Medicare Advantage cuts may strip coverage from 5 million retirees

Medicare’s annual open enrollment period, which began last week, threatens to strip coverage from up to 5 million retirees as private insurance companies pare back their offerings to offset rising costs, money.com reported. This contraction forces beneficiaries to re-evaluate their healthcare options ahead of the upcoming fiscal year.

Majority of Eligible Americans Choose Private Medicare Advantage Plans

Based on statistics provided by KFF, a nonprofit healthcare organization, roughly 55% of the approximately 70 million Americans who qualify for Medicare are signed up for a private Medicare Advantage plan in 2026. This marks the fourth year in a row that a majority of eligible Americans chose a private option over traditional Medicare. Heather Schreiber, founder of HLS Retirement Consulting, notes that cost remains one of the primary drivers for this preference. These plans typically feature more affordable monthly premiums, occasionally dropping to $0, whereas traditional Medicare carries a standard premium of $202.90 a month per person in 2026 alongside surcharges for high-income enrollees.

Insurers frequently package Medicare Advantage plans with prescription drug coverage, eliminating the need for traditional Medicare enrollees to purchase a separate policy. Many plans also bundle dental and vision benefits, areas where traditional Medicare participants must pay out of pocket or secure standalone policies. Perks such as over-the-counter medication debit cards and gym memberships make these private options more attractive to consumers.

The Trade-Offs of Supplemental Perks

Lower upfront costs and bundled extras conceal significant operational restrictions. Unlike traditional Medicare, which grants access to virtually any doctor and hospital, Medicare Advantage plans enforce strict provider networks, prior authorization requirements, and other administrative limitations similar to employer-sponsored health insurance.

Utilization rates for supplemental perks remain low. Gretchen Jacobson, vice president of Medicare policy at the nonprofit Commonwealth Fund, stated via email that about 3 in 10 Medicare Advantage enrollees surveyed reported using none of their supplemental benefits in the prior year.

A Rare Window for Traditional Medicare and Medigap

Losing a Medicare Advantage plan provides an unusual regulatory opening. While traditional Medicare covers 80% of most medical services outside of long-term care, enrollees face the remaining 20% without an out-of-pocket spending limit. Catastrophic medical events can thus create severe financial exposure, prompting many beneficiaries to purchase supplemental Medigap plans.

Initial eligibility windows allow retirees to buy Medigap policies without medical underwriting, but subsequent applications allow insurers to charge higher rates, limit coverage, or deny enrollment entirely. Discontinued Medicare Advantage plans serve as one of the few exceptions granting guaranteed-issue Medigap rights. Schreiber highlights that this dynamic provides a rare opportunity for retirees experiencing worsening health to transition back to traditional Medicare paired with a Medigap policy and a separate prescription drug plan.

Evaluating New Plan Options Carefully

Retirees forced to select a new Medicare Advantage plan should prioritize network adequacy over premium pricing. Paul Ginsburg—who serves as a professor of health policy at the University of Southern California and directs the Center on Health Policy at the Brookings Institution—recommends that participants first confirm whether a specific plan covers their preferred hospitals and existing doctors. Prescription drug formularies represent the next critical evaluation point for individuals taking regular, expensive medications.

Jenn Kerfoot, president and COO of health technology firm DUOS, advises ignoring promotional marketing in favor of fine print details regarding perk limitations and coverage inclusions. Insurers frequently alter formularies, networks, and out-of-pocket structures even when monthly premiums remain flat.

While Medicare Advantage brokers assist in sorting through options, commissions can incentivize sales toward specific plans rather than consumer needs. Unbiased advice and unbiased plan comparison tools are available through the government’s official plan finder and the nonprofit State Health Insurance Assistance Program.

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