Why Medicare Advantage providers are cutting plans — and what to do if your coverage is affected
Kerry Hannon · Senior Columnist
Sat, August 15, 2026 at 6:07 PM GMT+3 5 min read
Medicare Advantage plans are shrinking.
Last month, Humana (HUM) announced that it will exit some Medicare Advantage plans for next year, forcing more than half a million seniors to find a new health plan.
The reason for the coverage cutback: high costs and slimmer profit margins in certain markets, according to Humana CFO Celeste Mellet.
It's the second year in a row of plan downsizing for Humana. This year, the company exited three states and 194 counties, affecting around 500,000 members. UnitedHealthcare (UNH) also jettisoned Medicare Advantage plans that served more than 600,000 seniors.
According to KFF research, the percentage of Medicare Advantage enrollees who faced terminated plans this year reached 60% or higher in Wyoming, South Dakota, New Hampshire, North Dakota, and Vermont.
Medicare Advantage is enormously popular. More than 35 million people are enrolled in the plans — about 55% of all eligible Medicare beneficiaries nationwide, up from 24 million six years ago. The plans typically cover benefits not included in traditional Medicare, such as prescription drugs, eyeglasses, dental care, and fitness classes. Plus, they often have very low or even no premiums.
But as enrollment in these plans, which are administered by private insurance companies, has mushroomed, provider costs have also ballooned. As a result, insurers have been steadily shuttering plans, trimming some benefits, and increasing deductibles.
"Churning of the market by plans pulling out of certain areas in order to maximize profit and minimize losses reflects the challenges of a healthcare system that is overly reliant on private, for-profit insurance companies," David Lipschutz, associate director of the nonprofit Center for Medicare Advocacy, told Yahoo Finance.
"Every year, plan sponsors make business decisions that are more attuned to the needs of shareholders than plan enrollees, leaving individuals scrambling to figure out their coverage," he said.
In recent years, insurers have grumbled about people using more healthcare services than they anticipated and the rising cost of healthcare across the board, he added.
Humana's announced cutback is notable because so few organizations operate these plans. UnitedHealth Group is currently the largest in the market. Combined with Humana, it accounts for nearly half of all Medicare Advantage enrollees nationwide, according to KFF.
Insurers aren't exiting Medicare Advantage plans as a business — they're just shedding plans that are dragging profitability.
"Our No. 1 priority was to make the necessary progress to remain on track to deliver on our 2028 commitment of returning to a sustainable margin of at least 3%," Humana's Mellet said on a recent earnings call. Expected margin expansion in 2027 "will benefit from our ongoing benefit adjustments and targeted plan exits."
What to expect
Despite the cuts, most seniors on Medicare Advantage will still have options, said Jeannie Fuglesten Biniek, deputy director for the Program on Medicare Policy at KFF.
"The vast majority of people still have a number of Medicare Advantage options to choose from," she said.
That includes plans that cover prescriptions and some vision, dental, and hearing benefits, she said.
Plans can offer these additional benefits because, in 2026, they receive an additional $2,664 per enrollee from the federal government above their estimated costs of providing Medicare-covered services, according to the Medicare Payment Advisory Commission (MedPAC).
Read more: Medicare open enrollment — how to add or adjust your coverage
This portion of plan payments, also called the rebate, has increased substantially in the past several years, more than doubling since 2018, per KFF.
That said, some enrollees can anticipate higher out-of-pocket prescription copays in some plans and reductions or even the elimination of certain benefits, Biniek said.
At the same time, Medicare Advantage plans use cost-management tools, such as prior authorization requirements, which can make it harder for seniors to receive care without jumping through time-consuming hoops. Virtually all enrollees in Medicare Advantage are required to obtain prior authorization for some services — most commonly, higher-cost services such as inpatient hospital stays, skilled nursing facility stays, and chemotherapy, according to Biniek.
This contrasts with traditional Medicare, which requires prior authorization for only a few services.
What to do
"A person's experience is really going to depend on what plan they're in, where they live, and what benefits they actually use," Biniek said.
When a plan is terminated by the insurer, if they offer another plan of the same type in the county, the insurer can crosswalk somebody to that other plan, Biniek added.
You might also opt to jump to traditional Medicare during Medicare open enrollment, which runs from Oct. 15 to Dec. 7, or switch to a different Medicare Advantage plan and provider.
"People should always be paying attention because even if there is no change in the plans that are offered in your area, the particular costs and benefits almost always change," Biniek said. "There can be increases to certain copays, changes in prior authorization requirements, changes to what drugs are on the formulary or what tier they're on."
A critical factor, though, is to check if your doctors and provider network are part of any plan you switch to. Medicare Advantage plans often have a limited network of providers, which can restrict the choice of physicians and hospitals, and those networks are ever-changing.
If you do nothing when you receive a notice, you'll be enrolled in a replacement plan. If the company is leaving the market altogether, you would have to sign up for a new Medicare Advantage plan if you want to stay in it or switch to traditional Medicare for next year.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky.
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