Medicare 2027 Guide: What Agents Need to Know Before AEP

CMS has finalized its Medicare Advantage and Part D policies for 2027, and the numbers landed differently than most in the industry expected. As Annual Enrollment Period approaches, here’s a clear breakdown of what changed, why it matters, and how to talk to clients about it with confidence.

What’s In the CY 2027 Rate Announcement?

CMS finalized a net average payment increase of 2.48% to Medicare Advantage plans for 2027, translating to more than $13 billion in additional payments. That’s a notable jump from the 0.09% increase CMS had originally proposed earlier in the year — a shift driven partly by higher-than-projected spending in traditional Medicare late in 2025. When CMS factors in expected changes in risk scores from coding practices and population shifts, the total increase reaches closer to 4.98%.

For Medicare agents, the short version: plans are getting meaningfully more funding than initially expected, which could translate into more stable supplemental benefits and premiums for 2027 compared to what earlier signals suggested.

Key Changes Agents Should Understand

Payment Accuracy and Risk Adjustment

CMS is tightening how plans can use certain records to calculate risk scores, specifically disallowing diagnosis codes submitted through unlinked chart review records (with limited exceptions). This is part of a broader effort to align Medicare Advantage payment more closely with actual patient care rather than coding volume. Agents likely won’t see a direct client-facing effect here, but it’s part of why plan payment and, by extension, plan benefits can shift year to year.

Star Ratings Updates

CMS added a new Part C Depression Screening and Follow-Up measure to the Star Ratings program, starting with the 2029 Star Ratings based on 2027 performance data. This reflects a growing CMS focus on behavioral health as part of overall plan quality. Since Star Ratings directly affect plan bonus payments, and often shape which plans can offer richer supplemental benefits, this is worth tracking over the next couple of enrollment cycles, even though the direct impact won’t show up immediately.

Part D Provisions Made Permanent

Several Inflation Reduction Act provisions that CMS had been implementing through temporary program instructions are now being formally written into regulation for 2027 and beyond. This includes the framework behind the $2,000 annual out-of-pocket cap for Part D enrollees, which has already been in effect but is now on firmer regulatory footing going forward.

Deregulatory Changes to Supplemental Benefits

CMS finalized several deregulatory measures affecting how plans structure and report supplemental benefits, consistent with a broader administration push to reduce regulatory requirements on Medicare Advantage plans. Agents should expect potential variation in how plans market and structure benefits like dental, vision, and over-the-counter allowances for 2027, since plans now have somewhat more flexibility in this area.

What This Means for Your Business

Every year, Medicare changes bring the same underlying challenge for agents: clients need help making sense of what changed and whether their current plan still fits. 2027 is no exception, and a few things stand out this cycle:

Clients will have more plan variation to sort through. With deregulatory changes giving plans more flexibility on supplemental benefits, expect more year-over-year differences between plans than clients might anticipate, which means more education is needed before they assume “the same plan” is truly unchanged.

Behavioral health is becoming a bigger part of plan quality conversations. With depression screening now factored into future Star Ratings, plans are likely to start promoting behavioral health resources more actively, and clients may start asking about it directly.

The funding increase is good news, but it’s not a guarantee of richer benefits everywhere. A higher overall payment increase gives plans more room to maintain or improve supplemental benefits, but how each plan uses that funding will vary. This is exactly the kind of detail clients need an agent to walk them through rather than assume from a mailer or ad headline.

Preparing for AEP 2026 (For 2027 Coverage)

With Annual Enrollment Period running October 15 through December 7, now is the time to get ahead of client questions rather than fielding them cold once AEP opens. A few practical steps:

• Review Star Ratings changes for the plans you represent most often, and understand how any rating shifts might affect 2027 benefits or bonuses
• Prepare clear, simple language for explaining the out-of-pocket cap and other IRA-driven Part D provisions, since these affect nearly every Part D client directly
• Expect more plan-to-plan variation in supplemental benefits this year, and build in time during client conversations to walk through specific benefit changes rather than assuming continuity
• Anticipate more questions around behavioral health coverage as plans start highlighting it more prominently

Final Thoughts

The 2027 Medicare Advantage and Part D changes bring a mix of good news and added complexity. The payment increase gives plans more room to work with, but the deregulatory shifts and evolving Star Ratings criteria mean agents have real value to add in helping clients understand what’s actually changed for their specific plan. Staying current on these details, and communicating them clearly, is what turns AEP into an opportunity rather than a scramble.

Frequently Asked Questions

How much are Medicare Advantage payments increasing for 2027?

CMS finalized a net average increase of 2.48%, or more than $13 billion in additional payments, up significantly from the 0.09% increase originally proposed. Accounting for expected risk score trends, the total increase is closer to 4.98%.

Is the Part D out-of-pocket cap changing for 2027?

The $2,000 annual out-of-pocket cap for Part D enrollees remains in place. What’s changed is that CMS has now formally written this and other related Inflation Reduction Act provisions into regulation, rather than implementing them through temporary program instructions.

Will changes to Star Ratings affect plans in 2027?

Not immediately. The new depression screening measure begins affecting Star Ratings in 2029, based on performance data collected in 2027. It’s a good measure to understand now, even though its direct effect on ratings is still a couple of cycles away.

Why should I expect more variation between plans this year?

CMS finalized several deregulatory changes giving plans more flexibility in how they structure and report supplemental benefits. That flexibility can lead to more year-over-year differences between plans than clients might expect.

Editor’s note: This post was originally published in 2024 covering CY 2025 Medicare changes and has been fully updated for 2026 with the finalized CY 2027 Medicare Advantage and Part D Rate Announcement.