Humana Cuts Medicare Advantage Plans While Aiming for Profitability

Humana’s plan to eliminate Medicare Advantage offerings affecting approximately 600,000 members in 2027 is more than a geographic retreat. It is a clear signal that disciplined profitability is replacing unchecked enrollment growth across the market.

The decision marks Humana’s second consecutive year of Medicare Advantage plan reductions as the company works toward a sustainable pretax margin of at least 3% by 2028. Approximately 8% of Humana’s 7.2 million Medicare Advantage members could be affected by the upcoming changes.

For agents and agencies, the immediate story is member disruption. For carriers, the larger lesson is that even substantial revenue and membership growth cannot compensate indefinitely for weak county-level economics, rising medical costs, lower quality bonus payments and benefit designs that do not produce acceptable returns.

A Deliberate Reset After Rapid Growth

Humana already narrowed its Medicare Advantage footprint for 2026 by withdrawing from three states and 194 counties. Those reductions followed an even larger restructuring for 2025, when the company eliminated unprofitable plans and affected roughly 500,000 members.

The 2026 pullback did not stop Humana from growing. Competitive benefits, stronger retention and new sales helped the company add more than one million Medicare Advantage members. Humana continues to expect individual Medicare Advantage membership growth of approximately 25% during 2026.

That growth, however, created a portfolio with widely varying profitability. Humana is now examining plans at the lower end of its financial performance and removing products that do not support its longer-term margin targets.

“Our No. 1 priority is 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%.”

Celeste Mellet, Chief Financial Officer, Humana

Humana does not expect all 600,000 affected members to leave the company. Management anticipates retaining approximately 40% of them, or about 240,000 people, by transitioning them into other Humana plans available in their markets.

That distinction matters. A plan exit does not necessarily equal a lost customer. When a carrier has adjacent products, adequate provider networks and an organized member communication strategy, it may be able to preserve a meaningful share of the relationship.

The Numbers Behind the Strategy

Humana’s quarterly results illustrate why Medicare Advantage performance cannot be judged by enrollment or revenue alone. The company produced substantial growth while still disappointing investors who expected stronger earnings momentum and a more favorable outlook.

Why Higher Revenue Does Not Automatically Mean Higher Margin

Humana reported quarterly revenue of approximately $40.9 billion, an increase of 26% from the prior year. Net income rose 27% to $694 million, while adjusted earnings reached $7.61 per share.

Those results were supported by membership growth and higher Medicare Advantage payment rates. At the same time, Humana’s insurance benefit ratio reached 91.2%, meaning more than 91 cents of every premium dollar was being used for medical benefits and related expenses.

A high benefit ratio is not automatically a sign of poor performance, particularly in a regulated program designed to finance healthcare. It does, however, leave less room for administrative expenses, investments, unexpected utilization and profit. Small changes in inpatient admissions, outpatient procedures, prescription costs or risk adjustment can have an outsized effect on earnings.

Medical utilization among older adults has remained elevated as patients receive procedures and services that were postponed or disrupted during the pandemic. Insurers have responded by changing benefits, adjusting provider arrangements and withdrawing from counties where projected funding does not adequately cover anticipated costs.

CMS finalized an estimated 2.48% increase in Medicare Advantage payments for 2027, representing more than $13 billion in additional industry funding before expected risk score trends. Even with that increase, each carrier must evaluate whether local reimbursement, member health needs, provider costs, quality performance and benefit commitments produce sustainable economics.

Star Ratings Have Become a Financial and Distribution Issue

Humana’s profitability challenge is not based solely on medical utilization. Lower Medicare Advantage Star Ratings are significantly reducing the quality bonus payments the company receives from CMS.

Star Ratings measure areas including clinical outcomes, preventive care, medication adherence, customer experience, complaint handling and access to services. They also influence quality bonus payments and the rebate dollars carriers can use to fund supplemental benefits.

Only about 20% of Humana members were enrolled in plans rated four stars or higher for the 2026 rating year. The company has consequently lowered its 2026 GAAP earnings guidance to at least $6.52 per share from its previous forecast of at least $8.36.

Humana maintained adjusted earnings guidance of at least $9 per share, but the difference between adjusted and reported results highlights how quality performance can affect carrier finances well beyond the clinical department.

Star Ratings influence benefit budgets, product competitiveness, marketing opportunities and the resources available for member programs. For agencies, those effects can eventually appear as different premiums, narrower benefits, revised service areas or fewer plan choices.

“We don’t know industry thresholds. So while we feel good about our substantial progress, we cannot guarantee an outcome.”

Jim Rechtin, President and Chief Executive Officer, Humana

Humana is targeting top-quartile Star Ratings performance by the 2028 bonus year. The challenge is that a carrier can improve its own results and still miss a desired rating because CMS cut points are partly influenced by how competing contracts perform.

