With Medicare Open Enrollment beginning October 15th, this is a good moment for retirees to sit down and evaluate healthcare costs, coverage, and financial risk together.
For a lot of my clients, healthcare is one of the largest expenses they can't easily control. We can adjust a travel budget. We can put off buying a new car. We can decide whether the kitchen renovation happens this year or next. But when we need medical care, we generally don't have that same flexibility.
That's why a development in Medicare deserves your attention this fall.
The Centers for Medicare & Medicaid Services recently announced that average Medicare Advantage premiums are projected to decline in 2027. At the same time, an independent analysis from KFF found that the average beneficiary will have fewer Medicare Advantage prescription drug plans available than in 2026.
Both of those things can be true at once. And together, they illustrate something I tell clients every fall: the cost of healthcare coverage is about a lot more than the monthly premium.
What's Changing for 2027?
On September 28th, CMS announced that the enrollment-weighted average Medicare Advantage monthly premium is projected to decline from $14.37 in 2026 to $12.00 in 2027, a reduction of roughly 16.5%. Average premiums for stand-alone Medicare Part D prescription drug plans are projected to increase by less than $1 a month.
Those are encouraging numbers for retirees worried about healthcare expenses.
But there's another side to the story. According to an October 1st analysis by KFF, the average Medicare beneficiary will have access to 28 Medicare Advantage prescription drug plans in 2027, compared with 32 in 2026. Some insurers are pulling back in certain markets, and the number of available plans varies a lot by location.
Interestingly, Pennsylvania remains among the states with the most choices. An October 9th KFF analysis found that Lancaster County residents will have access to 66 Medicare Advantage prescription drug plans in 2027, the highest number of any county in the country.
That sounds like an abundance of choices. But having 66 options doesn't necessarily make choosing the right one any easier.
The Premium Is Only the Beginning
Picture two hypothetical Medicare Advantage plans. Plan A has a $0 monthly premium. Plan B costs $75 a month.
At first glance, Plan A looks like the obvious choice. Why spend $900 a year when another plan has no additional premium?
But say Plan A has higher copayments, a narrower provider network, and a higher annual out-of-pocket maximum. Plan B, meanwhile, provides access to the specialists you regularly see and lower cost-sharing on the services you're likely to actually need.
If you rarely require medical care, Plan A might be perfectly reasonable. If you have ongoing medical needs, Plan B could potentially cost you less overall.
The point was never that higher premiums are better. It's that insurance should be evaluated by the financial risk it transfers, not simply the amount you pay to own it. That's especially important for clients with real accumulated wealth. The objective isn't necessarily finding the cheapest insurance. It's finding coverage that appropriately protects your financial resources while still giving you access to the healthcare you need.
Think About Your Total Annual Healthcare Exposure
A useful way to evaluate Medicare coverage is separating healthcare expenses into three categories.
Predictable expenses include monthly premiums and the expected cost of regular prescriptions, appointments, and treatments. Variable expenses include copayments, coinsurance, and other costs that depend on how much care you actually use. Potential major expenses include hospitalization, surgery, serious illness, and other events that could cause medical spending to jump substantially.
A plan with a low premium but a relatively high out-of-pocket maximum may be perfectly manageable during a healthy year. But how would it perform during a year involving surgery, rehabilitation, or repeated specialist visits? That's the more meaningful comparison.
And remember, Medicare Advantage out-of-pocket maximums generally apply to covered services within the plan's rules. They don't necessarily include premiums, prescription drug expenses, or services the plan doesn't cover. A low monthly premium doesn't eliminate financial risk. It simply changes how that risk gets distributed.
Your Doctors May Matter More Than Your Premium
Another consideration is access to care. Medicare Advantage plans commonly use provider networks, and depending on the plan, you may face different requirements for using physicians, specialists, hospitals, and other providers.
For someone who's spent years building relationships with trusted physicians, that matters a great deal. Think about a retired couple who regularly spends several months a year in Florida but keeps their primary residence in Pennsylvania. Their healthcare needs extend well beyond their home county. A plan that works beautifully around Harrisburg might not offer the same access to routine care while they're away.
That doesn't automatically make Medicare Advantage the wrong choice. It just means geography and lifestyle need to be part of the decision. Your coverage should fit the retirement you're actually living, not simply the ZIP code where you receive your mail.
Original Medicare and Medicare Advantage Are Different Approaches
This is also a good time to revisit the distinction between Original Medicare and Medicare Advantage.
Original Medicare generally allows beneficiaries to use doctors and hospitals throughout the United States that accept Medicare. A lot of retirees pair Original Medicare with a Medicare Supplement policy, commonly called Medigap, to help manage certain out-of-pocket costs. Prescription drug coverage generally requires a separate Part D plan.
Medicare Advantage, by contrast, provides Medicare benefits through a private insurance plan and often combines medical and prescription drug coverage. These plans may offer additional benefits, but they can also come with provider networks, prior authorization requirements, and different cost-sharing arrangements.
Neither structure is universally superior. The right choice depends on your healthcare needs, financial circumstances, preferences, and willingness to accept different forms of risk. There is, however, one consideration that gets overlooked frequently.
