Medicare Advantage has grown every single year for more than two decades. In 2026, that streak is expected to break.
The Centers for Medicare and Medicaid Services projects that total Medicare Advantage enrollment will slip from 34.9 million beneficiaries to roughly 34.0 million next year, a net loss of about 900,000 people. At the same time, the average monthly premium will fall from $16.40 to $14.00, a drop of nearly 15%, according to the agency’s 2026 rate announcement.
A cheaper product losing customers is not the contradiction it appears to be. The forces reshaping Medicare Advantage for 2026 run deeper than the sticker price, and they carry real consequences for the roughly one in three Americans on Medicare who get their coverage through a private plan.
How Medicare Advantage works, briefly
Medicare Advantage (also called Part C) lets private insurers offer an alternative to Original Medicare. The federal government pays each insurer a per-member amount tied to regional spending benchmarks. In return, the insurer designs a plan that covers at least everything Original Medicare covers and often adds extras like dental, vision, hearing, and fitness benefits.
The model proved enormously popular. According to the Kaiser Family Foundation, more than half of all eligible Medicare beneficiaries were enrolled in a Medicare Advantage plan by 2024, up from about 19% in 2007. Two companies, UnitedHealthcare and Humana, together account for roughly half of all Medicare Advantage enrollment nationwide, which means their individual business decisions can move national numbers.
Why the average premium is falling
Every year, CMS publishes benchmark payment rates for each county. Insurers then submit bids estimating what it will cost them to cover a standard Medicare benefit package. When a bid lands below the benchmark, the insurer keeps a share of the savings and must pass the rest back to enrollees through lower premiums, reduced cost-sharing, or supplemental benefits.
For 2026, CMS set benchmarks reflecting updated county-level spending data and several policy adjustments detailed in the agency’s rate announcement fact sheet. Enough insurers bid low enough to pull the national average premium down to $14.00. That figure is an average across all plan types and regions; individual premiums will still range from $0 to well over $100 depending on location, plan design, and whether prescription drug coverage is included.
The Part D landscape matters here, too. The Inflation Reduction Act’s $2,000 annual out-of-pocket cap on prescription drug costs, which took effect in 2025, has changed the math for Medicare Advantage plans that bundle drug coverage. Some insurers have been able to lower bids partly because the new cap limits their exposure to catastrophic drug spending.
Why enrollment is expected to shrink
CMS did not pin the projected decline on any single cause, but several forces are converging.
A new payment model is squeezing insurer revenue. CMS has been phasing in an updated risk-adjustment model, known as V28, that recalculates how the government estimates the cost of covering each enrollee. The transition started in 2024 and reaches its final stage in 2026. Industry groups have warned that V28 will reduce insurer payments by billions of dollars over the phase-in period. For plans operating on thin margins, particularly in rural or lower-cost counties, the reduced revenue can make it uneconomical to keep offering coverage. When an insurer exits a county or discontinues a plan, affected beneficiaries typically default back to Original Medicare unless they actively choose another option.
Plan availability is thinning in some markets. While CMS characterized the 2026 outlook as “stable,” a projected loss of 900,000 enrollees points to real contraction in at least some regions. Humana, the second-largest Medicare Advantage insurer, signaled in early 2025 that it would exit certain counties and trim plan offerings in others as part of a broader effort to shore up margins. County-level plan data for 2026 has not yet been fully published through the Medicare Plan Finder, so the geographic scope of the pullback is still coming into focus.
Lower premiums do not always mean better coverage. Insurers facing tighter payments can offset premium cuts by narrowing provider networks, raising specialist copays, or scaling back supplemental benefits like dental allowances or gym memberships. For enrollees who chose Medicare Advantage specifically for those extras, the trade-off may no longer pencil out, prompting a switch back to Original Medicare paired with a Medigap supplemental policy.
Demographics are working against net growth. Medicare Advantage enrollment is the net result of new sign-ups minus departures (including deaths). If fewer newly eligible seniors choose a private plan, or if a larger-than-usual cohort ages out, total enrollment can decline even without dramatic plan exits.
What beneficiaries should weigh right now
Open enrollment for 2026 Medicare Advantage plans runs from October 15 through December 7, 2025, with coverage starting January 1, 2026. Several practical points are worth keeping in mind.
Ignore the $14.00 average and focus on local plan costs. Some plans will still charge $0 in monthly premiums; others will cost far more. What matters is total annual cost in a specific area: premiums plus deductibles, copays, and the plan’s out-of-pocket maximum. A $0-premium plan with a $5,000 out-of-pocket cap can easily cost more over a year than a $25-a-month plan with a $3,000 cap, depending on how much care a person uses.
Watch the mail for discontinuation notices. Beneficiaries whose current plan is being dropped should receive a letter from their insurer by September 2025. Those individuals can pick a different Medicare Advantage plan in their area or return to Original Medicare, potentially adding a standalone Part D drug plan and a Medigap policy.
Understand the Medigap catch. Returning to Original Medicare is not always seamless. In most states, guaranteed-issue rights for Medigap policies are limited to the initial enrollment window around a person’s 65th birthday. After that, insurers in many states can charge higher premiums or deny Medigap coverage based on health status. Anyone considering a switch should check their state’s rules before dropping a Medicare Advantage plan.
Review the Annual Notice of Change. Even if a plan is continuing in 2026, its benefits, provider network, and drug formulary can shift. Plans mail this document each fall, and reading it closely can prevent surprises in January.
What comes after the first dip in two decades
One year of projected decline does not necessarily signal a long-term retreat. CMS’s own monthly enrollment tracking reports, which will cover actual 2026 sign-ups as the year progresses, will show whether the 34.0 million projection holds or whether late-switching during the Medicare Advantage Open Enrollment Period (January 1 through March 31, 2026) changes the picture.
But the regulatory and political headwinds facing Medicare Advantage are not letting up. The V28 risk-model phase-in is tightening payments at the plan level. Congressional scrutiny of insurer practices, including prior authorization denial rates and network adequacy, has intensified through hearings in both chambers. And the Medicare Payment Advisory Commission (MedPAC) has recommended in consecutive annual reports to Congress that CMS reduce the benchmarks driving Medicare Advantage payments, arguing the program costs the federal government more per beneficiary than Original Medicare does.
If those pressures hold, 2026 may mark the start of a plateau rather than a one-year blip. If payment policy shifts or Congress intervenes on behalf of the industry, growth could resume. For now, the picture is clear even if incomplete: Medicare Advantage is cheaper on paper than it has been in years, but the program’s long expansion has, at least for the moment, stalled.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
