Being a Medicare agent in 2025 feels a little like joining a circus. You’re expected to juggle the latest changes in plan availability, in-network coverage, and preferred drug lists while walking a tightrope of new compliance rules. Sometimes it feels like you’re also riding a unicycle and reciting the alphabet backwards just trying to stay up-to-date with the latest legal rulings and benefits changes. What’s next?
When you do all that work only to see the audience (your clients) getting up and walking out because they’re not happy, it’s easy to feel like throwing in the towel. How is anyone supposed to succeed?
Let’s put the circus analogy aside for now. Your clients are probably just as frustrated as you are, especially if they feel like you—their Medicare agent—didn’t tell them about these changes in a timely, understandable way. They might see you as part of the problem even though you don’t make the decisions.
To nurture clients’ trust and prevent them from seeking health insurance elsewhere, you need to understand what’s going on, why it’s happening, who it affects, and how to talk about it. There’s a lot to keep track of, so today we’re going to focus on three Medicare disruptions that are likely to impact enrollment retention: formulary exclusions, limited plan availability, and in-network hospital changes.
A whopping 80% of U.S. prescriptions are processed by just three pharmacy benefit managers (PBMs): Caremark, OptumRx, and Express Scripts. That means about 290 million insured Americans (including about 54 million Medicare recipients) rely on a drug formulary that’s controlled by one of these PBMs.
So when all three started to exclude dozens–-and then hundreds—of medications from their formularies, many people were understandably concerned about the potential rise in out-of-pocket costs. A 2024 survey found that one in two want to switch health plans to reduce out-of-pocket costs, while about one in four look for a plan that covers a specific treatment. Constant formulary changes can make it tough to retain clients on an existing plan.
Unfortunately, people on Medicare may be disproportionately affected by drug exclusions. A survey conducted in 2023 found that Medicare recipients were more likely to be on a health plan that didn’t cover a prescription, or required a very high copay for that prescription, than people with Medicaid, Marketplace coverage, or employer-sponsored insurance.
On the plus side, 2025 formularies were more stable than they’ve been for years. Caremark added 16 excluded drugs but began covering 18 drugs, giving it a negative net growth rate for the first time. OptumRx and Express Scripts added 12 and 21 exclusions, respectively—nearly half of what they added in 2024.
Could this be a sign of more stability, or perhaps more coverage, to come? Only time will tell, but another shake up could be around the corner as the government gears up to negotiate several Part D prices for the first time—without the use of PBMs.
So, why do PBMs mess around with drug formularies so much? It’s all about negotiating lower drug prices. Excluding a drug, placing it on the non-preferred drug list, or requiring prior authorization or step therapy make the drugs less accessible to beneficiaries, which drive down sales and (ideally) motivate the drug manufacturer to agree to a lower price for better formulary placement.
Lower drug prices typically translate to lower premiums and deductibles. In a 2019 report, the Government Accountability Office found that PBMs passed 99% of their negotiated Medicare Part D savings on to plan sponsors rather than pocketing it as profit, and the savings offset Medicare spending by 20%.
This is good news for beneficiaries overall, but it can be hard to appreciate the potential long-term benefits when the exclusions create a frustrating reality for some. Plan members are likely to see these restrictions as inexplicable barriers to care that could cost them thousands of dollars in out of pocket expenses. The new $2,000 Part D out-of-pocket cap and prescription payment plan don’t apply to excluded drugs, so people who need an excluded prescription could face crippling expenses.
When working with clients who have lost drug coverage, position yourself as an empathetic partner. Communicate formulary changes as soon as possible so people don’t feel like they have to rush to make a decision.
Samantha George, Director of Client Relationships at The Baldwin Group, says it can be helpful for agents to know why the formulary is changing so they can pass that information on to their client. “You want to be able to have a conversation with your client like, ‘This is why they’re making the change on the formulary, but here’s how we can address it. Here are other plan options for you, or we can look into having a conversation with your doctor to submit for a potential exception request,” George explains.
Your knowledge and empathy can go a long way in preserving a working relationship with an unhappy client. On the other hand, if plan members believe you’re part of the problem, they may bounce to another agent or look for insurance on their own. Pay close attention to formulary changes and take action to keep your roster full.
If you need help identifying affected clients, consider using Connecture’s Active Analytics platform for timely alerts. George, who uses Active Analytics, says it saves agents hours each day by highlighting and paring down the audiences that are affected by formulary changes.
