Humana plans to shut down more Medicare Advantage plans next year as the insurer works to improve profits, auguring more disruption for seniors in the privatized Medicare program.
It’s the second consecutive year of plan exits for Humana, and shows that payers are not done downsizing in the face of rising costs — a strategy that’s already forced many seniors to find new health plans.
Humana offered MA coverage in three fewer states and 194 fewer counties in 2026. However, the insurer retained more generous benefits than its competitors, causing more than one million new seniors to flock to its coverage.
But now, Humana thinks it needs to trim its footprint further to reach long-term margin targets, executives told investors on a Wednesday morning call to discuss the insurer’s second quarter results.
“Our No. 1 priority is to make the necessary progress to remain on track to deliver on our [2028] commitment of returning to a sustainable margin of at least 3%,” CFO Celeste Mellet said.
Humana is shuttering plans with lower capital returns to ensure it can keep benefits stable and retain members in plans that generate higher profits, according to Mellet. The insurer expects the exits will impact roughly 600,000 seniors — about 8% of its 7.2 million members in MA.
But, “we will work to recapture a significant portion of that volume, as we did in 2025,” Mellet said.
Humana expects to bring back about 40% of the affected members, or about 240,000 people, in other plans, according to the CFO.
Insurers have made progress on resuscitating flagging profits as government programs are slammed by higher spending — including in MA, which has been stressed by seniors utilizing more expensive care coming out of the coronavirus pandemic. The industry was helped by the Trump administration, which locked in a generous rate hike for 2026, along with its own moves to wrangle down spending, like waving goodbye to unprofitable markets.
UnitedHealth, Elevance, Centene and Molina all posted better MA results than expected in the second quarter, and boosted their 2026 earnings guidance following the results.
Wall Street had similar expectations for Humana, which is the second-largest insurer in the privatized Medicare program after UnitedHealth — and could supplant UnitedHealth this year, thanks to the recent membership growth.
Humana did benefit from better controlled medical costs, which were more than covered by the higher rates, executives said. Cost trends came in as expected and were even better in some areas, such as inpatient hospital care, Mellet said.
However, though Humana beat analyst expectations for earnings and revenue, its guidance was a downer for investors. The company reaffirmed guidance for adjusted earnings per share, which businesses argue is the best indicator of core performance — but slashed its guidance for unedited or ‘unadjusted’ earnings.
Humana now expects EPS of at least $6.52 this year, down from its previous guidance of at least $8.36.
It’s Humana’s second cut to its non-adjusted EPS outlook this year, as the company struggles with a sharp decline in its MA star ratings, which are drastically lowering its quality bonus payments from the CMS.
On the call, CEO Jim Rechtin said he’s proud of the progress Humana is making to improve its star ratings, which run from 1 to 5 stars and are meant to synthesize a plan’s quality and performance in MA. Though the insurer saw its most recent star ratings slip yet again, Humana is on track to reach its goal of achieving top quartile stars in the 2028 bonus year, the CEO said.
But it’s impossible to predict how the insurer’s results will come in against its peers for 2027, Rechtin acknowledged.
“We don’t know industry thresholds. So while we feel good about our substantial progress, we cannot guarantee an outcome,” Rechtin said.
Insurers are being more vocal about their annoyance with the star ratings, arguing regulators use an overly complex methodology to calculate the stars and change goalposts on a whim. Stars uncertainty generates major headaches for insurers, as just a single half-star change can equate to a loss of hundreds of millions of dollars for a plan.
Anger over metrics or perceived unfairness in the CMS’ calculations have fueled a barrage of lawsuits from the industry looking to strong-arm the CMS into improving their scores — including Humana, though the insurer’s legal efforts have been ineffectual so far.
Overall, Humana brought in $40.9 billion in revenue in the quarter, up 26% due to membership growth and more generous MA rates, the insurer said.
Humana posted $694 million in profit, up 27% year over year.
Despite the improvements, Humana’s results were “slightly underwhelming” overall, Leerink Partners analyst Whit Mayo wrote in a note.
Humana’s stock fell almost 8% in morning trade Wednesday following the results.
The insurer has seen progress in growth areas, expanding revenue and income for its health services division CenterWell thanks in part to two recent acquisitions, of Florida providers The Villages Health and MaxHealth. Humana has also notched recent wins in Medicaid, including a new Medicaid contract in Illinois that should go live in 2027 and the extension of its contract in Florida, Humana’s largest Medicaid state.
Humana also announced two new adds to its board of directors on Wednesday: Paul Smith, an executive at artificial intelligence company Anthropic, and Frederick Crawford, a 30-year veteran of the insurance and banking industries.
