A court ruling in favor of a Medicare Advantage insurer could affect how the federal government calculates quality ratings for health plans, potentially giving insurers more flexibility as they build their 2027 benefit packages.

While the outcome remains uncertain, the decision could ease some pressure on carriers that had been facing lower ratings and reduced payments.

Jae Oh, CFP, author of “Maximize Your Medicare” and a longtime Medicare expert, said the lawsuit creates new uncertainty for the Centers for Medicare & Medicaid Services (CMS) as it prepares ratings that influence how much funding Medicare Advantage plans receive. That funding, in turn, helps determine the supplemental benefits insurers can offer beneficiaries.

For retirees and people approaching Medicare eligibility, the case does not change today’s coverage.

It does, however, reinforce one message that financial advisers and Medicare specialists have delivered for years: Medicare Advantage plans are annual contracts, and beneficiaries should compare their options every fall rather than automatically renewing coverage.

What the Medicare Advantage ruling means for you

• Your current Medicare Advantage coverage does not change because of the lawsuit.
• Benefits and premiums for 2027 remain subject to CMS approval.
• Some insurers could avoid rating downgrades that might have reduced plan funding.
• Review your Medicare coverage every year during open enrollment because benefits, provider networks, and prescription drug coverage can all change.

Below is a transcript of the interview with Oh, edited for brevity and clarity.

Why Medicare Advantage star ratings matter

Bob Powell: Another round of Medicare Advantage star ratings recalculations could be just around the corner. It might sound like an obscure topic to some, but it should not be, correct?

Jae Oh: It is confusing, understandably so.

CMS, which governs Medicare, oversees all Medicare Advantage plans and all Part D plans, for example. CMS also has a star rating system. Depending on the star rating of a particular plan, that rating determines how much money a carrier may receive to create its benefits packages for Medicare Advantage plan members.

That makes this a highly contested topic for a carrier. If a carrier gets a lower star rating, then the next year it has less funding to create its benefits package. That hurts the benefits package, and as a result, enrollment in the next year can decline. We have seen that.

In addition, if that becomes extreme, carriers can simply choose not to offer plans in a particular location because the plan is not viable. There are fixed costs and other matters they are looking at.

We have seen that fairly dramatically in 2026, with carriers leaving counties entirely. The fact that the star system is now being challenged, and a lawsuit has been won by a particular carrier, throws another moving part into an already complicated situation.

How Medicare Advantage star ratings are determined

Bob Powell: How do the star ratings come about? Is it the plan beneficiary who rates the company, or do the ratings come about another way?

Jae Oh, CFP®: It is a little bit of a mystery to me as well. There are a number of inputs, and one of them is user satisfaction and outcomes. These matters combine to create the composite star rating.

Very recently, a smaller carrier called Clover Health challenged the system, and it won on some of the changes CMS had proposed and enacted.

Why CMS may have to recalculate ratings

Bob Powell: I mentioned at the start that these ratings might be recalculated. Do you have a sense of how that might work?

Jae Oh: Given that the Medicare Advantage plan carrier was the plaintiff and won, it implies that the rating systems, which were supposed to be notably tighter going into 2027, may be relaxed.

In theory, that should be positive for existing Medicare Advantage plan members. From what we read in the news, CMS itself is having to relook at everything. CMS even extended the time frame by which carriers could file for approval going into 2027.

Beneficiaries may see more four-star plans, but 5-star plans remain uncertain

Bob Powell: It strikes me that beneficiaries, when they are reevaluating which plan to enroll in, may have more four- and five-star insurers to choose from than in the past.

Jae Oh: I am skeptical about five-star plans returning. [The year] 2026 saw a dramatic decline in the number of five-star plans.

That said, could certain plans that were four stars in the past and then downgraded to three-and-a-half stars change again? Carriers were concerned. It remains to be seen.

From the surface, at least, the rating system and this lawsuit have created challenges for CMS. How CMS responds is still in flux. That is why there is a longer deadline for carriers to gain approval.

Higher insurer rating could affect benefits, but timing is complicated

Bob Powell: As an outsider looking in, as a plan beneficiary, if my insurer goes from three and a half stars to four stars and presumably gets more money from CMS, I might be able to witness an increase in the features offered to me, perhaps.

Jae Oh: There is a strange lag time when it comes to Medicare Advantage plans. We are talking about a star system that is not released until 2027, yet all the features and benefits for 2027 are already being proposed now and sent in for approval.

So there is a time-lag issue.

Concerns I might have had six months ago have declined a little because we have seen fewer Part D plans. The number of Part D plans has dropped dramatically, and I do not necessarily think that is going to change.

The number of Medicare Advantage plans may also have been at risk. That risk seems to have declined.

It does not get away from the idea, however, that every year the plans will change, and people should check. I will stay with that.

Medicare beneficiaries should review coverage every year

Bob Powell: I think that is the best actionable advice we can give folks on this topic, given the uncertainty of where we are and what the outcome will ultimately be.

Jae Oh: A long time ago, Bob, all of five years ago, when everything was stable and the number of plans was increasing in a straight line, our message to your public was still to always check.

These are annual contracts. The clear implication is that every moving part is subject to change every year.

Carriers are interested in having bigger membership numbers. That side of the equation is very, very competitive.

Key takeaways

• A court ruling could prompt CMS to revise how it calculates Medicare Advantage star ratings for 2027.
• Star ratings influence how much funding insurers receive and can affect future plan benefits.
• The lawsuit does not change beneficiaries’ current Medicare Advantage coverage.
• Five-star plans remain relatively scarce, although some lower-rated plans could benefit if CMS adjusts its methodology.
• Review your Medicare Advantage options every year because plans, benefits and costs can change annually.

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