Even before the Trump administration said the 2027 Medicare Advantage payment rate will be flat, insurers were pulling back from unprofitable markets.
But rising costs coupled by flat rates could trigger further withdrawals of health insurers from states and counties across the country, disrupting the choice of plan for millions of older adults enrolled in Medicare Advantage.
Already, some of the biggest names in health insurance including UnitedHealth Group’s UnitedHealthcare, CVS Health’s Aetna, Elevance Health, parent of several Blue Cross and Blue Shield plans, and Humana pulled back this year from sales of Medicare Advantage plans in certain markets after years of expanding their geographic footprints.
Take UnitedHealthcare, for example. The health insurer exited certain marketsfor this year and expects its Medicare Advantage enrollment to contract by more than 1.1 million older adults, the company said last Tuesday in its fourth quarter and annual 2025 earnings report.
When health insurers leave markets, it forces Medicare Advantage enrollees to pick new plans which may or may not have the same doctors and hospitals or benefit packages. Medicare Advantage plans contract with the federal government to provide traditional coverage available in traditional Medicare plus extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.
Last week, the Centers for Medicare & Medicaid Services (CMS), which is run by a Trump-appointed administrator in celebrity physician Dr. Mehmet Oz, said they planned to raise rates paid to health insurers by 0.09 percent, which was less than what health insurers were expecting.
The lobby for health insurers already hinted last week that older Americans enrolled in Medicare Advantage plans could see more services and benefits reduced due to the proposed “flat program funding” proposed by CMS.
“Health plans welcome reforms to strengthen Medicare Advantage,” said Chris Bond, spokesman for America’s Health Insurance Plans (AHIP). “However, flat program funding at a time of sharply rising medical costs and high utilization of care will impact seniors’ coverage. If finalized, this proposal could result in benefit cuts and higher costs for 35 million seniors and people with disabilities when they renew their Medicare Advantage coverage in October 2026.”
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Such plans, which provide benefits for more than half of the nation’s Medicare beneficiaries, have been hit hard by rising costs in the last two years in part because seniors have a pent up demand for healthcare following the Covid-19 pandemic when many patients delayed treatment.
UnitedHealthcare is no exception. Its full year adjusted 2025 medical care ratio, which is the percentage of premium revenue that goes toward medical costs, was 88.9% compared to 85.5% in 2024. Adjusted medical care ratio was more than 91% in the fourth quarter.
“As part of our efforts to address elevated trend and funding cuts, we planned for some Medicare Advantage contraction in 2026,” UnitedHealthcare chief executive Tim Noel told analysts on UnitedHealth Group’s fourth quarter and full year 2025 earnings call last week. “We now expect UHC Medicare Advantage contraction will be in the range of 1.3 million to 1.4 million members for the full-year, including group, individual and D-SNP.”
Elevance Health, too, which is the nation’s second-largest health insurance company, also disclosed last week that it was seeing rising healthcare costs. The company’s benefit expense ratio rose to 93.5 percent in the fourth quarter.
Elevance’s benefit expense ratio gradually rose over the last year. It was 91.3 percent in the third quarter, 88.9% and in the second quarter and 86.4% in the first quarter, according to earnings reports issued throughout last year.
“For 2026, we made deliberate changes to our plan offerings and intentionally exited select geographies, prioritizing plans that deliver value to members while producing sustainable financial performance,” Elevance chief financial officer Mark Kaye told analysts on the company’s fourth quarter and annual 2025 earnings call. “As you heard from (Elevance CEO) Gail (Boudreaux), we now expect Medicare Advantage membership to decline in the high teens percentage range in 2026 while achieving meaningful margin improvement.”
Insurance companies won’t disclose the markets they are participating in for Medicare Advantage for 2027 until this fall. Stay tuned.
The Great Medicare U-Turn: How to Switch Back to Original Medicare
If you’ve spent the last year realizing that “Advantage” doesn’t always feel like an advantage, you aren’t alone. Maybe your favorite specialist left the network, or you’re tired of asking for “prior authorization” just to get an MRI.
The good news? If you’re reading this in January, the door is wide open for a change. But before you jump ship, there’s a specific sequence you need to follow to avoid getting stranded without coverage.
