Average Medicare Advantage premiums are set to fall to about $12 a month in 2027, yet several of the largest insurers are dropping plans in many markets. With open enrollment starting on October 15, here is what has changed and how to check whether it affects you.

Key takeaways

• Medicare projects the average Medicare Advantage premium will drop 16.5%, from $14.37 to $12 a month, in 2027.
• Humana, UnitedHealth, CVS Health’s Aetna and Centene are trimming their footprints, so some members will need to pick a new plan.
• Drug coverage is shifting too: the yearly Part D out-of-pocket cap rises from $2,100 to $2,400, and stand-alone drug plan premiums tick up slightly.

Why everyone is talking about it

“Medicare Advantage” was one of the fastest-rising money-related searches in the United States over the weekend. The timing is no accident. Insurers had to send members their Annual Notice of Change for 2027 by the end of September, and in the same week the Centers for Medicare & Medicaid Services (CMS) published its outlook for next year. Many retirees are now opening letters that say their plan is ending, while headlines say premiums are falling. Both things are true at once, which is why the topic is causing confusion.

The facts so far

According to CMS, the weighted average monthly Medicare Advantage premium will fall from $14.37 in 2026 to $12.00 in 2027. For Advantage plans that include drug coverage, the drug part of the premium is projected to drop 38%, from $11.32 to $7. Stand-alone Part D drug plans move the other way, with the average premium rising by less than a dollar, from $35.09 to $36.

CMS expects about 34 million people, roughly 47.4% of everyone on Medicare, to be in an Advantage plan next year. The total number of plans barely changes (about 5,532, against 5,553 this year), and the agency says 97% of beneficiaries will still have ten or more plans to choose from. CMS also estimates that eight in ten current members can stay in their plan at the same or a lower premium. “CMS is fighting to keep high-quality care options affordable and accessible,” Administrator Mehmet Oz said in the agency’s announcement.

Underneath those averages, the big insurers are reshuffling. Humana says its plan exits affect about 600,000 members and that it will operate in roughly 2,600 counties across 45 states plus Washington, D.C., down from 46 states this year. Reports citing Bloomberg say UnitedHealth and Humana cuts together touch more than one million people, with Aetna and Centene also scaling back. The reason given across the industry is the same: insurers are leaving less profitable markets to rebuild margins.

The background

Traditional Medicare is run by the government. Medicare Advantage is the private alternative: insurers receive a fixed payment from Medicare for each member and, in return, cover hospital and doctor care, often with extras such as dental or vision and usually with a provider network. Over the past decade it grew to cover close to half of all beneficiaries.

Think of it like a restaurant on a fixed-price menu. If the cost of ingredients (medical claims) rises faster than the fixed price (government payments), the restaurant can raise prices, shrink the menu, or close branches that lose money. In recent years insurers have reported medical costs climbing faster than expected, so for 2027 many are closing “branches” in weaker counties rather than raising the headline premium. That is how average premiums can fall while some people lose their plan.

Drug coverage is also in transition. A temporary federal program that held down Part D premiums ends after 2026, and the legal cap on what enrollees pay for covered drugs each year is indexed upward, from $2,100 to $2,400. The maximum Part D deductible rises from $615 to $700. AARP notes that, according to KFF, the number of stand-alone Part D plans is falling by about 13% and there will be no $0-premium stand-alone plans next year for people outside the Extra Help program.

What it means for your money

For most people, the premium is the smallest number on the page. A drop from $14.37 to $12 saves about $28 a year. Copays, deductibles, the drug formulary and whether your doctors stay in network can easily matter more.

A simple worked example: someone in a stand-alone Part D plan who takes expensive medicines pays the average premium of $36 a month ($432 a year) and reaches the new $2,400 cap. Their maximum yearly drug spending would be about $2,832, roughly $310 more than the same situation this year ($35.09 × 12 + $2,100 ≈ $2,521). Someone with few prescriptions would mainly notice the higher deductible.

Practical steps that apply to almost everyone: read your Annual Notice of Change, check that your doctors, pharmacy and medicines are still covered, and compare options on the official Medicare Plan Finder at Medicare.gov. Free one-to-one help is available through 1-800-MEDICARE and your local State Health Insurance Assistance Program (SHIP). If your plan is ending, you will normally be given a special window to choose another one, but acting during open enrollment avoids gaps.

This is general information, not financial or insurance advice.

What to watch next

• October 15 – December 7: Medicare open enrollment, when you can switch plans for 2027.
• Late October or early November: CMS is expected to announce the 2027 standard Part B premium, which most beneficiaries pay on top of any Advantage premium.
• Insurer earnings: third-quarter results from UnitedHealth, Humana and CVS will show whether the retreat is improving margins. Track key dates in our economic calendar and our week-ahead preview.

Sources

• CMS: Medicare Advantage and Part D expected to remain stable in 2027
• Reuters (via Investing.com): Medicare Advantage premiums expected to drop more than 16% in 2027
• Fierce Healthcare: CMS projects Medicare Advantage premiums to decline by 16% in 2027
• AJMC: CMS projects 16.5% drop in 2027 Medicare Advantage premiums
• Healthcare Finance News: Humana adds benefits amid Medicare Advantage pullback
• Quartz: UnitedHealth and Humana cutting Medicare Advantage plans in 2027
• AARP: Medicare Part D premiums for 2027
• Kiplinger: Changes coming to Medicare in 2027

Written by The Daily Economy editorial team with AI assistance and checked against the sources above. Read our editorial policy.