What Agents and Agencies Should Prepare For

Specific county and plan details will determine which members are affected, but agencies serving Medicare clients should begin preparing before the fall enrollment rush. Waiting until a worried beneficiary calls with a nonrenewal notice can turn a manageable review into an urgent replacement search.

• Identify exposure early: Review the agency’s Humana book by county, plan and contract.
• Verify complete alternatives: Compare doctors, hospitals, prescriptions, pharmacies, costs and supplemental benefits.
• Prioritize complex cases: Contact clients receiving ongoing treatment or taking expensive medications first.
• Document every review: Record the client’s providers, prescriptions, priorities and final enrollment decision.
• Coordinate communications: Ensure carrier notices and agency outreach deliver consistent, accurate information.

The Member Conversation Will Start Before Enrollment

Medicare Advantage plans send Annual Notices of Change each fall explaining updates to costs, benefits and service areas. Notices are generally delivered before September 30, while Medicare’s annual enrollment period runs from October 15 through December 7.

Members often focus first on whether their premium or dental allowance changed. Agents should expand the conversation to include provider participation, prescription formularies, prior authorization rules, specialist access, maximum out-of-pocket limits and travel needs.

A replacement plan that looks similar on a summary page may function very differently for someone managing cancer treatment, diabetes, kidney disease, heart conditions or multiple specialist relationships.

Retention Will Depend on Transition Quality

Humana’s expected 40% recapture rate shows how member retention can continue even when a specific plan disappears. The outcome will depend on whether alternative Humana products remain available, meet the member’s healthcare needs and compare favorably with competing plans.

Agents should avoid assuming that staying with the same carrier is automatically the best choice. They should also avoid assuming that every affected member must leave. A documented, needs-based comparison protects the beneficiary while helping the agency preserve trust.

What Carriers Can Learn From the Pullback

Humana’s strategy reinforces the importance of evaluating Medicare Advantage at the market, county, product and member-cohort levels. A carrier can report strong national growth while specific plans produce inadequate returns because of local provider costs, utilization patterns, risk characteristics or benefit commitments.

Rather than reducing benefits evenly across its entire portfolio, Humana is concentrating changes among plans with lower profitability and capital returns. Many of the affected plans are rated 3.5 stars or lower, although management has indicated that Star Ratings were not the primary reason for each exit.

The company is also prioritizing markets with greater value-based care penetration. These arrangements can give insurers and providers stronger incentives to coordinate care, improve preventive services, manage chronic conditions and reduce avoidable hospital use.

For carriers, the operational challenge is balancing three competing goals: maintaining attractive benefits, protecting member continuity and producing adequate returns. Cutting too deeply can weaken retention and distribution relationships. Moving too slowly can prolong losses and reduce the resources available for future investment.

Diversification Provides Another Path to Stability

Humana is not relying exclusively on Medicare Advantage plan redesign to improve performance. Its CenterWell health services division continues to expand through senior-focused primary care, home health and pharmacy operations.

CenterWell Senior Primary Care reported year-to-date patient growth of approximately 130,900 people, an increase of 27%. Humana has also expanded its provider presence through acquisitions in Florida, including The Villages Health and MaxHealth.

The company is broadening its Medicaid presence as well. Humana received a statewide Illinois Medicaid managed care contract expected to begin in January 2027 and secured an extension of its Florida Medicaid contract.

These businesses create additional revenue sources and may strengthen Humana’s ability to influence care delivery. They also reflect a broader carrier strategy of moving beyond financing claims toward coordinating care across primary care, pharmacy, home health and government programs.

What the Industry Should Watch Next

The first major signal will be the final geographic scope of Humana’s 2027 exits. Agencies will need county-level details to identify affected clients and determine whether alternative Humana plans remain available.

The second will be the design of the plans Humana keeps. The company has said it wants to preserve stable benefits in stronger-performing products, but premiums, provider networks, prescription coverage and supplemental benefits will determine whether members view those alternatives as comparable.

The third will be Humana’s actual recapture rate. Retaining approximately 40% of affected members would demonstrate the value of having multiple products, organized outreach and recognizable carrier relationships. A lower result could suggest that competing plans offered stronger benefits or broader access.

Finally, the industry will be watching Humana’s Star Ratings progress. Improving quality performance could restore bonus payments, strengthen future benefit packages and reduce pressure for additional geographic retrenchment. Falling short could make the path to a sustainable 3% margin more difficult.

Humana’s pullback should not be viewed simply as a carrier abandoning growth. It is a shift toward more selective growth, with membership, benefits and market presence evaluated against long-term financial sustainability. For agents, the practical responsibility is helping affected members move through that transition without losing access to the doctors, medications and care they depend on. For carriers, the message is equally clear: durable Medicare Advantage growth requires strong quality results, disciplined pricing and a portfolio that works one county at a time.