Between 2024 and 2025, major insurers like Humana, United Healthcare, Blue Cross Blue Shield, CVS Health, Centene, and Cigna exited a combined total of 330 counties.
On top of that, at least 14 insurers completely exited the Medicare Advantage market in 2025:
Meanwhile, only three entered the market:
Market exits and other plan terminations meant around 2.3 million Medicare recipients had to shop for a new plan for 2025. That’s about 6% of all recipients—a huge jump from 1% for the 2024 annual enrollment period (AEP). Experts expect the number of plan terminations to increase by at least 400,000 for the 2026 AEP, and another 1.8 million Medicare recipients may want to shop for a new plan because their current one will be consolidated.
If a significant portion of your book of business needs a new plan, it could affect your bottom line. Instead of earning an easy retention fee from clients who re-enroll with the same plan, you’ll need to help them shop around. It means less time building your client roster and more time putting out fires from unhappy members.
According to executives at some of America’s largest health insurance carriers, the market exits seem to be fueled by poor profitability. Thinking of an insurance company as a profitable business tends to put a bad taste in people’s mouths, but if they couldn’t meet their bottom line, insurance companies would have to shut down entirely. That could throw millions of people off their plan rather than thousands.
Of course, “for the greater good” is a tough sell for people who have already been forced off a plan due to the insurer exiting the market. The 2025 market withdrawals mostly affected people in eastern Oregon, western Kansas, and northwest Nebraska. Other areas, like the entire state of Alaska and portions of Nevada and South Dakota, haven’t had Medicare Advantage plans for years.
Fortunately, 99.6% of beneficiaries live in a county where multiple Medicare Advantage plans are available, so you should be able to help clients look at other plan options. The average person eligible for Medicare can choose from 42 plans (including 34 plans with Part D coverage) available from eight insurers, but the actual number of available plans in any given county varies from around 1 to 85. Rural areas in western states tend to have the fewest options.
2025 marks the first year since 2014 where the average beneficiary had fewer plans to choose from compared to the year before. This could be the start of a new downward trend if more insurance companies start to exit markets to balance their finances.
UnitedHealth, for example, saw higher-than-anticipated claims expenses from new Medicare members in the first quarter of 2025, which prompted the company to delay the release of its earnings forecast. This has some people worried that the largest Medicare Advantage insurer could be in financial trouble. The company could follow Aetna’s lead and exit unprofitable markets. And because UnitedHealth offers plans in 88% of counties, it’s tough to predict which areas could be hit.
Although insurance companies can also try to balance their finances by enrolling new members, this strategy carries far more risk. It only works in the insurance company’s favor when members’ claims cost less than their premiums. If the plan doesn’t have enough members to sustain the cost of claims, it loses money and threatens to sink the insurance company altogether.
Insurance companies have also cited increasing regulations from the Centers for Medicare and Medicaid Services (CMS) as a reason for withdrawing plans. In many cases, the carriers take on more administrative costs to comply with the regulations. They may increase premiums to balance the new cost burdens, but this could also lead to fewer plan enrollments, unsustainable finances, and plan termination.
George says plan terminations affect not only beneficiaries, but also agents and other insurance carriers. “When there are fewer options, it puts stress on the entire system because you’re going to have an influx [of enrollment] to the remaining carriers that are left.”
There’s also an increased level of risk for the remaining carriers. “When a carrier terminates their plan, all of those beneficiaries that were on the plan now qualify for a guaranteed issue buying period for Medicare supplement plans. They don’t have to go through medical underwriting, which increases the risk to the carrier they’re buying the policy with,” George explains.
“This typically leads to massive premium increases, shutting off that business for taking on new clients, making their plans non-commissionable, or just exiting the state entirely,” she says. This can limit enrollment opportunities for beneficiaries while also limiting agent income.
Medicare agents need to learn about and address terminations early-on. “That will make a huge difference for them and their book of business because it’s something that they’re going to have to talk about with their clients,” George says.
“I think the most important thing for agents is to be able to readily and simply communicate to their clients about what their other options are. Let them know they have an additional timeframe to make a plan change because there is an election period (aside from the annual election period) that they qualify for because of the plan termination. They have a longer duration of time to make a change, but there are consequences if they don’t make a change by a certain point.”
George recommends using Active Analytics to get ahead of the game. Otherwise, she says agents face “hours and hours of work sitting there, toiling away, going, ‘Okay, I have these clients on this plan, this plan’s ending, these are the plan options that are available.”
“Those are the things that are going to make or break someone’s AEP,” she adds. Without the right tools, Medicare disruptions can cause agents to spin their wheels trying to retain clients rather than growing their book of business at the same time. “You need to be a proactive subject matter expert on the benefits and needs of your client. That’s what’s really going to sustain people long-term,” George says.
Over the past few years, an increasing number of hospital systems have stopped accepting Medicare Advantage plans from certain insurers. As of 2025, more than 45 hospital systems around the country have cut ties with at least one insurer.
Some hospitals, like Baptist Health in Louisville, Kentucky, have ended partnerships with multiple insurers, while others, like Scripps Health in San Diego, California, no longer accept any Medicare Advantage plans at all.
In about half of these situations, the dropped insurer was Humana. United Healthcare plans were dropped by six healthcare systems each, Aetna by five, Cigna by four, Anthem Blue Cross Blue Shield (BCBS) by three, Centene WellCare by two, and Highmark, BCBS Tennessee, Alignment Health, and Molina by one each.
Twenty-five states have at least one healthcare system that stopped accepting a Medicare insurer within the last three years. Four South Dakota hospital systems discontinued at least one Medicare partnership, the most of any state.
The Brookings Health System, based in Brookings, South Dakota, no longer accepts any Medicare plans, while the other three hospital systems all dropped Humana. That means South Dakotans with a Humana plan lost access to 74% of the state’s largest hospitals. Similar stories are unfolding across the country.
Hospital representatives put the blame squarely on insurers, citing payment delays, time-consuming administrative protocols, and a surge in denials as some of their top reasons for cancelling the insurance contracts. And while those are certainly pain points, the reality is that providers (like hospital systems) sometimes end contracts as a negotiation tactic to get a higher payment from the insurance company.
It’s the same strategy insurance companies use on drug manufacturers when negotiating prices. If the manufacturers don’t agree to a lower price, their product might be excluded from the formulary so beneficiaries won’t buy it. But here, the tables are turned—hospital systems exclude the insurance companies when they won’t agree to pay providers a higher price.
The contract cancellations force beneficiaries to make a decision:
Option one doesn’t make much sense unless someone is seeing a specialist and has the means to pay them out of pocket. As for option two, 61% of people ages 50–80 say a convenient location is the most important thing they consider when choosing a doctor, so having fewer local, in-network doctors to choose from could be a dealbreaker.
That leaves option three—switching to a health insurance plan that’s accepted by their usual doctor. This is what hospital systems hope their patients will do, as it cuts into the insurance company’s bottom line. If the two organizations start negotiating again, perhaps the insurer will be more willing to meet the provider’s payment demands.
The provider-versus-insurer payment battle has been brewing for at least five years, as physicians have taken a pay cut from the Medicare system over that entire period.This year, the provider pay cuts totalled 2.8% while the Medicare Advantage industry as a whole is projected to earn 4.33% through 2026. With that in mind, it’s not surprising that the number of hospitals dropping Medicare insurers nearly quadrupled from 2023 to 2025.
Many beneficiaries don’t realize that network changes make them eligible for a Special Enrollment Period (SEP). They may stick with their current health insurance plan because they believe they have no other choice. You get to bring them some hope.
As with other Medicare disruptions, George believes “the biggest opportunity for agents is to be aware and to properly educate and advise their clients. So, getting ahead of it so they know what the ramifications are for not changing their plan.”
Agents should be prepared to have conversations about looking for other providers or other health systems—not just other health plans. “That’s the big decision-making pivotal point that’s really at the discernment of the beneficiary, but the agent can help guide that conversation to help them make their best choice.”
The J.D. Power 2024 US Medicare Advantage Study found that beneficiaries are happiest with their plan when it’s easy to find care, their out-of-pocket costs are low, and they can use the provider of their choice. Helping them choose a new plan in the middle of the year shows that you care about saving them money and sparing them the hassle of finding a new doctor. It’s a great way to build trust and loyalty among your client roster.
Medicare’s volatility may not slow down any time soon, so it’s important to remain agile, to look for the opportunity and nuance in upcoming changes, and to stay laser-focused on customer service in order to retain your current clients.
Here are a few predictions for the disruptions discussed above:
Other challenges for Medicare agents may include the following:
Staying focused on what’s in your control is a healthy way to shed the stress of constant Medicare disruptions. Active Analytics can help you make well-informed, timely decisions thanks to actionable insights on your client accounts. Your dashboard shows exactly which clients are affected by upcoming changes—and so much more.
We’re ready for AEP 2026. Are you?
Sources
Want to join us as a thought partner for our next article series?
