Health insurers’ rates skyrocket for Medicare–what this means for your wallet!
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In a surprising turn of events that's sure to have a ripple effect on the wallets of many seniors, US health insurers have seen a significant jump in their stocks as Medicare payment rates for 2026 are set to exceed expectations.
This news, while potentially positive for investors, raises concerns for Medicare beneficiaries about what these changes could mean for their future healthcare costs.
Medicare, the federal health insurance program for people who are 65 or older, as well as for some younger individuals with disabilities, is a cornerstone of healthcare in retirement.
The program's payment rates are a critical factor in determining the cost of premiums, deductibles, and out-of-pocket expenses for beneficiaries.
The recent announcement indicates that insurers will receive higher payments for their Medicare Advantage plans, which are an alternative to the traditional Medicare program and are offered by private companies approved by Medicare.
The US government has finalized a 5.06% average increase in reimbursement rates for 2026 Medicare Advantage plans—a jump that’s more than twice the initial proposal made in January.
These payments, which are provided to private insurers overseeing Medicare coverage for seniors and individuals with disabilities, play a key role in shaping monthly premiums, available plan benefits, and insurers' bottom lines.
The Impact on Seniors and the Healthcare Market
Higher reimbursement rates are expected to benefit major US health insurers such as UnitedHealth Group and Humana, which have been facing significant medical expenses tied to government-sponsored Medicare and Medicaid programs.
Following the announcement, shares of UnitedHealth and Elevance Health climbed approximately 6% in after-hours trading, while CVS Health saw a 6.7% increase. Humana's stock surged by 11.5%, and Cigna shares rose by 1% during extended trading.
Bernstein analyst Lance Wilkes said the finalized rate serves as “visible evidence of [the] Trump administration’s support for [the] MA program.”
The Centers for Medicare & Medicaid Services (CMS), the federal agency that manages Medicare and Medicaid, had initially proposed a 2.2% payment increase for 2026. In contrast, it had announced a 0.2% reduction in reimbursement rates for 2025.
According to CMS, the updated rate reflects new information about rising costs for insurers, including payment data collected through the fourth quarter of 2024.
"We're encouraged that CMS is supportive of this important program," a CVS spokesperson stated, noting that 88% of its Medicare Advantage members are enrolled in CMS plans rated 4 stars or higher.
As insurers "review the new policies released in the last two days, they will continue to focus on helping seniors stay healthy, closing gaps in care and supporting those with chronic illness," according to a statement from the industry lobbying group America’s Health Insurance Plans.
Navigating the Changes: Tips for Seniors
1. Review Your Medicare Advantage Plan: Take a close look at your current plan's costs and benefits. Be on the lookout for any notifications from your insurer about changes for the upcoming year.
2. Compare Plans During Open Enrollment: Medicare's open enrollment period is an excellent time to compare different plans and see if there's a more cost-effective option that meets your healthcare needs.
Source: WBNS 10TV / Youtube.
3. Budget for Potential Increases: Start planning for the possibility of higher healthcare costs in your budget. This may involve setting aside extra savings or exploring ways to reduce other expenses.
4. Seek Assistance: If you're concerned about affording your healthcare, look into programs that can help with Medicare costs, such as Medicaid, Medicare Savings Programs, or the Extra Help program for prescription drugs.
How do you feel about the potential increase in Medicare payment rates to insurers? Are you concerned about how this might affect your healthcare costs? Do you have any tips or strategies for managing healthcare expenses in retirement? Share your thoughts, experiences, and questions in the comments below!
This news, while potentially positive for investors, raises concerns for Medicare beneficiaries about what these changes could mean for their future healthcare costs.
Medicare, the federal health insurance program for people who are 65 or older, as well as for some younger individuals with disabilities, is a cornerstone of healthcare in retirement.
The program's payment rates are a critical factor in determining the cost of premiums, deductibles, and out-of-pocket expenses for beneficiaries.
The recent announcement indicates that insurers will receive higher payments for their Medicare Advantage plans, which are an alternative to the traditional Medicare program and are offered by private companies approved by Medicare.
The US government has finalized a 5.06% average increase in reimbursement rates for 2026 Medicare Advantage plans—a jump that’s more than twice the initial proposal made in January.
US health insurers have seen their stock prices increase following the announcement of Medicare payment rates for 2026 that were higher than expected. Image source: CNBC / Youtube.
These payments, which are provided to private insurers overseeing Medicare coverage for seniors and individuals with disabilities, play a key role in shaping monthly premiums, available plan benefits, and insurers' bottom lines.
The Impact on Seniors and the Healthcare Market
Higher reimbursement rates are expected to benefit major US health insurers such as UnitedHealth Group and Humana, which have been facing significant medical expenses tied to government-sponsored Medicare and Medicaid programs.
Following the announcement, shares of UnitedHealth and Elevance Health climbed approximately 6% in after-hours trading, while CVS Health saw a 6.7% increase. Humana's stock surged by 11.5%, and Cigna shares rose by 1% during extended trading.
Bernstein analyst Lance Wilkes said the finalized rate serves as “visible evidence of [the] Trump administration’s support for [the] MA program.”
The Centers for Medicare & Medicaid Services (CMS), the federal agency that manages Medicare and Medicaid, had initially proposed a 2.2% payment increase for 2026. In contrast, it had announced a 0.2% reduction in reimbursement rates for 2025.
According to CMS, the updated rate reflects new information about rising costs for insurers, including payment data collected through the fourth quarter of 2024.
The news seems to have a positive impact on the market sentiment towards health insurance companies. Image source: National Cancer Institute / Unsplash.
"We're encouraged that CMS is supportive of this important program," a CVS spokesperson stated, noting that 88% of its Medicare Advantage members are enrolled in CMS plans rated 4 stars or higher.
As insurers "review the new policies released in the last two days, they will continue to focus on helping seniors stay healthy, closing gaps in care and supporting those with chronic illness," according to a statement from the industry lobbying group America’s Health Insurance Plans.
Navigating the Changes: Tips for Seniors
1. Review Your Medicare Advantage Plan: Take a close look at your current plan's costs and benefits. Be on the lookout for any notifications from your insurer about changes for the upcoming year.
2. Compare Plans During Open Enrollment: Medicare's open enrollment period is an excellent time to compare different plans and see if there's a more cost-effective option that meets your healthcare needs.
Source: WBNS 10TV / Youtube.
3. Budget for Potential Increases: Start planning for the possibility of higher healthcare costs in your budget. This may involve setting aside extra savings or exploring ways to reduce other expenses.
4. Seek Assistance: If you're concerned about affording your healthcare, look into programs that can help with Medicare costs, such as Medicaid, Medicare Savings Programs, or the Extra Help program for prescription drugs.
How do you feel about the potential increase in Medicare payment rates to insurers? Are you concerned about how this might affect your healthcare costs? Do you have any tips or strategies for managing healthcare expenses in retirement? Share your thoughts, experiences, and questions in the comments below!
