Millions of older Americans choose a private Medicare Advantage plan for the extra benefits and low upfront premiums it advertises. For 2027, more of those plans are disappearing. Insurers are trimming and exiting Medicare Advantage markets after Medicare finalized a modest payment increase that many companies say falls short of their rising costs, and members whose plans are dropped face a hard deadline to make a new choice.
Why the 2.48% payment increase is squeezing plans
Each spring, the Centers for Medicare & Medicaid Services sets how much it will pay private plans the following year. For 2027, CMS finalized an average payment increase of 2.48%, roughly $13 billion, in its April rate notice. That was actually higher than the near-flat 0.09% the agency floated in January, and with expected risk-score adjustments the effective increase runs closer to 4.98%. Even so, insurers argue the raise has not kept pace with how fast members are using care and how quickly medical prices are climbing. When payments rise slower than costs, plans respond by cutting benefits, leaving unprofitable counties, or shutting down some plans entirely.
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Which insurers are cutting back for 2027
The retreat is not limited to small carriers. Humana, one of the largest Medicare Advantage insurers, said it plans to exit additional plans in 2027 in a move expected to affect roughly 600,000 members, part of a strategy to improve the profitability of its Medicare business. Smaller and regional insurers are pulling back too; Presbyterian Health Plan, for instance, announced it is leaving most of its Medicare Advantage market, affecting tens of thousands of members. Even plans that survive are expected to pare down in places, raising copays or scaling back the dental, vision and other extras that draw people in. The pattern has been building for several years as the gap between plan funding and plan costs persists.
What happens to a member whose plan is dropped
When an insurer discontinues a plan, the affected enrollees do not lose Medicare, but they do lose that specific plan at year’s end. Plans are required to send an official notice, typically in the fall, telling members their coverage is ending and laying out the alternatives. A member who takes no action generally returns to Original Medicare, the government-run program, which covers hospital and medical care but does not include the drug coverage or supplemental perks a Medicare Advantage plan bundled in. That default can leave someone without a Part D drug plan and exposed to costs their old plan used to absorb, which is why a dropped plan calls for an active decision rather than silence.
The December 7 deadline that governs the switch
The window to act is Medicare’s Annual Enrollment Period, which runs from October 15 to December 7 each year for coverage that begins the following January 1. During that period, a person can join a different Medicare Advantage plan, switch between Advantage and Original Medicare, or add a standalone Part D drug plan. Choices made by December 7 take effect January 1, 2027. Missing the deadline can leave a member stuck with the default coverage for the year, or without drug coverage and facing a late-enrollment penalty later. Anyone who receives a plan-termination notice this fall should treat that December 7 date as firm.
How to compare options before switching
For members forced to shop, the goal is matching a new plan to the doctors, prescriptions and pharmacies a person already uses. Medicare’s online Plan Finder lets users enter their drugs and preferred providers to compare total expected costs, not just premiums, across the plans available in their area. It is also worth checking whether a specific doctor or hospital is in a plan’s network, since Advantage plans restrict care to their networks in ways Original Medicare does not. Anyone considering a move to Original Medicare should look at whether they can add a Medigap supplement policy, since the ability to buy one without medical underwriting is limited outside certain windows. The drug coverage deserves separate attention as well, because Original Medicare does not include Part D and a standalone drug plan has to be chosen during the same window to avoid a coverage gap. The practical message for 2027 is straightforward: read the mail from the plan, and if it says the plan is ending, choose a replacement before December 7. Setting the notice aside to deal with later is the most common way people end up defaulted into coverage that does not fit their doctors or prescriptions.
This article was researched and drafted with the assistance of AI 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.