1. The “Right Now” Window: The 2026 MA OEP
Since today is January 26, 2026, you are currently in the Medicare Advantage Open Enrollment Period (MA OEP). This runs from January 1 to March 31. The Fall Window: Annual Enrollment Period (AEP) Dates: October 15 – December 7.
During this time, you can:
Switch from Medicare Advantage back to Original Medicare.
Sign up for a standalone Part D prescription drug plan.
Note: If you make the switch this month, your new coverage will typically begin on the 1st of the following month.
2. The Medigap “Trap”: Don’t Drop Your Plan Yet!
This is the most critical part of the U-turn. Unlike Medicare Advantage, which must take you regardless of health, Medigap (Medicare Supplement) providers in most states can use medical underwriting.
The Risk: If you have a pre-existing condition, a Medigap insurer can charge you more or deny you a policy entirely unless you have a “Guaranteed Issue Right.”
Do you have a “Guaranteed Issue Right”?
You generally don’t need a health screening if:
The Trial Right: This was your very first time joining a Medicare Advantage plan and you’ve been in it for less than 12 months.
The Move: You moved out of your Advantage plan’s service area.
Special State Rules: You live in a state like New York, Connecticut, or Massachusetts, which have year-round or annual protections for Medigap enrollment.
The Golden Rule: Secure your Medigap policy and get an acceptance letter before you officially disenroll from your Medicare Advantage plan.
3. Your 2026 Transition Checklist
Switching back involves a three-step dance. If you miss a step, you could face lifetime penalties or massive bills.
Step
Action
Why it matters
Step 1
Apply for Medigap
Ensures your “gap” coverage is locked in before you leave your current plan.
Step 2
Join a Part D Plan
Medicare Advantage usually includes drugs; Original Medicare does not. Missing this causes a late-enrollment penalty.
Step 3
Confirm Disenrollment
Joining a standalone Part D plan usually automatically triggers your exit from Medicare Advantage, but always call your plan to confirm.
4. What Original Medicare Costs in 2026
Since you’re moving back to the “Original” way of doing things, here is a quick look at the 2026 rates:
Part B Monthly Premium:$202.90 (standard).
Part B Annual Deductible:$283.
Part A Inpatient Deductible:$1,736 per benefit period.
Part D Out-of-Pocket Cap:$2,100. (Once you spend this on meds, you pay $0 for the rest of the year!)
Why People are Making the Switch
In 2026, the maximum out-of-pocket (MOOP) for Medicare Advantage plans can be as high as $9,250. For someone facing a major surgery or chronic illness, that “low premium” plan can suddenly become very expensive. Medigap Plan G, by contrast, covers nearly everything after you pay the small Part B deductible, giving you total “cost predictability.”
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Medigap offers the type of flexibility that some seniors may find is worth the higher price tag.
As Medicare open enrollment kicks into high gear, millions of older adults are taking a fresh look at their health insurance options. For many, that means deciding between sticking with or switching to either a Medicare Advantage plan or a Medicare supplemental insurance policy, also known as Medigap. It’s a choice that can shape not just monthly budgets but also how easily seniors can access the care they need.
At first glance, Medicare Advantage plans may seem like the obvious choice. Many offer low or $0 monthly premiums and bundle extra perks like dental, vision and hearing coverage. For retirees living on fixed incomes, those features can be appealing. But despite the popularity of Medicare Advantage — 54% of all Medicare beneficiaries are enrolled in these plans — a significant share of seniors continue to rely on Medigap coverage instead.
So what drives some seniors to choose Medigap coverage over Medicare Advantage plans? That answer typically comes down to what people value in their healthcare coverage. Below, we’ll break down what to consider.
Why do some seniors choose Medigap over Medicare Advantage?
Medigap plans work alongside Original Medicare, covering many of the out-of-pocket costs that traditional Medicare doesn’t, like deductibles, coinsurance and copayments. Medicare Advantage plans, on the other hand, replace Original Medicare with a private insurance plan that often comes with its own rules, networks and cost structures. Here’s more on why many older adults opt for Medicare supplemental coverage over Medicare Advantage plans:
Access to a wider network of doctors and hospitals
One of the main reasons seniors opt for Medicare supplemental coverage is the flexibility to see any doctor or specialist who accepts Medicare, anywhere in the nation. There are no restrictive provider networks or referral requirements. For retirees who travel frequently, live in multiple states or simply want to keep their existing doctors, this nationwide access can be a major advantage.
