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Why this year’s Medicare enrollment decisions deserve a closer look.

The Margin Notes

Every October, I have conversations with Medicare clients who tell me essentially the same thing. “My plan worked fine this year. I don’t see any reason to change it.” And let’s face it, most people don’t like change when it comes to their healthcare because it can be associated with more costs and less robust benefits. And you need to learn your plan benefits all over again. I understand. Most years, that may be a reasonable starting point, but this year, I’m encouraging everyone to look a little closer. There are meaningful changes to plans in 2027 that can affect your monthly budget greatly if you don’t pay attention, and not changing plans could be detrimental to your healthcare coverage.

Medicare’s Annual Enrollment Period begins Thursday, October 15, and those changes are taking place behind the scenes. That’s why you must review the Annual Notice of Change (ANOC) the plan sends you for your plan at the beginning of October.

Some insurance companies are leaving markets. Others are reducing their plan offerings or changing how their plans operate in certain areas throughout the country due to profitability issues.

One additional development deserves mention. CMS announced a one-time $90 Part B premium rebate for certain Original Medicare beneficiaries, with most eligible payments expected around October 8th. Those who are in enrolled in Medicare Advantage, receive state-funded assistance or who are paying an IRMAA surcharge are not eligible to receive the rebate. So, less than half of the people on Medicare will receive this rebate. This is separate from the upcoming Annual Enrollment Period.

The Medicare market is changing, even when the numbers on the surface appear relatively stable.

CMS recently projected that the average Medicare Advantage premium will decline to approximately $12 per month in 2027. The average standalone Part D premium is expected to increase by less than $1, reaching approximately $36.

Those numbers sound encouraging, but they are national averages, and averages don’t tell us what will happen to your particular coverage. For example, Tennessee is losing Wellcare’s regular Medicare Advantage plan offerings for 2027. Kentucky is experiencing changes in standalone prescription coverage, including the withdrawal of SilverScript Choice from the region shared with Indiana. For beneficiaries enrolled in affected plans, those changes are considerably more important than the national average premium.

But that’s not the whole story that’s developing, at least in Kentucky and Tennessee. What I’m seeing is a large amount of $0 premium plans for Medicare Advantage and a small amount of Medicare Advantage plans that are over $40 per month in premium. What’s more, there are approximately 4 stand-alone Part D drug plans that are under $10 per month in premium and then the other half of those plans are over $100 per month and some over $200 per month, which is eye opening since many Medicare beneficiaries are on Medicare supplements that cost less than a drug plan.

Another development arrived on October 8th. CMS released its 2027 Medicare Advantage and Part D Star Ratings, providing updated information about plan quality and performance. Approximately 71% of current Medicare Advantage prescription drug plan enrollees are in contracts that received ratings of four stars or higher for 2027. That’s encouraging, but a high rating doesn’t automatically mean a plan is right for you.

Four Stars, Five Stars… But Is It the Right Medicare Plan?

What the newly released 2027 Medicare ratings tell us, and what they don’t.

Last Thursday, CMS released its Medicare Advantage and Part D Star Ratings for 2027. For insurance companies, these ratings are extremely important and affect the insurance companies’ overall profitability.

For Medicare beneficiaries, they’re useful information, but they require some perspective.Medicare evaluates participating private health and prescription drug plans using a five-star rating system. A five-star rating represents the highest overall performance, while lower ratings indicate weaker results across the several measures CMS evaluates.

These measurements include factors such as preventive care, management of chronic conditions, medication safety, customer service, and members’ overall experiences with their coverage. The ratings are based on performance data from earlier measurement periods, rather than a guarantee of what any individual will experience next year.

This year’s results contain some interesting developments.

According to CMS, approximately 71% of current Medicare Advantage prescription drug plan enrollees are in contracts receiving at least four stars for 2027. However, only 37% of the Medicare Advantage prescription drug contracts offered in 2027 received ratings that high. In other words, a relatively small share of contracts accounts for a substantial portion of enrollment in higher-rated coverage.

One particularly noteworthy change involves Humana. The insurer reported that approximately 95% of its Medicare Advantage members are associated with contracts rated four stars or higher for 2027, compared with approximately 20% for 2026. That’s a substantial improvement, and it has important financial implications for the company because Medicare uses quality ratings in determining certain payments to insurers (a.k.a. profitability).

But here’s where I think beneficiaries need to be careful. A four- or five-star plan isn’t necessarily the best plan for your individual circumstances.

Imagine two Medicare Advantage plans available in your county. One has a five-star rating but doesn’t include your preferred specialist in its network. The other has a four-star rating, includes your doctors and hospital, and provides more favorable coverage for the prescriptions you take.

Which is the better plan? For many people, the second option is most likely the more appropriate choice. The Star Rating tells you something about overall performance. It doesn’t tell you everything about how that plan will work for you.

And there is another consideration.

The ratings released for 2027 will influence Medicare Advantage quality bonus payments in 2028. That makes them important to insurers, but those future financial consequences shouldn’t be confused with an immediate improvement in your personal benefits.

Closing Thoughts

When reviewing your Medicare coverage this fall, I recommend treating Star Ratings as just one part of the decision, but starting with your doctors, hospitals, prescriptions, and anticipated healthcare costs are definitely more important.

Then consider the plan’s quality rating. A good Medicare plan should provide more than a strong rating. It should provide coverage that works for you. And if you’re still concerned about change next year, just remember if you have a Medicare Advantage plan in January, you still have the option to change once between January 1st and March 31st the following year during the Medicare Advantage Open Enrollment Period.

Important Disclosures

Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark.