Humana’s chief financial officer told investors on July 29 that most of the health insurer’s 2027 Medicare Advantage plan exits will land on its lowest-scoring coverage, plans already sitting at 3.5 stars or below in the government’s current quality ratings. The company expects the cuts to touch roughly 600,000 members, with about 40 percent likely to land in a different Humana plan the way earlier rounds of exits played out. For a member who has never paid attention to the number of stars printed next to their plan’s name, that rating turns out to be one of the clearest signals of which coverage is safest from next year’s cuts.
What a star rating on a Medicare Advantage plan actually counts
Every Medicare Advantage plan that bundles drug coverage gets scored on up to 43 separate measures each year, covering things like how well a plan manages chronic conditions, how quickly members can get appointments, how many complaints a plan draws, and how members rate their own care. The Centers for Medicare and Medicaid Services rolls those measures into a single rating of one to five stars, and it recalculates the thresholds — called cut points — every year based on how every plan actually performed. The ratings that matter for Humana’s 2027 decisions are already public: they posted to the Medicare Plan Finder tool in October 2025 as the “2026 Star Ratings,” and CMS’s own 2026 Star Ratings fact sheet says plainly that this batch of ratings “will impact 2027 MA quality bonus payments.” In other words, the numbers driving next year’s plan cuts were set roughly a year before most members will ever hear about it.
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Why star ratings decide how much money a plan has to work with
The reason 3.5 stars specifically shows up in Humana’s math is written into federal regulation, not company policy. Under 42 CFR 422.258, a plan rated 4 stars or higher gets a flat 5-percentage-point boost added to the benchmark CMS uses to calculate its payment — a bonus that plans below 4 stars simply do not receive. Layered on top of that, 42 CFR 422.266 sets how much of the gap between that benchmark and a plan’s bid must be returned to members as extra benefits, such as dental work, vision coverage, or a lower Part B premium: 70 percent of that savings at 4.5 stars or above, 65 percent between 3.5 and 4.5 stars, and only 50 percent below 3.5 stars. A plan that slips under 3.5 stars is losing on both fronts at once — no quality bonus, and a smaller share of its own savings available to fund the perks that make a plan competitive. That is the exact math squeezing the plans Humana is choosing to shut down.
What Humana’s CFO said, and what she didn’t
Speaking on the July 29 call, Mellet described the exits as targeting “the lower tail of profitability and return,” with Humana prioritizing plans that have deeper value-based care participation, according to Becker’s Payer Issues‘ account of the call. Becker’s reports that the majority of the roughly 600,000 affected members are enrolled in plans rated 3.5 stars or lower for the 2027 bonus year — but it also reports that Mellet said the decision was not primarily driven by the star ratings themselves. That distinction matters: profitability and star ratings move together because of the payment formula above, but Humana’s own framing is that it is cutting for margin, with the star-rating pattern following as a consequence rather than the stated cause. For scale, only about 20 percent of Humana’s Medicare Advantage members are currently in plans rated 4 stars or higher, which is part of why the company has said its 2026 star-ratings performance is a real drag on this year’s earnings; Humana’s own second-quarter earnings release confirms the July 29 call took place and that the company is targeting a sustainable pretax margin of at least 3 percent by 2028.
How to check a plan’s own rating before anything changes
A Medicare Advantage member does not have to wait for a non-renewal letter to find out where their plan stands. The Medicare Plan Finder at medicare.gov already lists this year’s star rating for every plan by name and ZIP code, the same rating CMS says is shaping insurers’ 2027 bid decisions right now. Under 42 CFR 422.506, an insurer that will not renew a contract has to notify CMS by the first Monday in June and mail every affected enrollee a notice at least 90 calendar days before the nonrenewal takes effect — for a plan year ending December 31, that puts the mailing in early October, alongside the annual star-rating refresh. Nothing about a rating below 3.5 stars, by itself, guarantees a plan will be cut — Mellet’s own comments make clear profitability, not the score alone, is the stated trigger — so a low rating is a warning sign worth checking, not a certainty.
The next full refresh — the “2027 Star Ratings,” which will apply to the 2028 bonus year — is due to post to the same Plan Finder tool in October 2026, ahead of the annual Medicare enrollment window that opens October 15. That update will be the first real look at whether the specific plans Humana is protecting today are actually holding their ratings, or whether this round of cuts is simply the first of several still to come.
Of the 516 Medicare Advantage prescription-drug contracts CMS rated for 2026, 175 — about 34 percent — sit at exactly 3.5 stars, the line separating a 65 percent rebate from a 50 percent one under federal rule. That single half-star gap, multiplied across a national insurer’s membership, is large enough to reshape which plans a company like Humana decides are worth keeping.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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