Humana Inc., the second-largest seller of private Medicare plans, told investors in late July that it will not renew Medicare Advantage contracts covering roughly 600,000 members for the 2027 plan year. The decision marks the insurer’s second consecutive year of large-scale plan exits, following a similar retrenchment that affected about 500,000 members heading into 2025. Retirees enrolled in one of the discontinued plans will feel the change this fall, when a formal non-renewal notice arrives in the mail and forces a fresh decision during Medicare’s annual enrollment window, the same six-week stretch that determines coverage for the entire following year. Humana has said the reductions target lower-performing plans rather than a uniform nationwide pullback.
A 600,000-Member Retreat Aimed at Weak-Margin Plans
Humana Chief Financial Officer Celeste Mellet disclosed the scope of the 2027 exits on the company’s second-quarter earnings call, held July 29. The affected plans amount to about 8 percent of Humana’s 7.2 million Medicare Advantage members nationwide. Rather than trimming benefits evenly across its entire portfolio, the insurer is eliminating what Mellet described as the lower tail of profitability, concentrating the cuts on plans that generate the weakest financial returns while protecting the counties and benefit designs tied to its value-based care partnerships with physician groups. The company’s Medicare Advantage business generates most of Humana’s profit, so even modest shifts in medical-cost trends or star-rating bonus payments can move pretax income by hundreds of millions of dollars.
Most of the discontinued plans carry a rating of 3.5 stars or lower for the 2027 bonus year under Medicare’s quality scoring system, though Mellet said star ratings were not the primary driver of the decision. Humana expects to recapture roughly 40 percent of displaced members, or about 240,000 people, by steering them into other Humana Medicare Advantage plans still operating in their county, a repeat of the recapture rate the company reported after its 2025 exits.
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Star Ratings, Lawsuits and a 2028 Margin Target
The pullback is part of a broader effort by Humana to restore its pretax margin to at least 3 percent by 2028, a target executives have repeated on successive earnings calls. Star ratings have weighed heavily on that goal: the number of Humana Medicare Advantage plans earning 4 stars or higher fell sharply in 2025, cutting into the quality bonus payments CMS pays high-scoring plans. Humana sued to overturn its 2025 star ratings, and a federal court rejected the challenge on October 14, 2025; the company has appealed the ruling but has not prevailed.
For 2026, roughly 20 percent of Humana’s Medicare Advantage members remain in plans rated 4 stars or higher, and executives say the company is working toward the industry’s top quartile on star performance by the 2028 bonus year. Humana posted second-quarter revenue of $40.9 billion, up 26 percent year over year, and affirmed full-year adjusted earnings guidance of at least $9 per share even as it lowered its unadjusted earnings outlook to at least $6.52 per share from a prior estimate of at least $8.36.
Non-Renewal Notices Land Ahead of Fall Enrollment
Members whose plans are being discontinued will receive a formal non-renewal notice by early October, ahead of Medicare’s Annual Enrollment Period, which runs from October 15 through December 7 nationwide. The notice must state plainly that current coverage will not continue into 2027 and must outline how to select a replacement, giving affected beneficiaries roughly eight weeks to compare new plans, confirm which doctors and hospitals participate, and enroll before the window closes.
Beneficiaries losing coverage can search for a replacement Medicare Advantage plan, or return to Original Medicare paired with a stand-alone Part D drug plan, using the federal government’s plan comparison tool at Medicare.gov. Because provider networks, drug formularies and out-of-pocket maximums vary by plan and by county, benefits counselors generally advise confirming that a preferred doctor, hospital or prescription remains covered under any replacement option before the December 7 deadline, rather than assuming similar plans carry identical coverage. State Health Insurance Assistance Program counselors, who provide free and unbiased plan-comparison help in every state, are typically available to walk beneficiaries through the same comparison tool at no cost.
A Broader Retrenchment Across the Medicare Advantage Market
Humana is not acting alone. The insurer’s 2027 exits follow a year in which UnitedHealthcare’s Medicare Advantage enrollment fell about 9 percent and Elevance Health’s dropped 14 percent, as both companies also narrowed their footprints in response to rising medical costs. Humana itself already shrank its 2026 presence to 46 states and 85 percent of U.S. counties, down from 89 percent the year before, even though unusually generous benefits helped the insurer add more than 1 million new Medicare Advantage members over that same period, an outlier among the national carriers. Wall Street analysts have noted Humana could surpass UnitedHealthcare as the largest Medicare Advantage carrier this year given its recent enrollment gains, even as it now works to trim some of that growth back for profitability.
Federal regulators have tried to cushion the industry’s retrenchment. In April, the Centers for Medicare & Medicaid Services finalized a 2.48 percent average payment increase for Medicare Advantage plans in 2027, worth more than $13 billion industry-wide, after more than 100 organizations warned regulators that near-flat rates would accelerate plan exits and destabilize coverage for seniors. More than 30 million people nationwide are enrolled in a Medicare Advantage plan today, roughly half of all Medicare beneficiaries, making even a single insurer’s exits consequential for the hospital and physician networks that depend on those enrollment numbers. Whether the rate increase slows the pace of departures will become clearer once Humana and its competitors file their 2027 bids and start notifying members which plans will still exist next year.
This article was produced with AI assistance and reviewed by The Financial Wire editorial team.
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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.
