Every fall, the Centers for Medicare & Medicaid Services releases its official star ratings for Medicare Advantage and Part D prescription drug plans. For 2026, those ratings are now public — and if you're enrolled in a Medicare Advantage plan, or thinking about joining one, understanding what these numbers actually mean could save you real money and real frustration. The ratings run from 1 star (poor) to 5 stars (excellent), and they're calculated using dozens of performance measures that CMS collects from plans, pharmacies, and beneficiaries themselves.
The star rating system was designed to give Medicare beneficiaries an apples-to-apples comparison tool. CMS evaluates plans across five broad categories: staying healthy (screenings and vaccines), managing chronic conditions, member experience, complaints and appeals, and drug plan performance. Each category carries a different weight in the final calculation, with member experience and complaints carrying particularly heavy influence in recent years. A plan that scores well on paper but generates a flood of grievances from its own members will see that reflected in its overall rating.
For 2026, the national average star rating across Medicare Advantage plans with prescription drug coverage sits at approximately 3.9 stars — a slight decline from recent years, partly because CMS tightened its measurement methodology. That tightening matters: some plans that held 4-star or 5-star ratings in prior years dropped to 3.5 stars in 2026, which has real financial consequences for both the insurer and, indirectly, for you as a member. Plans rated 4 stars or above receive quality bonus payments from CMS — sometimes hundreds of millions of dollars annually for large insurers — and those funds are supposed to flow back into supplemental benefits like dental, vision, hearing, and over-the-counter allowances.
Here's where hospital indemnity coverage enters the picture in a way most beneficiaries don't anticipate. Medicare Advantage plans — even highly rated ones — still expose you to cost-sharing when you're hospitalized. In 2026, a typical Medicare Advantage plan may charge a copay of $250 to $400 per day for the first several days of an inpatient hospital stay, or a flat admission copay that can run $1,000 to $1,500 or more depending on the plan. A 5-star rating tells you the plan manages chronic conditions well and answers the phone promptly. It does not tell you what happens to your bank account when you spend five days in the hospital after a hip replacement or a cardiac event.
Hospital indemnity insurance is a separate, supplemental product — not part of Medicare Advantage itself — that pays you a fixed cash benefit for each day you're hospitalized, typically ranging from $100 to $500 per day depending on the policy you purchase. Some plans also pay a lump-sum benefit upon admission. These policies are designed specifically to offset the out-of-pocket costs that Medicare Advantage plans impose through their cost-sharing structures. If your Medicare Advantage plan charges a $300-per-day copay for days one through five of a hospital stay, a hospital indemnity policy paying $300 per day can effectively zero out that exposure. The benefit is paid directly to you — not to the hospital — so you can use it however you need, including covering transportation, meals for a family caregiver, or lost income.
The connection between star ratings and hospital indemnity planning is this: a lower-rated Medicare Advantage plan is more likely to face benefit cuts, network changes, or even contract termination in coming years. CMS has the authority to terminate a plan's contract if it receives fewer than 3 stars for three consecutive years. When that happens, enrolled members receive a Special Enrollment Period — typically running from the date of the termination notice through the end of the following month — allowing them to switch to a different Medicare Advantage plan or return to Original Medicare. If you're relying on a low-rated plan and it gets terminated, you may find yourself scrambling to find new coverage mid-year, and any hospital indemnity policy you've purchased will need to be re-evaluated for compatibility with your new plan's cost-sharing structure.
For beneficiaries currently enrolled in a plan that dropped in star rating for 2026, the Annual Enrollment Period — running October 15 through December 7 each year — is the primary window to make a change. During AEP, you can switch from one Medicare Advantage plan to another, drop Medicare Advantage and return to Original Medicare (with or without a Part D drug plan), or add or change a Part D plan. Changes made during AEP take effect January 1 of the following year. There's also the Medicare Advantage Open Enrollment Period, which runs January 1 through March 31 each year, during which you can make one plan change — but this window is more limited and doesn't allow you to switch from Original Medicare to Medicare Advantage.
One underappreciated feature of the star rating system is the 5-star Special Enrollment Period. If a plan in your area holds a 5-star rating, you can switch into that plan at any time during the year — not just during AEP. This is one of the few mid-year enrollment opportunities available to most Medicare beneficiaries outside of qualifying life events. If you're currently in a 3-star plan and a 5-star option exists in your county, you can make that switch in February, June, or any other month. You can only use this SEP once per calendar year, and the change takes effect the first day of the following month.
When evaluating star ratings alongside hospital indemnity coverage, it's worth understanding that not all Medicare Advantage plans are structured the same way. HMO plans typically require you to use a specific network of doctors and hospitals, with limited or no coverage for out-of-network care except in emergencies. PPO plans offer more flexibility but usually come with higher premiums or cost-sharing. PFFS (Private Fee-for-Service) plans and SNPs (Special Needs Plans) serve more specific populations. A 4-star HMO and a 4-star PPO may have very different hospital cost-sharing structures, which directly affects how much hospital indemnity coverage you'd want to carry alongside either one.
The practical advice here is to look up your specific plan's star rating on Medicare.gov's Plan Finder tool, then cross-reference it with your plan's Evidence of Coverage document — specifically the section on inpatient hospital benefits. That document will tell you exactly what you'll owe per day or per admission if you're hospitalized. Once you know that number, you can have an informed conversation with a licensed insurance agent about whether a hospital indemnity policy makes sense for your situation, and at what daily benefit level. Hospital indemnity premiums vary widely by age, benefit amount, and insurer, but a policy paying $200 per day for someone in their late 60s or early 70s might cost $50 to $100 per month — a meaningful but manageable expense compared to a $1,500 hospital admission copay.
State-level variations matter here too. Some states have additional consumer protections around Medicare Advantage marketing and enrollment that go beyond federal minimums. Your State Health Insurance Assistance Program — known as SHIP — offers free, unbiased counseling from trained volunteers who can help you compare star ratings, review your plan's cost-sharing, and evaluate whether supplemental coverage like hospital indemnity makes financial sense for your specific health history and budget. SHIP counselors are not licensed to sell insurance, which means their advice comes without any sales pressure. You can find your local SHIP program through Medicare.gov or by calling 1-800-MEDICARE.
Finally, it's worth noting that star ratings are a backward-looking measure — they reflect plan performance from the prior year, not a guarantee of future quality. A plan that earned 4.5 stars in 2025 based on 2024 data could face network disruptions, benefit reductions, or administrative problems in 2026 that won't show up in the ratings until 2027. That's why star ratings should be one input in your decision-making, not the only one. Checking your plan's formulary for your specific medications, confirming your doctors remain in-network, and understanding your hospital cost-sharing exposure are equally important steps — and ones that no star rating can do for you automatically.