Changes Ahead for Medicare Advantage Plans
On July 25, 2023, supporters gathered at a press conference in front of the U.S. Capitol to discuss the Medicare Advantage plan.
As reported by the Centers for Medicare and Medicaid Services, for the first time in nearly two decades, Medicare Advantage enrollment is expected to see significant changes. Health insurance companies foresee enrollments reaching 34 million by 2025.
While a slight decline is predicted, the agency confirmed late Friday that the Medicare Advantage market is expected to remain strong in 2026, more than what had been initially anticipated. Seniors will begin reviewing their 2026 plans soon, with an average of around ten options available across most markets.
After years of aggressive growth in the Medicare market, health insurers have faced declining profits with Medicare Advantage offerings over the past couple of years. Rising health costs, which have resulted in greater-than-expected member usage, along with new regulations, have pressured government reimbursement rates. Consequently, several large insurers are eliminating unprofitable plans and leaving specific markets altogether.
Chobi Blumenfeld-Gantz, a brokerage that assists Medicare members, noted, “This year, most carriers are emphasizing profitability over growth. Some plan benefits have diminished compared to prior offerings.”
Costs on the Rise for 2026 Plans
The CMS has projected a decrease in the average monthly premium for Medicare Advantage plans, estimating it will drop from $16.40 this year to $14 in 2026. However, during the preliminary open registration, many large insurers will likely raise their prices.
Initial data from analysts at Evercore ISI suggests that insurance providers, including UnitedHealth Group’s UnitedHealthcare, CVS Health’s Aetna, and others, are implementing price hikes on their 2026 plans. Elizabeth Anderson from Evercore ISI mentioned that insurers are making moves to enhance margins by introducing higher premiums, deductibles, and maximum out-of-pocket expenses, particularly focusing on HMO plans.
Analysts also observed a shift toward prioritizing HMO plans for 2026, as some insurers are raising deductions while still offering a $0 premium on these products. “Carriers tend to tread carefully here, often opting to cut costs before increasing premiums on zero-dollar plans, although some plans already featuring premiums may rise.”
Shifts in Insurance Offerings
During the open enrollment period, seniors typically rely on insurance brokers to navigate their options. To attract more enrollments in profitable plans, insurers are adjusting their fee structures, offering higher compensation for certain plans while dropping fees for less profitable ones.
This year, there’s been a noticeable trend of carriers cutting broker fees for a wide variety of low-profit plans. It’s not typical for such a significant contraction to happen, as noted by Michael Antoine, an independent health insurance agent. According to data, as much as 20% of plans could be eliminated in various regions by 2026, with some areas, like New York, potentially seeing a reduction of over 25% and in Georgia, more than 35%.
Blumenfeld-Gantz emphasized the importance of consulting Medicare advisors for plans that might be overlooked amidst these changes. There are cases where brokers may not even have access to certain plans due to restrictions.
Insurers appear to believe that narrowing their offerings and refining enrollment processes will help manage membership and costs more effectively by 2026. Still, there’s a palpable uncertainty as the market experiences such upheaval.
Upcoming Open Registration
This week, Medicare enrollees will receive notifications from their insurers outlining changes to their current health plans, with the open enrollment period starting on Wednesday for 2026. Brokers are advising seniors to actively explore their options this year.
According to Whitney Stidom, vice president of online brokerages, “This isn’t a year to just go on autopilot. Shopping around can save you a significant amount, potentially over $1,800 in out-of-pocket costs by comparing plans.”
Potential government shutdowns starting October 1 could further complicate this registration period, as Congress is dealing with funding issues. A former CMS official clarified that although brief shutdowns won’t impact open registrations, funding for contract oversight remains in place.
The Medicare Open Registration period is scheduled from October 15 to December 7.
