For nearly 20 years, Medicare Advantage moved in only one direction: up. More seniors enrolled every fall, more insurers expanded into new counties, and the program’s share of total Medicare enrollment climbed past 50 percent. In 2026, that streak ends.
The Centers for Medicare & Medicaid Services projects that Medicare Advantage enrollment will fall to 34.0 million this year, down from 34.9 million in 2025, a net loss of roughly 900,000 beneficiaries. That makes 2026 the program’s first year-over-year contraction since 2006. And it is happening while average monthly premiums are actually falling, from $16.40 to $14.00, a drop of about 15 percent.
Lower prices and fewer enrollees is not the combination most people expect. Understanding why both things are true at once means looking past the national averages and into the financial machinery that determines which plans survive and which ones vanish.
The numbers behind the reversal
CMS published its 2026 enrollment and premium projections in the fall of 2025, based on the benefit packages and contract bids insurers had already submitted. These are not midyear dropout estimates. They reflect the plans carriers chose to offer, the counties they chose to serve, and the premiums they locked in before open enrollment began.
The MA plan directory for 2026 shows which sponsoring organizations filed active contracts and where their service areas reach. Paired with the agency’s rates and statistics hub, which details county-level payment benchmarks, risk-adjustment factors, and maximum out-of-pocket caps, the data reveals an industry recalculating where it can still turn a profit.
CMS has characterized the overall outlook as “stable,” pointing to the premium drop and continued plan availability in most markets. But national stability can mask sharp disruptions at the local level, particularly in counties where only one or two insurers were competing to begin with.
Why plans are pulling back
No single policy change explains the contraction, but several financial pressures have been building at the same time.
The most significant is CMS’s updated risk-adjustment model, known as V28. Risk adjustment is the mechanism through which insurers report how sick their enrollees are; sicker populations justify higher federal payments. For years, government audits found that some MA plans were inflating those scores, and V28 is designed to curb the practice. CMS is phasing the model in over three years, with each year shifting one-third of the calculation to the new methodology. By 2026, two-thirds of the risk-adjustment formula uses V28, and for carriers that previously benefited from aggressive diagnostic coding, the resulting payment cuts make certain counties unprofitable.
Rising medical costs compound the squeeze. Hospital and specialist prices have climbed sharply in many metro areas, eating into margins for plans that promised low premiums and generous benefits when provider rates were lower. Star ratings add another variable. These quality scores determine whether a plan qualifies for federal bonus payments worth billions of dollars industrywide. A plan that drops from four stars to three and a half loses bonus revenue that may have been subsidizing $0-premium offerings or supplemental benefits like dental, vision, and hearing coverage.
Then there is the Inflation Reduction Act. The law’s $2,000 annual cap on out-of-pocket prescription drug costs, which took full effect in 2025, has changed the value proposition for many beneficiaries. One of MA’s longstanding selling points was supplemental drug coverage that traditional Medicare lacked. With that gap narrowing, some seniors have less reason to choose an MA plan, and some insurers have less reason to compete for them.
Large publicly traded insurers, including UnitedHealth Group, Humana, and CVS Health’s Aetna, have all acknowledged MA margin pressures in recent earnings calls and SEC filings, though none has published a county-by-county map of where it is scaling back. The result is that the 900,000-person enrollment decline is confirmed at the national level but largely opaque at the local one.
Who stands to lose the most
The seniors most vulnerable to plan exits are those in areas where only one or two insurers offered MA coverage to begin with. Rural counties across the South, the Mountain West, and parts of the upper Midwest have historically had fewer plan choices. When a single carrier withdraws from one of those counties, beneficiaries there may have no MA alternative at all. They would need to return to Original Medicare, often picking up a Medigap supplemental policy and a standalone Part D drug plan to approximate the coverage they had.
That transition is not seamless. Beneficiaries whose plans are terminated do receive a Special Enrollment Period and, in most cases, federal guaranteed-issue rights that allow them to buy certain Medigap policies without medical underwriting. But those protections are limited in scope. They typically cover only Medigap Plans A, B, C, F, K, and L, and the window lasts just 63 days. Seniors who want a more comprehensive Medigap plan, or who miss the deadline, may face higher premiums or outright denial depending on their state’s rules.