While Medigap plans typically have higher monthly premiums than Medicare Advantage plans, they tend to offer more stable and predictable out-of-pocket expenses. Depending on the plan type, like Plan G or Plan N, Medigap may cover nearly all of the costs left over after Medicare pays its share. For seniors managing chronic conditions or anticipating regular medical visits, that type of coverage predictability can be invaluable.
Fewer administrative hurdles
Medicare Advantage plans often require beneficiaries to obtain prior authorizations before they can be approved for certain treatments or services, and these hurdles can sometimes lead to delays or denials for otherwise necessary medical care. Medigap paired with Original Medicare typically doesn’t have these barriers, though, which makes it easier to access care when you need it.
Stable benefits year after year
While Medicare Advantage plans can change their provider networks, cost-sharing rules and benefits annually, Medicare supplemental plans are standardized and don’t change once you enroll. That type of stability can make long-term financial planning simpler and reduce the risk of unexpected coverage shifts.
How to decide between Medicare supplemental coverage and Medicare Advantage
Both Medicare Advantage and Medigap have clear benefits and tradeoffs and the right choice often depends on your health needs, financial situation and lifestyle. Here’s what to weigh as you’re deciding which coverage option makes the most sense for your needs:
Consider your healthcare usage
If you visit doctors frequently, need specialist care or expect ongoing medical costs, Medigap’s more comprehensive coverage may make sense. On the other hand, if you’re relatively healthy and want to minimize monthly premiums, a Medicare Advantage plan could be more cost-effective.
Think about where you receive care
Seniors who split time between states or travel often may benefit more from Medigap’s nationwide coverage. But if your care is primarily local and your providers are in-network, Medicare Advantage could work well.
Weigh long-term costs carefully
While Medigap premiums can rise with age, Medicare Advantage plans can also change cost structures each year. Some seniors start with Advantage plans for the lower premiums and switch to Medigap later. However, in many states, switching to Medigap after your initial enrollment period may require medical underwriting, and you could be denied coverage or face higher premiums if your health has changed.
Factor in extra benefits
Medicare Advantage plans often offer extras like dental, vision, fitness memberships or transportation services. If these are important to you, they might tilt the balance toward Medicare Advantage. Medigap focuses primarily on covering medical costs rather than additional perks.
The bottom line
When choosing between Medicare Advantage and Medigap, there’s no universal answer for retirees. Medigap appeals to many seniors because of its flexibility, predictable costs and stable coverage, while Medicare Advantage can be more affordable for those with limited healthcare needs or who value additional benefits.
When weighing your options during open enrollment, be sure to assess your health, budget and lifestyle carefully. By understanding the potential benefits and downsides of each option, you can select the coverage that best fits your unique situation and ensures you have the care you need at a cost you can manage.
Would you like more information on a Medigap plan?
Medicare coverage doesn’t just mean signing up for government insurance. In fact, more than half of Medicare recipients now get their coverage through a Medicare Advantage plan, or Medicare Part C plan, which is offered by a private insurer.
Advantage plans are an alternative to original Medicare, replacing Part A (hospital coverage), Part B (outpatient care coverage), and sometimes Part D (prescription drug coverage).
Yet, while Advantage Plans seem like a good alternative, a substantial number of older Americans who sign up for them don’t stick with them. In fact, among those who signed up between 2011 and 2022, around half left their plans within five years.
Recent research published in the journal Health Affairs helps demonstrate why so many are opting out of their Advantage Plan during open enrollment, either by switching to a different Part C plan or by returning to traditional Medicare instead. Since these Advantage plans are less likely to attract beneficiaries over the long term, the study warns that such plans will likely have less incentive to cater to participants with chronic conditions.
Should you ditch your Medicare Advantage plan? Why others are
Researchers sought to gain insight into why Medicare Advantage participants were disenrolling by using information from the Medicare Current Beneficiary Survey, linked with data on Medicare Advantage enrollment. The survey measures patient satisfaction with access to medical care, as well as the cost and quality of the care they receive.
Researchers found two primary factors drove departures from Medicare Advantage plans, and neither was related to cost. Instead, most people who disenrolled did so because of difficulty accessing care as well as concerns about the quality of their care.
