Fans of Medicare Advantage can rejoice since payments to these well-liked programs are expected to increase significantly in 2026.
The Centers for Medicare & Medicaid Services (CMS) delivered the final word on April 7, locking in a 5.06% average rise for Medicare Advantage (MA) plans.
That’s more than double the 2.23% rise first discussed in the Advance Notice back in January.
This change is worth looking into if you’re a member of one of these private plans or are simply interested in where healthcare spending is going. It’s a $25 billion windfall for insurers and has everyone talking.
What is causing this spike to be larger than anticipated? CMS highlights newer data as the main attraction.
According to the agency’s Rate Announcement, “the change is primarily due to the incorporation of additional fee-for-service payment data, including through the fourth quarter of 2024.”
WATCH: Shares of US health insurers jumped after a bigger-than-expected increase in the government’s reimbursement rates for Medicare Advantage plans in 2026 signaled some relief for a sector burdened with steep medical costs https://t.co/jmC7aHXm4n pic.twitter.com/paV0q0sTox
— Reuters Business (@ReutersBiz) April 9, 2025
The effective growth rate, a crucial indicator linked to Medicare expenses, increased from 5.93% in the plan to a staggering 9.04% as a result of the new data.
It indicates that CMS is making adjustments to stay up with the escalating costs of healthcare.
Although the financial flow is left up to plans like UnitedHealth and Humana, this could result in more stable premiums and benefits for beneficiaries.
How Medicare Advantage benefits exceeded the original plan in 2026?
This is not a haphazard change; rather, it is the first significant Medicare change under the Trump administration and a departure from the more stringent 0.2% 2025 dip under the Biden administration.
Industry voices are applauding. Mary Beth Donahue, CEO of Better Medicare Alliance, said, “We commend the Trump administration for protecting seniors and fully funding Medicare Advantage.”
For insurers struggling with rising costs and utilization spikes, this 5.06% boost—the largest benchmark leap in ten years—feels like a lifeline after years of smaller increases.
In after-hours trading, the stocks of major companies, such as Humana, surged 11.5%, indicating that Wall Street was heavily betting on this news.
The timing is also noteworthy. CMS complied with plans in spite of opposition and completed this along with a three-year phase-in of risk adjustment revisions. CMS stated that “finalizing the model will improve payment accuracy,” with the goal of reducing overcoding while keeping plans alert.
Every percentage point counts, as Massachusetts is expected to spend $9.2 trillion over the next ten years.
Even though the specifics are still being worked out, this could influence everything from plan options to out-of-pocket expenses for the 65 million Medicare beneficiaries—more than half of whom live in Massachusetts.
Source: Marca
