Medicare Advantage Rule Trims Marketing Safeguards for 2027 Plans

A rule that gives some protections and takes away more

Coverage of the federal government's 2027 Medicare Advantage rulemaking has mostly focused on money: bigger payments to insurers and a redesigned star ratings system. The consumer protection provisions got less attention, and they may matter more to the people choosing a plan this fall. In the final rule for the 2027 contract year, the Centers for Medicare & Medicaid Services (CMS) added a few new safeguards for enrollees. It also removed several protections that earlier rules had put in place to shield beneficiaries from aggressive sales tactics.21

KFF called the package a mix, with some protections strengthened and others removed.14 Advocacy groups were harsher. The Center for Medicare Advocacy said the rule shows CMS "caving" to the industry.23 California Health Advocates said the rule ultimately puts plan interests ahead of stronger beneficiary protections.15 Taken as a whole, the rule leans toward deregulation, and its new protections are narrow. The rollbacks fall on the moment that matters most, when a beneficiary is deciding which plan to buy.

What CMS added

Most of the new protections deal with supplemental benefits. These are extras such as food and produce, pest control, and non-medical transportation, which plans can offer to chronically ill members. Plans must now post on their websites the eligibility criteria they use for these benefits. That includes how they define "chronically ill" and the specific test for each benefit. Plans also have to verify chronic illness through an objective process, such as a health risk assessment or a review of claims. A member's own statement is no longer enough.21

CMS also tightened the rules on the debit cards many plans use to deliver these extras. Starting in 2027, each card must be linked electronically to plan-covered benefits and checked in real time at the register. Plans must also explain how to use the card, offer customer support, and keep a backup reimbursement process.21 Card use is limited to a single plan year.23 The rule includes long lists of what qualifies, for example antacids but not shampoo.13 In practice, an advertised $1,200 "flex card" may buy much less than $1,200 of ordinary goods if the items fall outside approved categories.14

CMS stopped short on a related point. It had proposed banning ads that list the dollar value of supplemental benefits or promote "flex cards." It dropped that proposal, saying the ban could reduce informed decision-making.21 This is a clear tension in the rule. The agency agreed that the dollar-figure marketing can mislead people, but it chose to police how the card works after enrollment rather than how plans sell it beforehand.

What CMS removed

The list of rollbacks is longer:

• No more mid-year reminders. A 2024 rule would have required plans to tell members each summer which supplemental benefits they had not used. CMS rescinded it before it took effect. The agency cited survey data showing 70% of enrollees used at least one benefit, along with the cost to plans, while admitting that data on how much these benefits are used remains limited.21
• No separation between education and sales. Agents can now collect scope-of-appointment forms at educational events, meet with a beneficiary right away with no 48-hour waiting period, and hold a marketing event immediately after an educational one in the same room.11
• Superlatives allowed again. Plans may once more use words like "best" or "highest rated." CMS says its existing ban on misleading claims is enough protection.1122
• No referral to SHIP counselors. Third-party marketers no longer have to mention State Health Insurance Assistance Programs, the free and unbiased counseling services, in their required disclaimers. Agents can also give that disclaimer later in the call instead of in the first minute.1119

One detail differs across reports: how long plans must keep sales-call recordings. California Health Advocates and the Medicare Rights Center say the requirement drops from 10 years to three.1519 Georgetown's Center on Health Insurance Reforms and a trade summary describe the cut as 10 years to six.1816 The reports agree the retention period is shorter. Beneficiaries and regulators should check the final regulatory text for the exact number.

CMS defends the changes as less paperwork and a smoother experience. Medicare director Chris Klomp described the shift as moving away from "administrative box-checking."13 On high-pressure selling, CMS argued that vulnerable beneficiaries often have relatives helping them decide, which acts as a built-in safeguard.13 Advocates point out that this reasoning offers nothing to people who have no one helping them.23 Georgetown researchers tie the rule to a broader deregulatory executive order that requires agencies to remove existing rules before issuing new ones.18

The protection CMS proposed and then dropped

The most important change for patients is a protection CMS proposed and then dropped. Today, enrollees can switch plans when a provider leaves the network only if CMS rules the network change "significant." CMS had proposed giving that right to anyone who was assigned to, or recently treated by, a provider who left.11 The final rule leaves it out and gives no explanation.12 The Center for Medicare Advocacy said dropping the proposal also hurts doctors who are cut from networks.22

This matters because doctors and hospitals can leave networks in the middle of the year, and plan options are already shrinking. Under current rules, a patient whose cancer center or cardiologist leaves can be stuck with the plan until the next enrollment window.

