Vermont Blue Advantage Exits Medicare Advantage Market in 2026 Amid Financial Strains
Blue Cross Blue Shield of Vermont announced it will discontinue its Vermont Blue Advantage Medicare Advantage plans in 2026, affecting approximately 26,000 enrollees. The decision also includes ending employer-sponsored retiree plans, with no current plans for reentry contingent on market conditions and potential opportunities. This move follows unsuccessful contract renewal attempts for retired teachers' coverage after a proposed 50% premium hike, which was deemed unsustainable by state authorities.
Vermont Blue Advantage, in partnership with its parent company in Michigan, has faced significant financial losses, contributing to the insurer's $152 million deficit from 2021 to 2024, with Medicare Advantage operations accounting for at least 20% of these losses. Concurrently, national trends show Medicare Advantage providers scaling back due to evolving federal regulations and diminishing plan profitability.
The withdrawal significantly reduces Medicare Advantage options for Vermonters, with UnitedHealthcare also exiting the Vermont market, eliminating coverage for around 7,800 policyholders. Currently, only Humana Advantage plans remain available in select counties. Employer-sponsored retiree plans, however, retain alternatives, as evidenced by the Vermont Treasurer's office contracting HealthSpring to provide coverage for retired teachers and state college retirees, offering a comparatively moderate 16.2% premium increase.
This transition is expected to ease financial strain on state resources and pension liabilities. HealthSpring's larger scale and experience are projected to provide more stable and affordable coverage solutions compared to the previous provider. However, concerns remain about the impact on Medicare beneficiaries shifting back to traditional Medicare, particularly regarding the affordability and accessibility of Medigap supplemental insurance.
Federal and state regulations protect individuals losing Medicare Advantage coverage from discriminatory pricing or denial of Medigap coverage due to pre-existing conditions, though high costs may still influence enrollment decisions. The state anticipates increased demand for Medicare counseling services to assist affected beneficiaries amid the upcoming open enrollment period and special enrollment window extending through February 2026.
The evolving landscape of Medicare Advantage in Vermont underscores broader challenges in maintaining sustainable insurance offerings within tight regulatory and financial frameworks. Industry stakeholders and policymakers continue to monitor the market for opportunities to restore competitive and viable Medicare options for residents.