(Reuters) – The U.S. government on Friday proposed 2026 reimbursement rates for Medicare Advantage plans run by private insurers, which will result in a 2.2% increase in payments, compared with a 0.2% drop last year.
Shares of insurers UnitedHealth Group, Elevance Health, CVS Health Corp and Humana rose between 1% and 3.2% in extended trade.
Ends: January 10th at 4:00:02 PM EST
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The state’s payment rate affects how much insurers charge in monthly premiums, what plan benefits they offer, and ultimately how much profit they can make.
The total increase in payments is estimated at 4.3%, or over $21 billion, when a 2.1% “risk score” is factored in, an adjustment that accounts for potentially higher payments for patients with more severe medical conditions.
The payment rate is used by companies such as UnitedHealth, Humana, Elevance and CVS’s Aetna unit to prepare contract bids for Medicare Advantage plans they will sell in 2026.
“Overall this was a very favorable release given the contentious political environment and recent proposals under this administration, and this should be very positive for the group and for stocks like HUM, UNH and CVS,” the analyst wrote Oppenheimer Michael Wiederhorn in a research note.
About 65 million people are enrolled in the government’s Medicare program for people 65 and older or people with disabilities, and more than half of them are enrolled in Medicare Advantage plans.
The proposed rate is usually changed after feedback from insurers, other entities and the public. The final price announcement will be made on or before April 7, 2025.
Under President Joe Biden’s Inflation Reduction Act, annual out-of-pocket drug costs will be capped at $2,100 in 2026 for people with Medicare prescription drug plans, known as Part D, the government also said. That’s an increase from the $2,000 cap in 2025.
(Reporting by Puyaan Singh in Bengaluru; Editing by Caroline Humer and Devika Syamnath)