Access issues, in particular, were especially likely to prompt Advantage customers not just to switch to a different Medicare Part C plan but instead to return to traditional Medicare. This makes sense, given that traditional Medicare doesn’t impose the same limits as Advantage Plans on which doctors or care providers patients can visit.
Hospitals have also been ending their affiliations with Medicare Advantage Plans, creating huge problems when break-ups happen outside of the open enrollment period, and Advantage Plan customers suddenly find themselves without coverage at the hospital where they’d been treated.
Researchers also revealed that individuals with health issues were more likely to switch out of their Medicare Advantage plan. Those who described themselves as being in poor health were:
More than twice as likely as other Advantage members to express difficulty with getting care;
More than three times as likely to be dissatisfied with the quality of care they are getting
More than twice as likely to be unhappy with the cost of their care
More than twice as likely to be dissatisfied with their specialty care.
“People who stay in [Medicare Advantage} are shopping for better service, but … those who switch to traditional Medicare are the ones potentially with high health care needs, who are much more strongly driven by dissatisfaction with access to care issues ” said Geoffrey Hoffman, Ph.D., Associate Professor, U-M School of Nursing and one of the study’s authors.
This tendency to switch between Advantage plans or back to original Medicare could undermine the long-term effectiveness of these plans while also driving up the nation’s cost to provide original Medicare. The study warns that Advantage plans will likely focus on the short-term healthcare needs of beneficiaries due to plan hopping.
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How you can find the right Medicare plan
Since concerns about care quality and accessibility were the most likely reasons for retirees to switch out of their Medicare Advantage Plan — often back to traditional Medicare — it’s clear that these are issues that older Americans should pay attention to when shopping for an Advantage Plan.
Don’t put yourself in this position. The best way to protect yourself is with original Medicare A & B and the a true medicare supplement such as plan G. Turning 65 is also the only time you are eligible for a supplement without answering any health questions.
Let us help answer your questions and provide you with a quote, ensuring you receive all available discounts.
The nation’s largest insurer is stumbling from crisis to crisis.
In early April, market analysts touted UnitedHealth Group as a “tariff safe haven.”And why not? The Trump administration had just announced an increase in payments to Medicare Advantage plans in 2026. Surely profits would likewise increase for UnitedHealth — not only the nation’s largest insurer, but specifically the largest provider of Medicare Advantage plans.
But, less than two months later, the company is in a state of free fall. Its collapse reflects not simply the troubles of the broader health care market, but also the troubles with Medicare Advantage, the program set up with the idea that the private sector could provide better health care than traditional Medicare at lower prices.
The company faces three federal investigations.
Instead, Medicare Advantage has only succeeded at juicing corporate profits, charging more — and denying more care — than traditional Medicare. And as for UnitedHealth Group, it’s looking quite possible the company’s bottom line was padded by billing fraud and patient abuse.
The company faces three federal investigations, looking at allegations of civil and criminal fraud and antitrust violations. The Wall Street Journal reported in February, for instance, that the DOJ is investigating whether UnitedHealth made its clinician employees record questionable diagnoses that make Medicare Advantage patients appear sicker than they are. This practice, known as “upcoding,” triggered extra federal payments. (UnitedHealth told the Journal it stands “by the integrity of our Medicare Advantage program.”)
And last week The Guardian alleged the company secretly paid nursing homes to prevent or delay transfers of Medicare Advantage patients to hospitals, something that saved the insurance giant money — but cost patients desperately needed care.
“At least one lived with permanent brain damage following his delayed transfer,” The Guardian reported, “according to a confidential nursing home incident log, recordings and photo evidence.” Five current and former UnitedHealth employees told The Guardian that the company “pressed nurse practitioners to persuade Medicare Advantage members to change their ‘code status’ to DNR” – or “do not resuscitate” — rendering them ineligible for “certain life-saving treatments that might lead to costly hospital stays.” (UnitedHealth denied the allegations.)
Somehow, that’s not the end of UnitedHealth’s troubles. A group of investors recently sued the company, claiming it had misled them about its financial outlook following the fatal shooting of Brian Thompson, CEO of UnitedHealthcare, UnitedHealth Group’s insurance arm. (UnitedHealth denied the lawsuit’s allegations.) In mid-May, UnitedHealth Group CEO Andrew Witty suddenly resigned for “personal reasons,” and the company withdrew its earnings guidance to Wall Street for 2025 after a disastrous first quarter, claiming it had underestimated its Medicare Advantage costs.
