About 600,000 Medicare Advantage members will receive a letter this fall confirming that Humana is not bringing their current plan back for 2027. The company disclosed the scale of the exits on its second-quarter earnings call in late July, months before any enrollee opens an envelope, and framed the decision as a deliberate trim of its least profitable markets rather than an across-the-board cut. For members holding one of the affected plans, the timing of that letter, arriving in early October, matters almost as much as the fact that it is coming.
Cutting the Lower Tail of Profitability
Humana’s chief financial officer, Celeste Mellet, described the 2027 reductions as cutting off the lower tail of profitability and return rather than trimming benefits evenly across the company’s portfolio, with the cuts concentrated among plans that generate weaker margins and less value-based care penetration. The company said returning to a sustainable margin of at least 3% is its top priority, a target it has missed in recent years.
The pullback follows an unusual year for Humana relative to its largest competitors. During the last annual enrollment period, UnitedHealthcare’s Medicare Advantage membership fell about 9% and Elevance Health’s dropped 14%, while Humana added more than a million Advantage members for 2026 coverage and now counts nearly 7.2 million members overall. Executives said on the earnings call that they still expect individual Medicare Advantage membership to grow by approximately 25% this year even as the 2027 exits proceed.
Humana posted $40.9 billion in second-quarter revenue, up 26% from a year earlier, with adjusted earnings per share of $7.61 that beat analyst expectations. The company affirmed full-year adjusted guidance of at least $9 per share but lowered its GAAP guidance to at least $6.52 from at least $8.36, citing lower star ratings that have already cut into quality bonus payments.
The exits also follow a setback on the star-rating side of Medicare Advantage payment, which determines how much of the industry’s quality-bonus money a plan collects. One of Humana’s largest contracts fell from 4.5 stars to 3.5 stars for the 2025 plan year, the rating used to calculate 2026 bonus eligibility, and an analysis by the health policy research organization KFF found Humana will collect just 11% of the industry’s $13.4 billion in 2026 quality-bonus payments despite holding roughly 20% of Medicare Advantage enrollment nationwide. Humana sued the Centers for Medicare and Medicaid Services over the recalculation that produced the lower rating, and courts have so far sided with the agency, leaving the lost bonus revenue in place as the company redesigns its 2027 plan lineup.
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An October Deadline That Applies to Humana Too
Federal rules require a nonrenewal notice tied to a December 31 termination to reach affected members in early October, giving them time to make another choice before Medicare’s annual enrollment period runs from October 15 through December 7. Humana’s 2027 non-renewal letters follow that same schedule, landing in mailboxes only weeks before enrollment opens rather than immediately after the earnings call where the company first outlined the scope of the cuts.
Federal rule also specifies what the notice itself must contain. A Medicare Advantage organization mailing a nonrenewal letter must provide a description of alternative Medicare Advantage, Medicare Advantage prescription drug or standalone Part D options available in the enrollee’s area, or place outbound calls confirming that affected members know who to contact about their choices. Humana’s version of that letter is expected to point members toward its own remaining plans first, since steering displaced enrollees into other company offerings is central to the recapture strategy described below.
The gap between disclosure and notification is not unique to Humana. Insurers across the Medicare Advantage market routinely confirm exit plans to investors months before the individually addressed letters go out, since the securities disclosure obligations that apply to a publicly traded company run on a different clock than the Medicare marketing rules that govern enrollee communications.
The nonrenewal notice also opens a window that runs longer than the notice-to-open-enrollment gap suggests. The guaranteed-issue right to buy a Medigap policy without medical underwriting begins the moment a member receives the termination notice, not on a fixed calendar date, and continues for 63 days after Medicare Advantage coverage actually ends, giving an affected member more time to shop for supplemental coverage than the enrollment period alone would imply. Some states extend that window even further under their own insurance law, though the federal 63-day floor applies everywhere regardless of when in the fall a particular insurer’s letter happens to arrive.
Recapture Is an Option, Not an Outcome
Humana recaptured just over 40% of the members affected by its 2025 exits by moving them into other plans the company still offers, and executives said they expect a similar share to re-enroll after the 2027 reductions.
Humana is not the only insurer downsizing Medicare Advantage this cycle. Providence Health Plan is winding down its insurance operations entirely, a move affecting more than 64,000 Medicare Advantage members, and Presbyterian Health Plan is discontinuing most of its Medicare Advantage plans for 2027 after the products contributed to more than $59 million in losses in 2025. UnitedHealthcare separately disclosed exits affecting more than 600,000 of its own enrollees, citing higher-than-expected medical costs, part of an industry-wide enrollment slowdown from annual growth as high as 10% in prior years to roughly 3% in 2026.
The majority of the exited plans carry a rating of three-and-a-half stars or lower for the 2027 bonus year, though Mellet said star ratings were not the primary driver of which markets were cut. About one-fifth of Humana’s Medicare Advantage members are already enrolled in plans rated four stars or higher for 2026, a slice of the business the company is not touching.
A recaptured enrollee moving into another Humana plan is not guaranteed the same doctors, drug coverage or annual spending limit as the plan being replaced. The company’s default answer to a canceled plan is another Humana plan, which is a reasonable option for some members and the wrong one for others, depending on whether their physicians and prescriptions carry over into the replacement network and formulary.
Humana’s chief executive, Jim Rechtin, has said the company needs to reach top-quartile results on Medicare’s quality measures to stay competitive, tying clinical performance directly to the bonus payments that fund next year’s plan design. For the roughly 600,000 members reading a nonrenewal letter this fall, that corporate math is background noise; what matters is whether the replacement plan Humana offers, or the Original Medicare and Medigap combination available under guaranteed-issue rules, actually fits the coverage they already depend on.
This article was drafted with AI assistance and edited for accuracy.
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