Switching Back May Not Be as Simple as You Think
A lot of people assume they can move freely between Medicare Advantage and Original Medicare with a Medigap policy whenever they choose. That assumption can get expensive.
While Medicare generally permits changes between Original Medicare and Medicare Advantage during designated enrollment periods, obtaining a Medigap policy follows separate rules entirely. Your initial Medigap enrollment period generally lasts six months, beginning when you turn 65 or older and enroll in Medicare Part B. During that window, insurers generally can't deny you coverage because of preexisting health conditions.
After that window closes, you may face medical underwriting, higher premiums, or even denial of coverage, unless you qualify for a guaranteed-issue right or additional state protections. This means a decision that looks attractive at 65 could narrow your options at 75. Before switching coverage, understand not just what you're gaining today, but which options you might be giving up tomorrow.
Don't Forget Prescription Drug Coverage
Prescription drug coverage deserves its own review every year. Even if you're satisfied with your current plan, the medications covered, preferred pharmacies, cost-sharing, and utilization requirements can change.
A prescription that was inexpensive this year may cost differently next year. A pharmacy that was preferred under your current plan may not offer the same pricing going forward. For retirees managing several prescriptions, those differences can add up.
The right comparison isn't simply the Part D premium. It's the estimated annual cost of the medications you actually take, at the pharmacies you prefer, under that plan's coverage rules. Medicare's prescription drug out-of-pocket protections have improved in recent years, but understanding the details of your particular plan still matters.
What About Higher-Income Retirees?
For households with substantial retirement savings, Medicare brings another financial consideration: income-related premiums.
Higher-income beneficiaries may pay additional Part B and Part D premiums through IRMAA, the Income-Related Monthly Adjustment Amount. These adjustments generally use income information from two years earlier, which means decisions involving Roth conversions, retirement-account withdrawals, capital gains, and other taxable income can potentially affect your Medicare premiums down the road.
That's exactly why I coordinate healthcare planning with retirement-income and tax planning rather than treating them separately. A decision that looks favorable through an investment or tax lens alone may have consequences elsewhere. The goal is understanding the combined effect.
What Should You Do During Open Enrollment?
Medicare's annual Open Enrollment Period runs October 15th through December 7th, 2026, with coverage changes taking effect January 1st, 2027.
If you're already enrolled in Medicare, this is your window to review current coverage and compare what's available. Before making a decision, I'd ask five questions:
Have my doctors, hospitals, or preferred specialists changed their participation in my plan's network?
What will my expected annual healthcare costs be, including premiums, prescriptions, and likely medical services?
What's my potential financial exposure during a year involving significant medical expenses?
Does my coverage accommodate my travel plans, seasonal residence, or other lifestyle needs?
If I change coverage, will I retain the flexibility to make different choices down the road?
Your current plan should have sent you an Annual Notice of Change explaining important adjustments for the coming year. Don't assume that because your coverage worked well in 2026, it's still the right fit for 2027.
You can compare available coverage through the official Medicare Plan Finder, and Pennsylvania residents can also get free, unbiased Medicare counseling through PA MEDI, the Pennsylvania Department of Aging's Medicare assistance program.
The Signal and the Noise
There will be plenty of headlines this fall about insurers leaving markets, premiums falling, and Medicare costs shifting. Some of that deserves attention.
But for you individually, the most important signal isn't whether the national average premium rises or falls by a few dollars. It's whether your particular coverage continues to meet your needs at an acceptable total cost and level of financial risk. A national average doesn't tell you what your prescriptions will cost. It doesn't tell you whether your cardiologist participates in your plan. And it doesn't tell you what happens financially if you experience a serious illness. Those are the questions that actually matter.
The Bottom Line
Healthcare coverage is a real part of retirement financial wellness. For households that have spent decades building wealth, protecting that wealth involves more than managing investments and minimizing taxes. It also means understanding the financial risks tied to healthcare.
The lowest-premium policy isn't necessarily the best value. And the plan offering the most additional benefits isn't necessarily the best fit. The right coverage is whatever appropriately balances cost, access, flexibility, and financial protection for your individual circumstances.
As Medicare Open Enrollment begins, take the time to review those factors carefully. Because successful retirement planning was never just about accumulating enough money to retire. It's about making thoughtful decisions that help preserve your financial freedom throughout retirement.
If you'd like help reviewing your own Medicare coverage alongside your broader retirement plan, that's a conversation I'd welcome having with you.
To play the game, you've got to know the rules.
This article is provided for educational purposes only and does not constitute individualized financial, insurance, tax, or legal advice. Medicare coverage, premiums, benefits, and enrollment rights vary by individual circumstances and location. Consult Medicare, a qualified insurance professional, or an appropriate benefits counselor before making coverage decisions.
Sources: Centers for Medicare & Medicaid Services, 2027 Medicare Advantage and Part D Outlook, September 28, 2026; KFF, 2027 Medicare Advantage Plan Availability, October 9, 2026; Medicare Open Enrollment Guidelines; Pennsylvania Department of Aging — PA MEDI.