Changes Ahead for Medicare Advantage Plans
The Medicare Advantage Plan is undergoing significant changes, and more updates are expected in 2026.
In 2024, we observed various factors contributing to increased costs and reduced benefits within the 2025 Advantage Plan.
During a three-year period, the Centers for Medicare and Medicaid Services (CMS) reduced payments for the dominant plan.
Moreover, primary providers of the Advantage Plan noted that costs exceeded their expectations as plan members utilized more health services. Companies like CVS Health, Aetna, and UnitedHealth Group reported disappointing earnings, which impacted their stock prices.
CMS also altered regulations, resulting in decreased or zero payments to Advantage Plan sponsors for certain health services.
These elements have significantly reshaped the 2025 Advantage Plan. Plans with prescription drug coverage are seeing a 6.6% decrease compared to 2025. UnitedHealth Group lowered its offerings by 5.4%, while Humana’s reduction stood at 2.5%.
A plan that targeted around 1.5 million beneficiaries in 2024 will not exist in 2025. In 2024, counties had an average of 43 Advantage plans available, but that number dropped to 34 in 2025.
Despite a decline in average premiums for the 2025 Advantage Plan, many plans are still avoiding additional premiums aside from the regular Part B Medicare Premium.
However, out-of-pocket maximum costs have risen, and many plans are increasing other expenses like copays and deductibles for doctor’s visits, which lessens some of the supplemental benefits they offer. Additionally, certain networks have reduced their number of participating healthcare providers.
For members of the Advantage Plan, more changes could be on the horizon when 2026 plans are announced later this year.
In its recent revenue report, one insurance company noted that costs were higher than anticipated as members accessed more medical services, which were also more expensive than they had estimated. Also, government subsidies for the plan haven’t increased as expected.
Coverage changes for Part D prescription drugs have negatively impacted Advantage Plan sponsors, similar to their effects on insurers offering specific policies.
For several years, these sponsors focused on attracting more enrollments by providing additional benefits at lower costs.
Now, there’s a shift towards profitability for Advantage Plan sponsors, considering their high enrollment numbers.
CVS and Humana are adapting to market shifts that have driven down plans and benefits for 2025. Currently, they appear to be more profitable than some competitors, with healthier stock prices.
Conversely, UnitedHealth Group has spotlighted a rise in subscribers for 2025 but finds itself in a more challenging situation. The company announced a CEO change earlier this year and plans to revamp its Advantage Plan strategy.
It’s likely that they’ll cut benefits and stop offering some plans altogether. Recent estimates suggest that plans catering to around 600,000 members may not be available next year.
The Medicare Advantage Plan still remains a viable option for many beneficiaries. However, the push from insurance companies to prioritize profits over benefits has come to a close. While major plan sponsors will continue their offerings, profitability will be a key focus.
Beneficiaries are encouraged to carefully review any changes to the plans during the October open enrollment period and consider alternatives available in their regions.
