support a denial of benefits. This requirement is in addition to the existing DOL claims regulation requirement that the decision maker upon review be a different individual than the individual who made the initial determination, and not a subordinate of that individual, and that a medical expert consulted upon review be different than the expert who made the initial determination, and not a subordinate of that individual. While this rule appears in the context of the ACA modifications to health plan claims procedures, as a practical matter recent Supreme Court decisions have highlighted the wisdom of applying it to claims arising under any ERISA-governed plan.


Fully Insured Plans

Administrators of fully-insured plans should rarely get involved with employee benefit claims.  That said, employees will ask for assistance on claims matters from time-to-time and these requests are likely to fall into one of three categories:

  1. Requests to help employee understand a claims decision or benefit calculation.
  2. Pleas to intervene on behalf of an employee to get the insurer to reverse its decision.
  3. Requests for information on or assistance with filing a claim or appealing an adverse claims decision.

With respect to Category (1), let’s be honest with ourselves.  The insurance company probably understands why it did what it did far better than you do.  They also have people whose job it is to explain it.  Your best bet here may be to get on the phone with one of those people and work through the decision/calculation with the employee present.  Keep in mind that the insurer may have specific authorization forms that it wants to have the employee sign before it talks to you.

With respect to category (2), if you think the claim was correctly decided, don’t expect the insurance company to make an exception.  If you think the claim was incorrectly decided, you can try the direct approach but don’t be surprised if the insurer just tells you that the employee should appeal.

This brings us to category (3).  If you want to help an employee file a claim or an appeal, you need to understand the rules.  There are three sets of rules.

  1. There are the federal rules for claims, appeals and external review that apply to all non-grandfathered medical plans (even non-ERISA plans) and insurance issuers. A different collection of rules applies to excepted benefits (like stand-alone dental and vision).  As is typical of federal rules, these are enormously complicated.
  2. Your insurer also has to comply with any applicable state insurance rules to the extent they are more favorable to the employee than the federal rules, and do not prevent the application of any federal rules.
  3. Your insurer also has its own set of rules that incorporate and elaborate on the federal and state rules. These may include things like the need to use specific forms to file claims or appeals, or time limits within which claims or appeals must be filed (or lawsuits instituted.)

The good news is that you only need to understand one set of rules, namely the last one.  Your insurer should set forth all the applicable rules – federal, state and company specific – in its SPD.

Please Note:  The original DOL claims procedures applied to all ERISA welfare benefit plans, including excepted benefits.  The enhanced claims procedures under the ACA apply to all welfare plans regardless of whether they are covered by ERISA, but do not apply to excepted benefits.  This distinction is important.  The pre-ACA rules required “substantial compliance” with the claims regulation.  The standard post-ACA is “strict compliance”.

Additional Resources

Benefit Claim Procedures for Group Health Plans FAQ

NAIC Uniform External Review Model Act

Final Rule