Because UnitedHealth is vertically integrated, it simultaneously pays for care through UnitedHealthcare and provides care through its health care services arm Optum, which includes both physician practices and pharmacies. This setup gives the conglomerate enormous leverage to dictate which claims are covered, which physicians patients can see and which medications are prescribed to them.
UnitedHealth’s Medicare Advantage strategy has proven very lucrative — until now.
Moreover, UnitedHealth also reimburses its own physician practices and pharmacies much more than competitors. A recent Federal Trade Commission report found the average markup could be more than 7,700%. This systematic under-reimbursement leaves independent physician practices struggling to keep their doors open, and some then sell to Optum, reinforcing UnitedHealth Group’s monopoly power. Disparate payments likewise squeeze independent pharmacies out of business, stranding patients in care deserts.
Ethics aside, UnitedHealth’s Medicare Advantage strategy has proven very lucrative — until now. Since 2003, its annual revenue has increased nearly 15 times over — to $372 billion last year — and its Fortune ranking has climbed 59 spots, to fourth. This strategy also inspired competitors — including CVS Health’s Aetna, Elevance Health’s Anthem, and Humana — to pursue a similarly vertically-integrated business model and Medicare Advantage billing practices. Early this month, the Justice Department sued all three for allegedly paying brokers hundreds of millions of dollars to steer older Americans to their Medicare Advantage plans — and to steer clear of potential enrollees with disabilities. (The companies have said they will fight the allegations.)
Older Americans are drawn to Medicare Advantage because most plans offer supplemental benefits, such as vision and dental coverage, and lower cost-sharing requirements than traditional Medicare. It’s not until they require lifesaving medical care that the program’s disadvantages — including rampant denials — reveal themselves.
For more than two decades, patients and taxpayers have paid a steep price for the Medicare Advantage grift. Only in the last few weeks, though, have shareholders felt any sort of pinch from Medicare Advantage. Finally, it seems UnitedHealth Group’s size and business model may be liabilities rather than assets.
Although the Trump administration plans to hike Medicare Advantage payments next year, plans are still reeling from a Biden administration rule that limited upcoding. UnitedHealth Group also floundered because, as mentioned earlier, Medicare Advantage costs exceeded expectations. More specifically, patients sought more care than expected during the first three months of the year, perhaps in part because of pent-up post-pandemic demand. Regardless of the reason, UnitedHealth had to provide more service, as The Wall Street Journal explained, both as an insurer paying for claims and as a provider “absorbing the higher cost of delivering that care.”
A growing number of members of Congress from both parties are sounding the alarm.
This is the fundamental flaw at the heart of Medicare Advantage. Plans are beholden to shareholders, who seek short-term profits. Profits are only achievable through the widespread denial of care. Meanwhile, plans use these profits to buy up entities along the health care supply chain, whose clinicians and other employees can do the insurance company’s bidding.
A growing number of members of Congress from both parties are sounding the alarm. Reps. Lloyd Doggett, D-Texas, and Greg Murphy, R-N.C., recently requested an investigation into private Medicare Advantage plans. Rep. Pat Ryan, D-N.Y., sent a letter to Attorney General Pam Bondi, urging her to hold UnitedHealth Group accountable. At a recent meeting of the Senate Judiciary Committee, several senators called for breaking up big insurers like UnitedHealth. Sen. Cory Booker, D-N.J., decried “a level of corporate violence that is costing American lives, a level of colossal greed at the expense of patient wellbeing.” Sen. Josh Hawley, R-Mo., echoed this sentiment. “Why shouldn’t we be breaking you guys up?” he asked. “[T]his looks like classic monopolist behavior. The patients are getting screwed. … You’re getting rich.”
Meanwhile, traditional Medicare chugs along, costing Americans 20% less than its for-profit rivals while besting them on a majority of care metrics. It turns out the federal government is a much better steward of taxpayer dollars than rapacious executives and shareholders. Yet, traditional Medicare now only covers a minority of Medicare patients.
It’s time to face the truth. Medicare Advantage — like all private health insurance — is structurally unsound. Nothing short of a complete overhaul can cure the U.S. health care system of this disease.
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