CMS Finalizes 2027 Medicare Advantage and Part D Changes: What Beneficiaries Need to Know

The Centers for Medicare & Medicaid Services has finalized important changes affecting Medicare Advantage and Medicare Part D plans beginning in 2027.

Some of the changes are designed to simplify plan comparisons. Others change how Medicare evaluates plan quality, administers supplemental benefits, and applies the redesigned Part D drug benefit.

CMS has also finalized the payment policies that determine how much Medicare Advantage plans will receive in 2027. Medicare Advantage payments are projected to rise by an average of 2.48%, representing more than $13 billion in additional payments to plans.

That sounds like a great deal of government paperwork—and it is.

But buried inside the regulatory language are changes that could eventually affect your drug costs, supplemental benefits, plan choices, and ability to determine whether one Medicare plan is actually better than another.

Here is what Medicare beneficiaries and their families should know.

When Do the 2027 Medicare Changes Take Effect?

CMS issued the final Medicare Advantage and Part D rule on April 2, 2026. The regulations become effective June 1, 2026, but most of the provisions apply to plan coverage beginning January 1, 2027. Marketing rules for 2027 plans generally begin applying on October 1, 2026.

Beneficiaries will begin seeing the practical results during the 2027 Medicare Annual Enrollment Period, which runs from October 15 through December 7, 2026.

That is when Medicare Advantage and Part D plans will present their 2027 premiums, deductibles, provider networks, formularies, copayments, and supplemental benefits.

The final CMS rule does not mean every Medicare Advantage plan will offer better benefits or lower costs.

It establishes the rules under which insurers design and operate their plans.

Each insurance company still decides how to use its Medicare payments. A plan may increase certain benefits, reduce others, alter its provider network, change its prescription formulary, or modify what members pay for medical services.

That is why beneficiaries should never assume their current coverage will remain unchanged.

You can learn more in our guide to Medicare plan changes beneficiaries should review every year.

Medicare Advantage Plans Will Receive More Money in 2027

CMS finalized an average 2.48% increase in payments to Medicare Advantage plans for 2027.

This is considerably higher than the 0.09% average increase CMS originally estimated in its January 2026 Advance Notice. The final figure changed after CMS updated several payment factors, including expected medical cost growth and revisions to the Medicare Advantage risk-adjustment model.

The projected increase does not mean that every Medicare Advantage plan will receive exactly 2.48% more money.

It is a national average.

An individual plan’s payments may be affected by:

• Where its members live
• The health conditions reported for its members
• The plan’s Star Rating
• Local Medicare costs
• Risk-adjustment calculations
• Quality bonus eligibility
• The types of beneficiaries enrolled

The additional payments could help some insurers maintain premiums or supplemental benefits. However, beneficiaries should not automatically interpret higher plan payments as a promise of lower personal costs.

Insurance companies still face higher hospital, physician, prescription drug, and administrative expenses.

The practical question is not simply how much the government pays the plan.

The practical question is: What will the plan require you to pay?

When reviewing a Medicare Advantage plan, look beyond the monthly premium. Consider hospital copayments, specialist costs, diagnostic imaging, outpatient surgery, prescription expenses, and the plan’s annual maximum out-of-pocket limit.

As we explain in Why a $0 Medicare Advantage premium does not mean free health care, the premium is only one part of the total cost.

CMS Is Changing the Medicare Star Ratings System

Medicare’s Star Ratings system gives Medicare Advantage and Part D plans ratings ranging from one to five stars.

The ratings are intended to help consumers compare plan quality. They also affect how much additional bonus money certain Medicare Advantage plans receive.

For 2027, CMS is changing the way the ratings system works.

CMS will remove 11 measures that primarily focused on administrative procedures or areas where most plans received similar scores. CMS concluded that these measures provided little meaningful help when beneficiaries were trying to distinguish one plan from another.

CMS says it wants the Star Ratings to focus more heavily on:

• Clinical outcomes
• Patient experience
• Access to care
• Meaningful differences between plans
• Areas where quality still needs improvement

A new Medicare Advantage measure addressing depression screening and appropriate follow-up will begin with the 2027 measurement year and appear in the 2029 Star Ratings. CMS also decided to retain the Diabetes Care–Eye Exam measure after receiving feedback about its importance in preventing complications.

The changes may make Star Ratings more clinically meaningful, but beneficiaries should remain skeptical of using a single number as the final word on a plan.

A five-star plan may still exclude your doctors.

