Medicare Advantage Premiums Are Falling for 2027 — but the Real Cost May Not Be

The federal government is promising cheaper Medicare Advantage and prescription drug premiums for 2027, even as consumer advocates and insurance brokers warn that the headline numbers understate what many older Americans will actually pay once they get sick.

A rate cut with an asterisk

The Centers for Medicare & Medicaid Services announced on September 28 that it expects the weighted average Medicare Advantage premium to fall from $14.37 a month in 2026 to $12 in 2027, a 16.5 percent drop, and projects that the average premium for Medicare Advantage plans bundled with drug coverage will fall 38 percent, from $11.32 to $7 a month after rebates. CMS Administrator Dr. Mehmet Oz framed the figures as evidence that the agency is "fighting to keep high-quality care options affordable and accessible for millions of beneficiaries."

The announcement lands eleven days before Medicare's annual open enrollment period opens on October 15 and runs through December 7, the single window each year in which the roughly 68 million people on Medicare can switch between Original Medicare and a private Medicare Advantage plan, change Advantage plans, or pick a new standalone drug plan for coverage that takes effect January 1, 2027. CMS and AARP's own breakdown of the 2027 numbers both point beneficiaries toward the same message: premiums are easing, but the details of any given plan still vary enormously by ZIP code and by what a person actually needs covered.

What the figures show, and what they leave out

• Standalone Part D drug plan premiums are projected to rise less than $1, from $35.09 to $36 a month.
• CMS expects roughly 34 million people to be enrolled in Medicare Advantage in 2027, about 47.4 percent of all Medicare beneficiaries, with 99 percent of beneficiaries able to pick at least one Advantage plan and 97 percent able to choose from ten or more.
• About 5,532 Advantage plans are expected to be on offer nationally, roughly level with the 5,553 available in 2026, and CMS says about eight in ten current enrollees can keep their existing plan at the same or a lower premium.
• The Advantage out-of-pocket maximum, the cap on what an enrollee pays before a plan covers 100 percent of costs, is rising to $9,850 for in-network care and $14,800 combined in- and out-of-network, up $600 and $900 respectively from 2026, according to figures cited in a financial columnist's breakdown of the CMS announcement.
• The standard Medicare Part B premium, which every beneficiary pays regardless of which plan they choose, was $202.90 a month in 2026; CMS has not yet set the 2027 figure, which it typically announces in November.

The gap between the falling headline premium and the rising out-of-pocket ceiling is the crux of the pushback the announcement has drawn. A $12 average monthly premium saves an enrollee roughly $28 over a full year compared with 2026. The increase in the worst-case out-of-pocket exposure is more than twenty times that.

Why premiums are easing now

Part of the Part D relief traces back to a temporary CMS demonstration program that has been subsidizing standalone drug plan premiums since 2025, holding the base premium down and capping how much it could rise year to year; that demonstration, which CMS says delivered $9.8 billion in subsidies over its two years, ends after 2026, which is one reason the standalone Part D premium is projected to tick up again even as Advantage-bundled drug premiums keep falling. On the Advantage side, insurers have been bidding more aggressively for enrollees heading into 2027, partly in response to a federal payment increase to Advantage plans of roughly 2.48 percent for the coming year.

That payment bump is smaller than the 3 to 4 percent increase insurers have typically built their benefit packages around, and brokers and health-policy analysts who track plan filings say many insurers are managing the squeeze by trimming the supplemental perks that have defined Advantage marketing for years, such as over-the-counter allowances, grocery and utility cards, dental benefits, and the "giveback" credits some plans use to offset a portion of the Part B premium. CMS's own announcement describes supplemental benefits as expected to "remain stable," but plan filings reviewed by trade publications and brokers this fall point to reductions in several of those categories even as premiums fall, which is the same pattern analysts have flagged in prior years when headline MA premiums dropped while plan generosity narrowed underneath.

Who is affected, and the split in reaction

The numbers touch most of the Medicare population either directly or indirectly: the roughly 34 to 36 million people projected to be in Medicare Advantage plans in 2027, plus everyone on Original Medicare who pays the Part B premium and anyone choosing a standalone Part D plan. CMS's public framing has been uniformly positive, emphasizing plan availability and the double-digit drop in the headline Advantage-drug premium.

Financial advisers and consumer-facing columnists have pushed back on that framing. Stacy Johnson, a certified public accountant and the founder of Money Talks News, argued in his analysis of the CMS figures that the modest premium savings are dwarfed by what a serious illness could cost under the same plans given the rising out-of-pocket caps.

"Buy health insurance for the year you get sick, not the year you feel fine."

Insurance brokers, for their part, are steering clients toward comparison shopping rather than either headline. "Consumers should look at how they used their coverage during the current year" and verify that a plan still covers their doctors and medications before re-enrolling, Amanda Weigel of UnitedHealthcare Medicare told a Palm Springs, California television station ahead of this year's enrollment window, pointing beneficiaries toward plan-comparison resources as the enrollment period approaches.

What happens between now and December 7

Open enrollment begins October 15 and runs through December 7, with any changes taking effect on January 1, 2027. Beneficiaries can compare specific plans available in their area, rather than relying on national averages, through the federal Medicare Plan Finder tool or by calling 1-800-MEDICARE. CMS has said it will announce the official 2027 Part B premium and deductible in November, a figure that applies to every Medicare beneficiary regardless of which Advantage or Part D plan they ultimately choose, and that is expected by independent forecasters to rise somewhat faster than the roughly $7 increase the government's own trustees projected earlier this year.

In the meantime, the advice converging from CMS, AARP, brokers and consumer advocates alike is less about which number to believe and more about which questions to ask: whether a plan's network still includes a beneficiary's doctors and hospitals, whether its drug formulary still covers current prescriptions at a predictable cost, and what the plan would actually charge in a bad year, not just a good one. Open enrollment is also, as it is every year, a period flagged by AARP and state insurance regulators as a peak season for Medicare-related fraud, with scammers posing as plan representatives or offering free equipment in exchange for a beneficiary's Medicare number.