CO-27 Denial Due To Expired Insurance Coverage on File

A CO-27 denial occurs when a claim is submitted under an insurance policy that is no longer active on the date of service. This typically happens when coverage has expired due to changes in employment, plan terminations, non-payment of premiums, or a switch to a new insurance provider. Because payers rely on real-time eligibility data to confirm active coverage before processing claims, outdated policy information leads to immediate rejection. Understanding the causes behind CO-27 denials is essential for preventing eligibility-related errors, reducing claim delays, and protecting practice revenue.

What CO-27 Means

A CO-27 denial indicates that the patient’s insurance coverage was not active on the date of service, meaning the payer cannot process the claim under the policy submitted. This occurs when an insurance plan has terminated, expired, or been replaced by a new policy, but the outdated information remains on file. Since payers validate eligibility before adjudication, any mismatch between the service date and the policy’s active period results in an automatic denial. CO-27 typically arises from coverage changes that were not communicated, verified, or updated at the time of the visit.

Common Reasons for CO-27

Insurance plan terminated before the date of service:

Coverage may end due to job changes, employer contracts, or voluntary disenrollment, causing the policy to be inactive at the time of the visit.

Patient changed employers or lost job-based insurance:

Employment transitions often result in immediate or retroactive termination of health benefits, leaving the previous plan invalid.

Premium not paid, resulting in policy termination:

Non-payment leads payers to discontinue coverage, sometimes retroactively, which makes the policy appear expired when the claim is submitted.

Patient switched to new insurance, but old plan remains on file:

If registration staff or the patient fails to update records, the claim may be billed to an outdated insurer no longer responsible for coverage.

Incorrect insurance entered during registration:

Typing errors, incorrect plan selection, or outdated insurance cards can cause the system to reflect a terminated policy.

Eligibility not verified at the time of service:

Skipping real-time eligibility checks leads to claims being submitted with inactive or expired coverage information.

Why CO-27 Denials Occur

CO-27 denials occur when the insurance information submitted on a claim does not match an active policy for the date of service. Outdated records typically cause these denials, missed eligibility checks, or recent coverage changes that were not communicated or captured during registration. The reasons below explain why payers flag claims under CO-27 and how coverage inaccuracies disrupt payment processing.

Inactive or terminated insurance policy

The most common cause is that the patient’s insurance coverage ended before the service date, whether due to job loss, plan termination, or voluntary disenrollment. When the policy is inactive, the payer cannot legally process the claim.

Coverage changes are not updated in the system.

Patients often switch insurance plans, particularly during open enrollment or when changes occur in their employment. If the practice continues to bill under the old plan, the payer will reject the claim as expired coverage.

Eligibility not verified before the appointment

Skipping real-time eligibility checks means outdated or incorrect insurance may remain on file. Without verification, providers risk submitting claims to plans that are no longer active.

Incorrect insurance details entered at registration

Errors such as incorrect subscriber IDs, policy numbers, or selecting the wrong payer can cause the system to flag coverage as expired, even if the patient has active insurance.

Retroactive termination by the payer

Sometimes, insurers cancel coverage retroactively due to non-payment of premiums, employer changes, or patient ineligibility. In these cases, the policy appears active at the time of service but is later marked expired when the claim is processed.

CMS & AAPC-Aligned Best Practices

Preventing CO-27 denials requires strong eligibility verification workflows, accurate insurance collection, and continuous communication between staff and patients. The following best practices help ensure coverage is valid on the date of service and reduce the risk of expired-policy denials.

Verify eligibility for every patient before each visit:

Insurance status can change quickly due to employment changes, plan transitions, or non-payment. Running real-time eligibility checks ensures the policy is active for the date of service and prevents claims from being submitted under expired coverage.

Confirm policy start and end dates during verification:

Eligibility tools provide exact effective dates. Reviewing these details ensures the service date falls within the active coverage period and helps catch terminations or changes early.

Update insurance information promptly when changes are reported:

If a patient reports a new insurance card or mentions a coverage change, update the system immediately. Delayed updates often lead to claims being billed under old, inactive policies.

Use electronic verification tools to detect terminated or replaced plans:

Automated eligibility systems help identify inactive policies, retroactive terminations, or new plan enrollments that may not yet be captured in the patient’s chart.

Train front-desk staff to ask detailed insurance questions:

Well-trained registration staff can gather accurate insurance information, confirm recent employment or coverage changes, and request updated cards when needed, reducing the chance of expired plans being used.

Maintain communication logs for coverage updates:

Documenting discussions about insurance changes, whether with patients, employers, or payers, ensures accuracy across all departments and supports compliance.

Corrective Action Steps For CO-27

Correcting a CO-27 denial requires verifying the patient’s current insurance status, updating all records, and resubmitting the claim to the appropriate payer. The steps below outline how to resolve expired-coverage errors and prevent them from recurring.

Contact the patient to confirm their most recent insurance coverage

Reach out to the patient to verify whether they have a new insurance plan, updated ID numbers, or recently changed employers. This helps determine which policy was active on the date of service.

Update or replace expired insurance information in the system

Once correct coverage is confirmed, update the EHR and billing system with the new policy details. Remove or archive expired plans to avoid future submission errors.

Rebill the claim to the correct active insurance plan

Submit the claim to the active payer with accurate insurance details. Ensure the date of service falls within the insurer’s active coverage period to prevent further denials.

Request updated eligibility or documentation when needed

If the payer requires proof of active coverage or updated plan documents, attach the required information to support the claim and expedite processing.

Discuss self-pay or payment options if no active coverage exists

If the patient had no valid insurance at the time of service, inform them about financial responsibility and available payment arrangements in compliance with office policy.

Track the resubmitted claim to ensure timely adjudication

Monitor the claim after resubmission to verify it processes successfully and identify any additional issues early.

 

BillingFreedom – Real-Time Eligibility & Accurate Coverage Validation

BillingFreedom helps healthcare practices prevent CO-27 denials by ensuring insurance coverage is verified, updated, and accurate before claims are submitted. Our team conducts real-time eligibility checks, confirms policy dates, and validates every detail to ensure the patient’s plan is active on the date of service. 

With automated verification tools, proactive follow-ups, and meticulous insurance data management, BillingFreedom significantly reduces denials caused by expired or inactive coverage. We ensure your claims reach the correct payer the first time, minimizing delays and improving overall billing efficiency.

In addition to eligibility verification, BillingFreedom provides comprehensive RCM support, addressing claim corrections, resubmissions, and denial follow-up to ensure timely reimbursement. Our specialists collaborate closely with front-desk and billing teams to establish reliable insurance workflows, strengthen data accuracy, and eliminate recurring coverage-related errors. 

By partnering with BillingFreedom for medical billing services, practices enjoy higher clean-claim rates, fewer disruptions, and a more stable, predictable revenue cycle.

 

For more details about our exceptional medical billing services, please don't hesitate to contact us via email at info@billingfreedom.com or call us at +1 (855) 415-3472.

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