LOUISVILLE, Kentucky, August 31, 2026, 01:05 (EDT)
- Humana plans to discontinue Medicare Advantage plans affecting roughly 600,000 members in 2027.
- Management expects to recapture about 40%, leaving a modeled net reduction near 360,000 members.
- Humana shares closed Friday at $385.54, down 1.79%, valuing the insurer near $46.3 billion.
Humana Inc. (NYSE:HUM) fell 1.79% Friday as investors weighed a 2027 Medicare Advantage pullback affecting about 600,000 members. That total represents roughly 8% of its 7.2 million Medicare Advantage members.
The exits target plans with weaker capital returns. Humana expects to retain about 40% of affected members through other offerings. That implies roughly 240,000 recaptured members and a net loss near 360,000.
The trade-off is deliberate. CFO Celeste Mellet said the company’s priority is restoring a sustainable individual Medicare Advantage margin of at least 3% by 2028. Plans that absorb capital without adequate returns now face a higher hurdle.
| 2027 exit scenario | Members | Share of affected |
|---|---|---|
| Plans being discontinued | 600,000 | 100% |
| Expected recapture | 240,000 | 40% |
| Modeled net reduction | 360,000 | 60% |
| Total MA membership | 7.2 million | Affected equals about 8% |
The reductions follow rapid expansion. Humana still forecasts roughly 25% individual Medicare Advantage membership growth in 2026. New sales and better retention drove that outlook.
Profit quality remains the central issue. Humana reported a 91.2% Insurance segment benefit ratio for the second quarter. Full-year guidance stands at 92.75%, plus or minus 25 basis points.
Second-quarter adjusted earnings reached $7.61 per share, up from $6.27 a year earlier. Yet Humana maintained adjusted 2026 guidance of at least $9.00. GAAP guidance was cut to at least $6.52 from $8.36.
Federal rates offer some support. CMS projects average 2027 Medicare Advantage payments will rise 2.48%, or more than $13 billion. The increase becomes 4.98% after estimated risk-score trends.
That headline increase does not guarantee equal gains for every contract. Star ratings, local benchmarks, member risk and benefit design determine plan economics. Humana’s 2026 adjusted guidance already includes a Star Ratings headwind.
Members in discontinued plans should receive non-renewal information before the annual election period. Medicare enrollment runs from October 15 through December 7. Coverage selections become effective on January 1, 2027.
The next investor test is retention. A recapture rate above 40% would protect scale while removing weaker plans. A lower rate would deepen the membership decline and raise acquisition costs.
Risks: utilization could remain elevated, Star Ratings may reduce quality bonuses, and richer benefits could dilute margin gains. Faster recapture or better medical-cost trends would improve the outlook.
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