Humana announced plans to exit Medicare Advantage plans in 2027 that will affect approximately 600,000 members, marking the second consecutive year the insurer has withdrawn from select markets as it pursues aggressive profitability targets.
The Louisville-based insurer disclosed the decision during its second-quarter earnings call on July 29, 2026, stating that it will shed about 8% of its 7.2 million Medicare Advantage members by exiting its least profitable plans and markets. CFO Celeste Mellet said the company will “cut off the lower tail of profitability” rather than reduce benefits uniformly across its portfolio.
Humana’s primary goal is to return to a sustainable margin of at least 3% by 2028, a target the company views as essential to long-term competitiveness. Despite the exits, Humana expects to recapture approximately 40% of the affected members—about 240,000 people—by enrolling them in other company plans that generate stronger returns.
The exits reflect broader financial pressures facing the Medicare Advantage industry. Humana’s profitability has been strained by rising medical costs and lower quality bonus payments tied to Star Ratings, which determine compensation from the Centers for Medicare and Medicaid Services. The insurer’s second-quarter pre-tax margin sat at 1.8%, down sharply from 6.7% in 2020, according to analyst reports.
Humana’s strategy contrasts with its aggressive enrollment growth: the company reported a 25% increase in individual Medicare Advantage membership in 2026 over 2025, partly because it maintained more generous benefits than competitors. However, those generous offerings have come at a cost to margins, prompting the company to recalibrate its approach toward profitability.
The insurer’s plan exits are part of a broader industry retrenchment. About 10% of the Medicare Advantage market was forced to find new plans in 2026 as multiple insurers, including UnitedHealth and Aetna, withdrew from unprofitable markets. Industry observers attribute the exits to elevated medical costs, particularly among older beneficiaries using more expensive care following the coronavirus pandemic, combined with payment pressures from regulatory changes.
Members affected by Humana’s 2027 exits will receive notification letters in September and will have an enrollment window to switch to alternative coverage. The insurer has emphasized that affected members will have other plan options available, though finding comparable coverage with the same benefit levels may prove challenging in some markets.
Humana faces additional headwinds from Star Ratings volatility, which directly impacts revenue. The company has been litigating its Star Ratings calculations with the CMS, arguing that the methodology is overly complex and subject to unpredictable changes. A single half-star change can equate to hundreds of millions of dollars in lost quality bonus payments for a plan.
The company is pursuing margin recovery through multiple avenues beyond plan exits. Humana is expanding its CenterWell health services division, which reported 27% membership growth in CenterWell Senior Primary Care, and has recently acquired primary care providers including The Villages Health in Florida and MaxHealth. These moves aim to shift seniors toward higher-quality, lower-cost value-based care arrangements.
Sources
- Healthcare Finance News — Humana’s announcement of 2027 Medicare Advantage plan exits affecting 600,000 members and margin recovery targets
- Healthcare Dive — Details on the exits, member recapture expectations, industry context, and Humana’s margin challenges
- Becker’s Payer — Confirmation of affected member count and margin recovery focus
- MarketWatch / Morningstar — Industry-wide Medicare Advantage exit trends and forced disenrollment rates