Insurers get more money while shoppers face higher costs

The consumer provisions arrived alongside a payment decision that favored insurers. CMS first proposed a 0.09% payment increase for 2027. It finalized about 2.48%, roughly $13 billion.16 It also dropped an updated risk-adjustment model meant to pay plans more accurately.12 The star ratings overhaul removes measures such as how plans handle appeals of denied claims and whether they provide interpreters.23 Healthcare Dive reported that the overhaul will cost taxpayers more than $18 billion over a decade.12

The 2027 plan data shows what enrollees will see. CMS says the average Medicare Advantage premium, weighted by enrollment, falls 16.5%, from $14.37 to $12.00.31 Healthcare Dive noted that this average includes cheaper special needs plans and so understates premium changes for most enrollees. Analysts found average out-of-pocket maximums up about 10% and Part D deductibles up about 30%.32 Every major insurer reduced its number of plans. Humana is cutting about 2,400 and UnitedHealthcare about 690.32 KFF found the average beneficiary will have 28 Medicare Advantage drug plans to choose from, down from 32.37 UnitedHealth Group is leaving 228 counties, and Molina is exiting the Medicare Advantage drug plan market.36

Lower premiums, smaller benefits, and fewer plans are the conditions in which sales tactics and plan switching matter most. Just as more beneficiaries will need help comparing plans, the rule loosens marketing limits and removes the referral to free counselors.

CMS has not stopped regulating. On October 16 it proposed a rule to make provider directories more accurate. Under the proposal, enrollees who saw an out-of-network provider because a directory listing was wrong would pay no more than in-network cost-sharing.30 That would fix a real problem, but it is still only a proposal.

Drug prices

Prescription drugs show the same split between lower prices and higher out-of-pocket exposure. On January 1, negotiated Medicare prices take effect for 15 more drugs. The semaglutide group (Ozempic, Rybelsus, and Wegovy) drops to $274 for a 30-day supply, compared with a 2024 list price of $959.3 CMS expects about $685 million in out-of-pocket savings for enrollees in 2027.3 At the same time, the Part D out-of-pocket cap rises from $2,100 to $2,400, the maximum deductible from $615 to $700, and the base premium from $38.99 to $41.33.3 The temporary program that subsidized stand-alone drug plan premiums ends after 2026.4 CMS projects the average stand-alone premium will rise less than $1, to $36, but individual plans face no cap on increases.431 The rule does include some new oversight of Part D formularies and prior authorization.15

Employers, Medicaid, and hospitals

Costs are rising outside Medicare too. Marsh projects employer health benefit costs will rise 8.2% per worker in 2027, the largest increase since 2003. About two-thirds of large employers expect workers to pay a bigger share.42 Research from the Health Care Cost Institute found that rising prices, not more use of care, caused 90% of the growth in employer spending from 2019 to 2023. The report pointed to hospital outpatient departments as a growing cost driver.47

Medicaid changes take effect on the same day as the new Medicare plan year. On January 1, 2027, adults covered through Medicaid expansion must document 80 hours a month of work, school, or similar activity, or $580 in monthly earnings. They must also renew coverage every six months.51 Retroactive coverage shrinks to 60 days, and to 30 days for expansion adults.55 Five governors have asked HHS for more time, warning that eligible people will lose coverage over paperwork. The Urban Institute estimates the 2025 budget law will produce $278 billion in uncompensated hospital care by 2034.51 Hospitals usually recover those losses by charging privately insured patients more, which feeds back into employer costs.

What it means

The 2027 Medicare Advantage rule tightens oversight of how benefits are used after enrollment. It loosens oversight of how plans are sold before enrollment. It also leaves enrollees without an easy way to switch plans when their doctors leave the network. With benefits shrinking, plans exiting counties, and costs rising across the health system, the people who carry the most risk are beneficiaries shopping without help. They have until December 7 to compare their options.33