The Centers for Medicare & Medicaid Services Monday announced a net average increase of 2.48%, or over $13 billion in additional Medicare Advantage payments to plans in 2027.

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The Trump administration announced a 2.48% payment increase for Medicare Advantage plans for 2027 -- a much bigger boost than an earlier proposal that essentially kept rates flat.

The increase, which amounts to more than $13 billion in additional Medicare Advantage payments to private health insurers, is much larger than a flat rate of 0.09% that was proposed in January. The Centers for Medicare & Medicaid Services, which announced the increase Monday afternoon, said the “finalized policies … advance CMS’ vision of a sustainable and stable MA program that offers choice to Medicare beneficiaries and is a responsible steward to taxpayers.”

The news is good to some of the nation’s largest health insurers including UnitedHealth Group’s UnitedHealthcare, CVS Health’s Aetna, Humana and Elevance Health that have been struggling to contain medical expenses of a record number of older adults enrolled in Medicare Advantage plans.

The payment increase comes following an intense lobby by the health insurance industry and health plan lobbies that have said the lower flat increase would lead to more insurers exiting markets and cutting health benefits or selling fewer plans with drug coverage. That, health insurers say, could reduce Americans access to Medicare Advantage choices.

Medicare Advantage plans contract with the federal government to provide traditional coverage available in traditional Medicare plus extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs. CMS said the payment increased includes “consideration of the various elements that impact MA payments, such as growth rates of underlying costs, 2026 Star Ratings for 2027 quality bonus payments, and risk adjustment updates.”

“CMS’ vision for Medicare Advantage and Part D is clear: a great choice for seniors and a smart deal for taxpayers,” said Chris Klomp, Director of Medicare and Chief Counselor of the U.S. Department of Health and Human Services. “The Rate Announcement improves payment accuracy and strengthens competition based on quality—not on coding practices—helping put the program on a more sustainable path for the long term.”

Enrollment in Medicare Advantage eclipsed 35 million older adults earlier this year, which is more than half of all eligible beneficiaries choosing coverage from such a private plan.

“Medicare Advantage and Part D should work for the people who rely on them,” said CMS Administrator Dr. Mehmet Oz. “These updates keep coverage affordable and ensure patients get real value from their plans.”

Following news of the 2.5% increase, the health insurance lobby, AHIP, said health plans will "continue to focus on keeping coverage and care as affordable as possible during this time of sharply rising medical costs.: