UCare Rocks the Boat: Medicare Advantage Plans Axed for 2026 Amidst Financial Storm

In a significant announcement sending ripples through Minnesota's healthcare landscape, UCare, one of the state's largest health plan providers, has confirmed it will discontinue offering its Medicare Advantage plans starting in 2026. This pivotal decision is set to impact approximately 55,000 Minnesota residents who currently rely on UCare for their Medicare coverage, forcing them to seek new health insurance options during the next open enrollment period.

The move comes as a direct consequence of substantial financial pressures that have plagued the non-profit insurer for several years.

UCare reported a staggering $66.5 million deficit in 2023, following an even larger loss of $100 million in 2022. Company officials attribute these mounting losses primarily to the complexities and challenges presented by the federal risk adjustment program, a system designed to compensate health plans based on the health status of their enrolled members.

Ghita Worcester, UCare's President and CEO, expressed the gravity of the decision, stating that it was "not made lightly." She emphasized that the company had explored numerous alternatives to sustain its Medicare Advantage offerings but ultimately concluded that continuing them would jeopardize UCare's overall financial stability and its ability to serve its broader membership base.

UCare currently serves a massive 650,000 members across various programs.

The federal risk adjustment program, while intended to ensure fair payments to health plans, has proven particularly burdensome for UCare, according to company spokespersons. Under this system, Medicare pays plans more for sicker members and less for healthier ones.

UCare contends that the program's methodology does not adequately account for the specific health profiles and complexities of its diverse Medicare Advantage population, leading to insufficient reimbursement for the care provided.

For the 55,000 individuals currently enrolled in UCare's Medicare Advantage plans, the announcement means a critical transition ahead.

They will need to actively select a new Medicare Advantage plan or opt for original Medicare with supplemental coverage during the annual open enrollment period, typically held in the fall of 2025 for coverage beginning in 2026. State officials and UCare have assured the public that they are working collaboratively to ensure a smooth transition for all affected members, providing resources and guidance to help them navigate their options.

Despite exiting the Medicare Advantage market, UCare remains a robust presence in Minnesota's healthcare sector.

The insurer will continue to offer a wide array of other health plans, including those for Medicaid, MinnesotaCare, employer-sponsored programs, and special needs plans. This strategic refocus aims to solidify UCare's position in its core markets and ensure its long-term viability, allowing it to continue its mission of improving the health of its communities.

This development underscores the evolving financial landscape for healthcare providers and the unique challenges faced by non-profit insurers operating within a highly regulated and competitive environment.

As 2026 approaches, the focus will shift to assisting affected members in finding suitable alternative coverage and monitoring the broader implications of UCare's significant strategic shift for the Minnesota healthcare market.