A highly rated Part D plan may still place one of your medications on an expensive formulary tier.

A lower-rated plan may happen to provide the network and drug coverage that fit your personal needs better.

Star Ratings are useful—but they are not a substitute for an individual comparison.

CMS Will Keep the Existing Star Ratings Reward System

CMS had previously planned to introduce a reward known as the Excellent Health Outcomes for All reward, formerly called the Health Equity Index reward.

That system was intended to encourage improved results for certain groups of Medicare beneficiaries.

CMS has now decided not to implement it for the 2027 Star Ratings. Instead, the agency will retain the historical reward factor, which rewards plans that maintain consistently high performance across quality measures.

For the average beneficiary, this is mainly a behind-the-scenes payment change.

However, Star Ratings affect quality bonus payments, which can influence the money available to Medicare Advantage plans for benefits and reduced cost-sharing.

The larger message is that CMS is trying to simplify the quality system and place more emphasis on measurable health results.

Whether the revised system accomplishes that will become clearer after several years of plan performance data.

Government programs have a habit of calling things “simplified” shortly before handing you a 200-page explanation.

The Redesigned Medicare Part D Benefit Is Becoming Permanent

Some of the most important 2027 provisions involve Medicare Part D prescription drug coverage.

These changes did not suddenly begin in 2027. They originated under the Inflation Reduction Act and have been phased in over several years.

CMS is now formally writing the redesigned Part D structure into its regulations for 2027 and future years.

The redesign includes:

• Elimination of the former coverage-gap phase
• A lower annual out-of-pocket threshold than existed under the old system
• No additional enrollee cost-sharing after reaching the catastrophic phase
• A new Manufacturer Discount Program
• Changes in how costs count toward true out-of-pocket spending
• Revised payment responsibilities among plans, drug manufacturers, beneficiaries, and Medicare

Many beneficiaries still refer to the old coverage gap as the “donut hole.”

Under the redesigned system, the traditional donut-hole phase no longer exists. The benefit now moves through a deductible phase, an initial coverage phase, and a catastrophic phase.

Once a beneficiary reaches the annual out-of-pocket threshold, covered Part D medications generally have no additional cost-sharing for the remainder of the year.

This provides important protection for people who use expensive medications.

However, it does not guarantee that every prescription will be affordable.

Plans may still use:

• Formularies
• Drug tiers
• Prior authorization
• Step therapy
• Quantity limits
• Preferred pharmacy networks
• Different negotiated prices

A medication must generally be covered by the plan and obtained according to its rules for the costs to receive full Part D protection.

That is why reviewing your medications every year remains essential. Read our guide to what the latest Medicare drug changes mean for beneficiaries.

The Part D Out-of-Pocket Limit Will Change Again

The annual Part D out-of-pocket threshold is indexed and can change each year.

The exact standard deductible, out-of-pocket threshold, premiums, and other 2027 benefit figures should be confirmed when CMS releases the official annual Medicare cost information and when individual plans publish their Evidence of Coverage documents.

Beneficiaries should be cautious when websites announce future Medicare dollar amounts before CMS has finalized them.

A proposed figure is not the same as a final figure.

An estimate is not the same as your actual plan cost.

And a national average is not the same as what you will pay at your pharmacy.

The safest approach is to enter your complete medication list into the official Medicare Plan Finder or an authorized Medicare plan-comparison platform after 2027 plan data becomes available.

Include the exact medication name, dosage, quantity, and preferred pharmacy.

“Same medication” does not always mean the same annual cost from one plan to another.

Supplemental-Benefit Debit Cards Will Face Clearer Rules

Many Medicare Advantage plans advertise debit cards for supplemental benefits such as healthy foods, over-the-counter products, transportation, or other approved items.

The advertisements sometimes make the cards sound like unrestricted spending money.

They are not.

CMS is finalizing clearer rules for how these benefit cards must operate.

Cards will need to be electronically connected to the items and services covered by the plan. A real-time system must verify at the point of sale whether a purchase is eligible. Cards will also be limited to the specific plan year for which the benefits were provided.

This may reduce confusion, misuse, and fraud.

It could also mean that beneficiaries encounter more precise purchase restrictions.

A card described as providing a “food benefit” may cover certain approved foods but reject others. An over-the-counter allowance may work only for specific products or retailers.

Before selecting a plan because of a debit-card benefit, ask:

• Who qualifies?
• How much is actually available?
• Is the amount monthly, quarterly, or annual?
• Does unused money roll over?
• Which stores accept the card?
• Which products qualify?
• Does the benefit expire?
• Is the benefit available to everyone or only certain chronically ill members?

