Medicare Advantage — the privately administered alternative to Original Medicare that now covers more than 33 million Americans — is facing a period of serious market instability. For 2025, the number of plans exiting local markets reached levels not seen in over a decade, with major insurers including Humana, Aetna, and UnitedHealthcare pulling back from specific counties, regions, and even entire states. The result is that an estimated 1.5 to 2 million beneficiaries received notices in late 2024 informing them their plan would no longer be available — a disruption that can affect everything from which doctors you can see to how much you pay for prescriptions.
The root cause of this instability is a financial squeeze that has been building for several years. Medicare Advantage plans are paid a fixed monthly amount per enrollee by the federal government, a figure set by the Centers for Medicare & Medicaid Services (CMS) each year. For 2025, CMS finalized a payment rate that insurers argued did not keep pace with the actual cost of caring for their members, particularly as post-pandemic utilization of medical services — surgeries, specialist visits, inpatient stays — surged well above pre-COVID baselines. At the same time, CMS tightened rules around how plans could code patient diagnoses to boost their risk-adjustment payments, a practice that had inflated insurer revenues for years. The combination of lower effective payments and stricter oversight squeezed profit margins sharply, and some plans concluded that operating in certain markets was no longer financially viable.
For beneficiaries whose plans are discontinued, the immediate practical question is: what happens to your coverage? The good news is that federal rules protect you. When a Medicare Advantage plan exits your area, you automatically receive a Special Enrollment Period (SEP) that allows you to switch to a different Medicare Advantage plan in your area or return to Original Medicare (Parts A and B). This SEP typically runs from the date you receive your plan termination notice through February 28 of the following year if the exit takes effect January 1. You do not have to wait for the Annual Enrollment Period (October 15 – December 7) to make this change. CMS also requires that your terminating plan send you written notice at least 90 days before coverage ends, so you should have received a letter by early October 2024 if your 2025 plan was discontinued.
If you decide to return to Original Medicare after your Medicare Advantage plan exits, you will want to seriously consider adding a Medicare Supplement (Medigap) policy to cover the out-of-pocket costs that Original Medicare does not pay — including the 20% coinsurance for outpatient services, which has no annual cap. Here is where timing matters enormously. Under normal circumstances, Medigap insurers can use medical underwriting to deny you coverage or charge you higher premiums based on your health history. However, when you lose Medicare Advantage coverage through no fault of your own — including a plan exit — you have a guaranteed issue right to buy certain Medigap plans (specifically Plans A, B, C, F, K, or L, depending on when you first became eligible for Medicare) without any health questions. This guaranteed issue window lasts 63 days from the date your Medicare Advantage coverage ends. Missing this window could mean being locked out of Medigap coverage if you have significant health conditions.
Medigap premiums vary considerably by plan type, insurer, and location. In 2025, a Plan G policy — the most comprehensive option for people who became Medicare-eligible after January 1, 2020 — typically costs between $100 and $200 per month for a 65-year-old, though prices for a 75-year-old can run $150 to $280 or more depending on the state and insurer. Plan N, which has lower premiums but requires small copays for some office visits, may cost $80 to $160 per month for a 65-year-old. These are meaningful ongoing costs, but they provide predictability — something many beneficiaries value highly after experiencing the network restrictions and prior authorization requirements common in Medicare Advantage plans.
For those who want to stay in Medicare Advantage rather than return to Original Medicare, the key is acting quickly during your SEP to compare available plans in your ZIP code. The number of Medicare Advantage plans available per county has actually remained relatively high nationally — averaging around 40 to 50 plans per county in many urban areas in 2025 — even as some insurers exited. However, rural counties have been hit harder, with some areas seeing their plan options drop to just one or two. You can compare all available plans at Medicare.gov's Plan Finder tool, which lets you enter your specific medications and preferred doctors to estimate your total annual costs under each plan. Pay close attention to the plan's drug formulary, its network of in-network providers, and its maximum out-of-pocket limit, which in 2025 can be as high as $9,350 for in-network services under CMS rules.
Looking ahead to 2026, the instability may not be over. Several large insurers have signaled continued financial pressure in their Medicare Advantage businesses, and CMS's 2026 payment rates — finalized in April 2025 — while somewhat more favorable than 2025, may not be sufficient to reverse the trend in all markets. Humana, for instance, has publicly stated it is evaluating its Medicare Advantage footprint on an ongoing basis. This means beneficiaries should treat the Annual Enrollment Period each fall (October 15 – December 7) as a serious annual review, not a formality. Plans that exist today may not exist next year, and even plans that continue may change their premiums, drug formularies, or provider networks significantly from one year to the next.
If you are currently enrolled in Medicare Advantage and your plan has not exited but you are concerned about stability, there are proactive steps worth taking now. First, verify that your primary care physician and any specialists you see regularly are still in-network for your current plan — networks can change even when plans don't exit. Second, check your plan's Annual Notice of Change (ANOC), which must be mailed to you each September, to see if your premiums, copays, or drug coverage are changing for the coming year. Third, if you are in a county with limited plan options, consider whether Original Medicare plus a Medigap policy and a standalone Part D drug plan might offer more stability and provider access, even if the monthly premium is somewhat higher.
For help navigating these decisions, your State Health Insurance Assistance Program (SHIP) offers free, unbiased counseling from trained volunteers. SHIP counselors can walk you through plan comparisons, explain your enrollment rights, and help you understand the financial trade-offs between Medicare Advantage and Original Medicare. You can find your local SHIP contact through Medicare.gov or by calling 1-800-MEDICARE (1-800-633-4227). This is not a decision to make based on a television advertisement or a mailer from an insurance broker — the stakes are too high and the details too specific to your situation.