Kerry Hannon · Senior Columnist
6 min read
UnitedHealthcare said in its second quarter earnings call that it plans to drop Medicare Advantage plans that currently serve over 600,000 users, becoming the latest health insurer to announce a scaling back of this magnitude.
“We are seeing higher-than-expected medical cost increases, particularly in outpatient care,” Tim Noel, UnitedHealthcare CEO, said on the earnings call. “The American health system’s long-standing cost problem is accelerating.”
As enrollment in these plans, which are administered by private insurance companies, has ballooned, costs for providers have taken off. In response, Medicare Advantage (MA) plans have been making cuts to some benefits and even increasing deductibles.
“Medicare Advantage has been extremely profitable for most insurers for a very long time,” David Lipschutz, associate director of the nonprofit Center for Medicare Advocacy, told Yahoo Finance. “But in recent years, insurers have complained about people using more healthcare services than they anticipated and the rising cost of healthcare across the board.”
“It’s bad for a plan’s business when people use healthcare from a plan that offers healthcare coverage. That said, it appears that they’re trimming around the edges and not pulling out of areas altogether,” he said.
Medicare Advantage enrollment is concentrated among plans owned by a tiny number of parent organizations, with UnitedHealth Group the largest in the market, and, together with Humana, accounting for nearly half of all Medicare Advantage enrollees nationwide, according to KFF.
“Nearly every Medicare Advantage insurer has either exited the business, such as Cigna, or is retrenching,” said Philip Moeller, a Medicare and Social Security expert who writes the Aging in America newsletter. “UnitedHealthcare is the largest, and its reappraisal could have the biggest impact. “
Humana, for example, expects a decline of roughly 550,000 Medicare Advantage members this year, largely driven by the decision to exit certain unprofitable plans and counties. Approximately 40% of those seniors, however, are likely to join other Humana MA plans.
To be clear, major insurers aren’t exiting Medicare Advantage, they are just getting leaner.
This year, 34.1 million people are enrolled in a Medicare Advantage plan, accounting for more than half of the eligible Medicare population, according to KFF, though increases in enrollment slowed this year. And the average Medicare beneficiary has access to roughly 42 Medicare Advantage plans in 2025.
Enrollees can anticipate higher out-of-pocket prescription co-pay costs in some plans and reductions or even the elimination of certain benefits.
A big enticement of Medicare Advantage plans is that they typically include coverage for benefits not included in traditional Medicare, such as drug coverage, eyeglasses, dental coverage, and fitness classes. Plus, they often have very low or even no premiums.
This year, original Medicare’s monthly Part B premiums are $185, and the annual Part B deductible, which most people must pay before their Medicare coverage begins, is now $257.
MA plans can offer these additional benefits, often without charging an additional premium for Part D prescription drugs or supplemental benefits, because in 2025, they received an additional $2,255 per enrollee above their estimated costs of providing Medicare-covered services.
This portion of plan payments, also called the rebate, has increased substantially in the last several years, more than doubling since 2018, per KFF.
At the same time, Medicare Advantage plans tap cost management tools, such as prior authorization requirements, which can make it harder for seniors to receive care without jumping through time-consuming hoops. Plus, 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.
For 2026, experts I spoke to say that some Medicare Advantage plans may reduce their dental and vision coverage, for example, and raise co-pays to see specialists. If you signed up for a gym membership through a Medicare Advantage plan, it may not be available next year.
So what should you do if your plan gets dropped or you discover that benefits are trimmed? Should you flee to traditional Medicare during Medicare Open Enrollment, which runs from Oct. 15 to Dec. 7, or switch to a different Medicare Advantage plan?
“When a plan is terminated by the insurer, if they offer another plan of the same type in the county, they can crosswalk somebody to that other plan,” Jeannie Fuglesten Biniek, associate director of the program on Medicare policy at KFF, told Yahoo Finance.
“The key will be to check if your doctors are going to be in the new one you’re being folded into.”
If you do nothing when you receive the notice, you’ll be enrolled in a replacement plan. If the company is leaving a market altogether, you would have to sign up for a new Medicare Advantage plan if you want to stay in Medicare Advantage or switch to traditional Medicare for next year, she said.
Be aware that switching Medicare Advantage plans potentially means changing provider networks and doctors.
“People should be really on the lookout for any notifications from their Medicare Advantage plan this year,” Lipschutz said. “Even if your plan isn’t going anywhere, providers do change their benefits annually and are obligated to send an annual notice of change that outlines some of the changes and the benefits and cost sharing.”
He also recommends contacting your doctors directly to confirm that they contract with your MA plan for 2026, or the new plan that you might be moved into.
The Medicare Rights Center offers a free consumer helpline: 800-333-4114. You can also contact Medicare directly at 800-633-4227.
You can research your options via the Medicare Plan Finder. Enter the drugs you take, and it will show you if they’re covered by the Advantage plan. When you look at the various plans available where you live, you’ll see annual estimates of the cost of that plan based on the drugs you’ve entered into the tool.
If you switch into traditional Medicare, you should qualify for a special enrollment period because your plan was terminated, which will allow you to get Medigap.
That’s good news if you’re in that boat.
Medigap policies are sold by private insurance companies and pay part or all of certain leftover costs after Medicare pays. They can cover outstanding deductibles, coinsurance, and co-payments, and may also cover healthcare costs that Medicare does not cover at all, like medical care received when traveling out of the US.
Some traditional Medicare enrollees receive supplemental gap insurance as a retirement benefit from former employers, and low-income seniors get help from Medicaid.
Many Medigap plans, however, reject applicants with preexisting conditions if they didn’t sign up when becoming eligible for Medicare initially. People who have not had a private Medigap supplement plan for more than six months may be subject to coverage restrictions.
Medigap plans are typically not part of open enrollment.
So, as medical costs continue to ramp up, there is little doubt that beneficiaries will continue to see changes in Medicare Advantage plan offerings for next year.
“Consumers should pay extra attention to how these things play out when costs and coverage features for 2026 are announced this fall,” Moeller said.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming “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.
Sign up for the Mind Your Money newsletter
Read the latest financial and business news from Yahoo Finance
Terms and Privacy Policy
Yahoo News – Latest News & Headlines
Read the full article .
