Important Information on Medicare Plans for 2027
Open Enrollment season for Medicare begins this week with beneficiaries facing fewer options as carriers scale back plans.
If you are a Medicare enrollee, then you should have received your Annual Notice of Change (ANOC) by now and, if you are like most Medicare beneficiaries, then the odds are unfortunately that you’ll toss it or ignore it. The ANOC details how your costs and coverage will be different next year. We highly recommend that you review your 2027 plan details because it’s unlikely to be identical to your 2026 plan.
Medicare Advantage Plans
About one million Medicare Advantage (the privately run alternative to traditional Medicare) members are in plans that are being discontinued for 2027. About 600,000 of these are Humana members who will be impacted by plans being terminated for 2027.1
If your Advantage plan is being discontinued, then the open enrollment period that begins on October 15 provides an opportunity for you to select a new one. If you don’t select a new one, then you’ll be automatically enrolled in traditional Medicare on January 1 and you’ll have to add a Part D drug plan and a Medicare Supplement (to fill the 20% Medicare benefit gap (i.e., “Medigap”)) on your own.
Part D Prescription Plans
The number of stand-alone Part D drug plans nationwide will fall for the fourth year in a row to 316 next year from 360, according to Kaiser Family Foundation, a health policy nonprofit. This means that the number of stand-alone Part D plans available to the average beneficiary will fall from 11 in 2026 to 9 in 2027.
Many Part D plan enrollees will see premium reductions or only modestly higher premiums if they keep their current plan, but others (in United Healthcare’s AARP-branded plans) will face substantially higher premiums.2
Unless you receive a ‘low-income subsidy’ in 2027, then do not expect to find a $0 premium Part D plans like the ones that have been available in the past.
Separately, you may see higher co-payments (from $0 to $3, for example, or from $5 to $10) for certain medications. Or you may see a co-payment change to coinsurance. Patients with coinsurance spend about six time more than those with just co-pays.
Or you may see your medication dropped from your plan entirely. Part D plans generally must cover at least two medications in each drug category, but they have leeway to pick and choose which ones they’ll cover. For example, while drug plans are required to include insulins, they may not cover the one that you use. The $2,100 out-of-pocket cap for 2027 only applies to medications covered your Part D drug plan and not to “Part B” drugs administered at a doctor’s office or a hospital’s outpatient department. It’s important to note that you will pay the full retail price for medications that are not covered by your Part D plan.
Shop your Plan each Year
If some or all of this sounds scary, then it’s not because Halloween is fast approaching. It’s because open enrollment season is here and the data tells us that only about ½ of Medicare beneficiaries open their ANOC each year and around 70% of Medicare beneficiaries do not shop their Part D prescription plan each year.
For those with original Medicare and a comprehensive Medicare Supplement (Medigap) plan, shopping your Part D prescription plan is the only “moving part” that you have to consider. We have recommended for years that you shop your Part D prescription drug plan (and your Medicare Advantage plan if you have one) during Open Enrollment each year and this has only become more important as a result of the Inflation Reduction Act. The best plan isn’t necessarily the one with the lowest monthly premium, but rather the one with the lowest overall cost.
You can continue to shop for the lowest cost plan using the Plan Finder tool available when you log into the Medicare.gov website.
We’re also happy to announce that ACM Wealth is continuing to partner with a third-party provider at no additional cost to help our clients shop for their Part D prescription drug plan as well as other Medicare plans (Medicare Supplement or Medicare Advantage) and health insurance plans for those younger than 65 years old. If you are interested, then contact your ACM Wealth Advisor for more information.
If you haven’t received the “Medicare & You 2027” handbook in the mail, then you can find it online here. This 100-plus-page resource shares important updates for 2027 plans, as well as detailed information about various types of plans and individuals’ rights and protections within the program.
$90 Social Security Payment on October 7
Lastly, some of you may have noticed that you received a $90 payment from Social Security on October 7. If you did, then you should know that this was a one-time $90 Medicare rebate. Over 20 million traditional Medicare Part B enrollees who pay standard Part B rates (so this excludes Advantage plan members and higher-earners who pay IRMAA) received this from the Medicare Improvement Fund as a rebate to help offset Part B premiums.3 If you qualified, then you automatically received the one-time payment and did not need to do anything to get it.
As always, we’ll follow-up with any additional changes as they occur and please let us know if you have any questions.
Sources:
- https://www.barrons.com/articles/medicare-open-enrollment-changes-shop-this-year-73a2b12d?mod=searchresults_article&pos=1
- https://www.kff.org/medicare/many-medicare-part-d-stand-alone-drug-plan-enrollees-will-see-modest-premium-increases-for-2027-but-others-could-pay-much-more-if-they-dont-switch-plans/
- https://www.cms.gov/newsroom/fact-sheets/medicare-improvement-fund-premium-rebate-frequently-asked-questions
Advisors Capital Management, LLC is an investment advisor registered with the United States Securities and Exchange Commission. Registration does not imply any degree of skill or training. All investing carries risk, including the potential for the loss of principal and past performance is no guarantee of future results. This content is for informational purposes only, can change at any time without notice, and is not investment advice or a recommendation to trade any security. Indices are not available for direct investment. We only provide services in jurisdictions where we are registered. Our disclosure brochure (ADV Part 2A) and customer relationship summary (ADV Part 3) are available at https://adviserinfo.sec.gov and upon request.