Provider networks also shift. A specialist who accepted a patient’s MA plan is not necessarily in-network under traditional Medicare’s fee-for-service system, and vice versa. For beneficiaries managing complex chronic conditions, rebuilding a care team mid-treatment is more than an inconvenience.
Urban and suburban beneficiaries generally have more fallback options, but even in competitive markets, a plan exit can mean losing access to a preferred doctor group or pharmacy network. CMS requires insurers that are terminating contracts to notify affected members by September 30 before the new plan year, giving seniors time to shop during the Annual Election Period that runs from October 15 through December 7.
What the premium drop actually signals
A falling average premium sounds like straightforward good news, and for many beneficiaries it is. But the decline from $16.40 to $14.00 is a weighted average across all available plans, not a guarantee that any individual senior’s costs will go down.
When insurers exit unprofitable markets, the plans they leave behind tend to be the ones with healthier enrollees and lower costs. That compositional shift alone can pull the national average premium downward without any single plan actually cutting its price. Think of it this way: if the most expensive plans disappear from the menu, the average price of what remains drops automatically.
Some plans genuinely are reducing premiums to attract enrollees in competitive markets, and CMS’s approved bids confirm real price cuts in certain regions. But the $14.00 figure should not be read as a universal benefit. It describes the market that remains after less profitable segments have been shed.
Total out-of-pocket costs tell a fuller story. Deductibles, specialist copays, and the maximum out-of-pocket limit often matter more to a beneficiary’s annual spending than the monthly premium alone. A $0-premium plan with a $5,000 out-of-pocket maximum can cost far more over a year than a $30-per-month plan with a $3,000 cap, depending on how much care someone needs.
What seniors should do now
Beneficiaries who currently have Medicare Advantage coverage should watch for their Annual Notice of Change (ANOC), which plans are required to send by September 30 each year. That document spells out any modifications to premiums, copays, drug formularies, and provider networks for the coming plan year. If a plan is terminating entirely, the notice will say so and outline the timeline for choosing a replacement.
But seniors do not have to wait until fall. Medicare’s Plan Finder tool lets beneficiaries enter their prescriptions and preferred doctors right now to see which plans in their area cover both. Checking early gives people time to research before the pressure of open enrollment deadlines.
Those considering a switch back to Original Medicare should also know about the Medicare Advantage Open Enrollment Period, which runs from January 1 through March 31 each year. During that window, anyone enrolled in an MA plan can switch to a different MA plan or drop MA and return to Original Medicare with a standalone Part D drug plan. This is separate from the fall Annual Election Period and provides a second chance for beneficiaries who realize their new plan is not working.
Seniors weighing a return to Original Medicare should check their state’s Medigap rules carefully. Some states, including California, Missouri, and Oregon, offer annual open enrollment or birthday-rule protections that make it easier to buy supplemental coverage without medical underwriting. Others do not, and waiting too long can limit options or raise costs significantly.
Free, unbiased counseling is available through the State Health Insurance Assistance Program (SHIP), which operates in every state and can help beneficiaries compare MA plans, Original Medicare, and Medigap side by side. Local Area Agencies on Aging also offer enrollment assistance at no charge.
What a shrinking Medicare Advantage market means going forward
Losing 900,000 enrollees out of nearly 35 million is a contraction of about 2.6 percent. Medicare Advantage is not collapsing. The vast majority of beneficiaries will still have multiple plans to choose from, and the program will continue to cover more than half of all Medicare-eligible Americans.
But the reversal matters because of what it exposes. Tighter risk-adjustment rules, rising provider costs, and new drug-pricing laws are all squeezing the margins that fueled two decades of expansion. Insurers are responding by retreating from markets where the economics no longer work. The cost of that retreat falls on the seniors who happen to live in those markets, many of them in communities that already have fewer health care options.
For the 900,000 people directly affected, the policy debate is secondary. What they need before anything else is a clear path to replacement coverage that keeps their doctors, their medications, and their budgets intact. The tools and protections exist, but only for those who know about them and act within the deadlines. Starting that research now, months before open enrollment begins, is the single most useful step any at-risk beneficiary can take.
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.