The headline dollar amount is rarely the entire story.

Plans Must Publish Eligibility Rules for Certain Chronic-Illness Benefits

Medicare Advantage plans may offer Special Supplemental Benefits for the Chronically Ill, commonly called SSBCI.

These benefits may include food, transportation, utilities, pest control, home modifications, or other nonmedical support when the benefit has a reasonable expectation of improving or maintaining a chronically ill member’s health.

Not every member of a Medicare Advantage plan automatically qualifies.

Under the 2027 final rule, plans must make their plan-developed eligibility criteria publicly available. CMS is also clarifying how these benefits should be administered.

This is an important transparency improvement.

A beneficiary should be able to determine whether a heavily advertised benefit is realistically available before enrolling.

Too often, consumers choose a plan after seeing television advertisements featuring groceries, utility assistance, or spending allowances—only to discover later that they do not meet the plan’s clinical eligibility requirements.

The rule does not require every plan to offer these benefits.

It requires more openness about who qualifies when they are offered.

Some Midyear Supplemental-Benefit Notices Will Disappear

CMS is eliminating the requirement for Medicare Advantage plans to send members a midyear notice listing supplemental benefits they have not used.

The previous notice was intended to remind beneficiaries that certain dental, vision, transportation, fitness, food, or over-the-counter benefits remained available.

CMS considers the requirement burdensome and duplicative.

The elimination may reduce administrative costs, but it places more responsibility on beneficiaries.

Members should review their Evidence of Coverage and keep track of benefits throughout the year.

Many supplemental benefits expire annually. Some expire monthly or quarterly.

Insurance companies are generally delighted when you forget to use a benefit. They do not hold a memorial service for your unused dental allowance.

Rules for Speaking With Agents and Brokers Are Being Relaxed

CMS is removing certain restrictions involving the timing and manner in which beneficiaries may speak with licensed Medicare agents and brokers.

The stated purpose is to make it easier for beneficiaries to obtain enrollment information.

This may provide more flexibility, but beneficiaries should continue protecting their privacy.

A legitimate agent should explain:

• Which insurance companies they represent
• Whether they can compare multiple carriers
• Whether your doctors participate
• Whether your prescriptions are covered
• What your costs may be
• How the plan’s network works
• Whether prior authorization applies

You should not feel pressured to enroll during one telephone call.

You can compare Medicare plans privately through MedicareSelfEnroll.com and review your choices before completing an enrollment.

No plan is improved by someone speaking louder or faster.

What Beneficiaries Should Do Before 2027

The most important action is to review your Annual Notice of Change when it arrives in September 2026.

Do not throw it into the same pile as supermarket coupons and invitations to buy a commemorative coin.

Look for changes involving:

• Monthly premiums
• Medical deductibles
• Drug deductibles
• Hospital copayments
• Specialist copayments
• Maximum out-of-pocket limits
• Prescription formularies
• Pharmacy networks
• Prior authorization
• Provider networks
• Dental and vision benefits
• Food and over-the-counter allowances
• Transportation and fitness benefits

Then compare the plan against other 2027 options available in your ZIP code.

A plan that worked well in 2026 may still be a good choice in 2027.

But it should have to earn that conclusion.

The Bottom Line

The finalized 2027 Medicare Advantage and Part D changes are intended to improve quality measurement, make supplemental benefits more transparent, continue Part D financial protections, and simplify certain enrollment and administrative rules.

Medicare Advantage plans are projected to receive more than $13 billion in additional payments, but that does not guarantee every beneficiary will see lower costs or richer benefits.

Your actual experience will depend on the plan offered in your area, its provider network, its drug formulary, and the medical services you use.

The rule may change the framework.

Your plan documents will reveal the reality.

Compare your options carefully, verify your doctors and prescriptions, and never assume that staying in the same plan is automatically the safest decision.

Medicare is complicated.

Making an informed decision does not have to be.

You can research and compare available plans privately at MedicareSelfEnroll.com. No pressure, no obligation, and no need to make a decision until you understand the choices.

Medicare Disclaimer

Medicare plan availability, benefits, premiums, formularies, provider networks, deductibles, copayments, and eligibility requirements vary by plan and location and may change annually. This article is for general educational purposes and is not an official Medicare communication. For official information, visit Medicare.gov or call 1-800-MEDICARE.