The Trump administration announced a $25 billion increase for Medicare Advantage plans in 2026, marking a significant rise over previous projections.

The Centers for Medicare & Medicaid Services (CMS) stated that projected payments should increase by an average of 5.06% from 2025 to 2026, a rise of 2.83 percentage points from earlier estimates.

"This change is primarily due to the inclusion of additional data on fee-for-service expenditures, including payment data through the fourth quarter of 2024, which was not included due to the early Advance Notice publication," CMS said.

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Fee-for-service expenditures refer to what the government pays providers for individual services rather than per patient.

Following the government's announcement, several major insurance companies saw their stock prices surge. UnitedHealthcare's stock increased by 8% by Tuesday afternoon, while Humana's stock rose by 9% late Monday and into Tuesday.

According to KFF, over 54% of the Medicare-eligible population is enrolled in Medicare Advantage. Previous federal data indicates that an estimated $540 billion will be spent on Medicare Advantage this year.

KFF reports that UnitedHealthcare and Humana are the two largest providers of Medicare Advantage in the U.S.

Medicare Advantage differs from original Medicare by allowing recipients to utilize private insurance rather than the government program. This results in different out-of-pocket costs for recipients.

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