How 2027 Medicare Advantage rates are set

Medicare Advantage payment rates for 2027 are determined by the Centers for Medicare & Medicaid Services (CMS) using a formula that accounts for the health status of people in each plan, the geographic region where they live, and adjustments for inflation. The rates are announced in the spring of each year — for 2027, CMS released the rates in April 2026 — and they take effect January 1 of that year.

The payment CMS sends to an insurance company is based on a benchmark, which is a target amount for what Medicare expects to spend on a person of a given age and health profile in a given county. If a plan's bid (what the insurer says it will spend) comes in below the benchmark, the plan can use the difference to offer lower premiums or add extra benefits like dental or vision coverage. If the bid comes in above the benchmark, the enrollee pays the difference as a premium.

These rates affect what you pay out of pocket and what extra benefits your plan can afford to offer. A plan in a county with a high benchmark may offer more benefits at a lower cost than the same plan in a county with a lower benchmark, even though the plan itself is identical.

Key Takeaways

  • CMS sets Medicare Advantage payment rates annually based on health status, location, and inflation, with 2027 rates announced in spring 2026.
  • Plans bid below or above a county-level benchmark, and the difference determines your premium and what extra benefits the plan can offer.
  • Rates vary significantly by county and state, so the same plan name may have different costs and benefits where you live.
  • Plan premiums and benefits can change year to year based on rate changes, so you should review your options during open enrollment even if you were satisfied last year.

Why rates differ by county and state

Medicare Advantage rates are not set nationally. Instead, CMS calculates a separate benchmark for each county based on what Medicare spent on fee-for-service beneficiaries in that area over the previous three years. A county with higher historical spending gets a higher benchmark, which means plans in that county receive more per person from Medicare.

This creates real differences in what you pay. A plan called "Blue Cross Advantage Plus" might have a $0 premium in one county and a $50 monthly premium in a neighboring county, because the benchmarks are different. The same plan might also offer dental coverage in the high-benchmark county but not in the low-benchmark county, for the same reason.

Urban counties often have higher benchmarks than rural counties in the same state, partly because historical spending was higher and partly because more plans compete in cities, which can drive costs up. This means rural beneficiaries sometimes have fewer plan choices and higher out-of-pocket costs, even though Medicare's per-person spending target is lower.

How health status adjustments affect your rate

CMS does not pay the same amount for every person in a Medicare Advantage plan. Instead, it uses risk adjustment, a system that pays more for people with serious chronic illnesses and less for people in good health. The adjustment is based on diagnoses your doctors have documented in the previous year — conditions like heart disease, diabetes, or cancer increase your risk score and the amount Medicare pays for you.

This system is meant to prevent plans from avoiding sick people or refusing to treat expensive conditions. In practice, it means that if you have multiple chronic conditions, your plan receives more funding from Medicare, which can translate to lower premiums or better benefits for everyone in that plan.

However, risk adjustment only works if your conditions are documented. If you have a chronic illness but have not seen a doctor recently, your diagnoses may not be in the system, and your plan will receive less funding for you. This is one reason why Medicare Advantage plans often encourage preventive care and regular doctor visits — they want your conditions documented so the plan receives appropriate funding.

What changed from 2026 to 2027

The specific rate changes for 2027 depend on your county and your plan. Some counties saw increases in their benchmarks, while others saw decreases. On average across the country, Medicare Advantage benchmarks increased, but this varies widely by region.

Plans respond to rate changes by adjusting premiums and benefits. A plan that received a higher benchmark may lower its premium or add dental coverage. A plan that received a lower benchmark may raise its premium or reduce extra benefits. These changes are why you should review your plan options during open enrollment (October 15 to December 7 each year), even if you were happy with your plan in 2026.

CMS publishes the specific benchmark for your county on its website, though the number itself is technical and not straightforward to interpret without knowing what it was the previous year. What matters to you is what your plan costs and what it covers — information you can find in your plan's summary of benefits or by calling the plan directly.

How inflation and policy changes affect rates

CMS adjusts benchmarks each year for inflation, using a formula that accounts for the growth in healthcare costs nationally. In years when healthcare costs rise faster than the general economy, benchmarks increase more. In years when costs rise slower, benchmarks increase less or may even decrease in some areas.

Congress can also change how Medicare Advantage rates are calculated through legislation. For example, the Inflation Reduction Act of 2022 included provisions that affected how CMS calculates certain adjustments. These legislative changes are rare but can have significant effects on what plans can offer and what you pay.

Proposed legislation for 2027 and beyond may include changes to how risk adjustment works, how much plans can charge for supplemental benefits, or how benchmarks are set in rural areas. These proposals are debated throughout the year, but most do not take effect when ready — they typically phase in over several years.

What to do during open enrollment

Because rates and benefits change every year, the plan that was cheapest for you in 2026 may not be the cheapest in 2027. During open enrollment (October 15 to December 7), you can switch to a different plan or return to Original Medicare if you prefer.

To compare plans for 2027, use Medicare.gov's plan finder tool, which shows premiums, deductibles, and covered services for every plan in your area. You can enter your current medications to see which plans cover them and at what cost. You can also call 1-800-MEDICARE to speak with someone who can walk you through your options.

If you are satisfied with your current plan, you do not need to do anything — your coverage continues automatically into 2027. However, reading your plan's annual notice of changes (which arrives in September) is worth your time, because your out-of-pocket costs or covered benefits may have changed.

Frequently Asked Questions

Will my Medicare Advantage premium go up in 2027?

That depends on your specific plan and county. Some plans lowered premiums for 2027, while others raised them. Check your plan's annual notice of changes or use Medicare.gov's plan finder to see what your premium will be.

Does my health status affect what I pay in premiums?

No. Medicare Advantage premiums are the same for everyone in a given plan in a given county, regardless of health status. However, your health status does affect your out-of-pocket costs — plans with sicker enrollees may have higher deductibles or copays to offset the higher risk adjustment.

Can I switch plans during the year if rates change?

No, not because of rate changes. You can switch plans only during open enrollment (October 15 to December 7) or if you experience a may have access to life event like moving, losing employer coverage, or becoming newly may be able to access for Medicare. Rate changes alone are not a may have access to event.

How do I find out what the benchmark is for my county?

CMS publishes benchmarks on its website, but the numbers are technical and hard to use. What matters more is what your plan actually costs and covers. Use Medicare.gov's plan finder or call 1-800-MEDICARE to compare plans in your area.

If my plan's benchmark went down, will my premium definitely go up?

Not necessarily. A lower benchmark means less funding from Medicare, but a plan may choose to absorb some of that loss by reducing benefits or administrative costs rather than raising premiums. Check your plan's annual notice to see what changed.