Federal payments to Medicare Advantage plans are set to rise about 2.48% for 2027, an increase the insurance industry values at roughly $13 billion. Yet the raise is not expected to reverse a wave of plan exits that could push nearly 3 million older Americans out of their current coverage. Humana, UnitedHealthcare and other carriers are trimming unprofitable plans faster than the payment bump can offset, and the seniors caught in the retreat will face a narrow window to line up replacement coverage before the year ends.
Why a 2.48% raise is not enough to keep plans open
In April, the Centers for Medicare & Medicaid Services finalized an average 2.48% rate increase for Medicare Advantage plans in 2027, well above what the administration first proposed but still short of the medical-cost growth insurers say they are absorbing. Utilization among older enrollees has climbed, and reimbursement has not kept pace, leaving carriers to abandon plans and counties they can no longer run profitably.
Humana, the second-largest Medicare Advantage insurer, is exiting additional markets for the second consecutive year. The company’s targeted 2027 withdrawals are projected to affect roughly 600,000 members, though it hopes to re-enroll many of them in plans that survive the cull.
UnitedHealthcare, the largest carrier in the program, is weighing exits from about 34 counties across 12 states, and analysts describe the pullback across UnitedHealth, Humana and Aetna as a broad retreat from business the companies cannot make pay. One industry analysis warns that the escalating exits could leave close to 3 million beneficiaries searching for new coverage as the changes take effect.
Medicare Advantage has grown to cover more than half of everyone on Medicare, upward of 34 million people, so even a targeted retreat reaches a large population. UnitedHealth Group and Humana alone account for nearly half of all Advantage enrollees, which means that when the two biggest carriers pull back in the same year, the disruption concentrates rather than spreads thin. Humana’s move is its second straight year of exits, and its withdrawals a year earlier already pushed hundreds of thousands of members to hunt for replacement coverage.
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The October 15 to December 7 switch clock
Carriers lock in which plans they will discontinue through the annual bid process, and enrollees usually learn their plan is ending through a non-renewal notice mailed in the fall. For those affected, the practical deadline lands during Medicare’s Open Enrollment period, which runs from October 15 to December 7 and is when most beneficiaries can change or replace a plan for the following year.
The warning usually arrives in writing before that window opens. Carriers dropping a plan must send an annual non-renewal notice, typically mailed by early fall, spelling out that the coverage will end on December 31. A separate Annual Notice of Change, sent to enrollees whose plans continue, details next year’s premiums, drug lists and cost-sharing, and is worth reading closely even when a plan survives, because the terms can shift enough to change the math.
A senior whose plan disappears and who takes no action can be left without Advantage coverage on January 1, and in some cases shifted back to Original Medicare with no drug plan attached. Skipping the window can also trigger a late-enrollment penalty on Part D that follows a person for as long as they stay in the program.
Beyond the standard enrollment period, a plan’s termination generally opens a special enrollment period that gives the displaced enrollee extra time to pick a new Advantage plan or move to Original Medicare with a stand-alone drug plan. Acting early, rather than waiting for the December cutoff, leaves room to compare premiums and confirm that current doctors and prescriptions are still covered.
The guaranteed-issue Medigap right that can close
Seniors forced out of Medicare Advantage often gain a valuable but time-limited protection: the right to buy certain Medigap policies without answering health questions. When a plan leaves the market, federal rules give affected enrollees a guaranteed-issue window to purchase specific Medigap plans regardless of health history, shielding them from the medical underwriting that would otherwise apply.
That right carries weight because outside these windows an insurer in most states can charge more, or refuse to sell a Medigap policy at all, based on a person’s health. A retiree with a chronic condition who lets the window lapse may find the supplemental coverage that caps out-of-pocket costs either unaffordable or unavailable.
That protection also runs on a clock: the guaranteed-issue right generally lasts 63 days from the date coverage ends, and letting it lapse can be irreversible in states without their own broader rules. A handful of states go further, requiring insurers to offer Medigap on a guaranteed-issue basis more often, but in most of the country the window that opens with a plan’s termination is the clearest shot a displaced enrollee gets at underwriting-free supplemental coverage.
The financial stakes cut in both directions. Original Medicare paired with a Medigap policy and a drug plan can cost more in monthly premiums than a zero-premium Advantage plan, but it removes the network limits and surprise cost-sharing that come with a plan chosen in a rush. For the millions who may be displaced, the surest move is to treat a non-renewal notice as a prompt to weigh both paths well before the December cutoff, while the guaranteed-issue clock is still ticking.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
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