Here’s what we know about UCare’s asset sale to Medica

The health insurer Medica announced Monday it is acquiring contracts and assets connected to the remaining health insurance business at its nonprofit peer UCare. That includes about 300,000 people with Medicaid and MNsure coverage through UCare.

In 2026, UCare will still be responsible for servicing its existing operations, including through a “runout” period to meet contractual obligations.

These and other required activities will be completed in the ordinary course of winding down the legacy UCare business, the insurers say.

Sources tell the Minnesota Star Tribune the wind down will be complete next year, although the exact timeline is not clear.

The acquisition is expected to close during the first quarter of next year, subject to customary conditions including regulatory approvals. As part of the agreement, the UCare brand will transition to Medica. Financial terms were not disclosed.

Medica and UCare have had their differences in the past, but struck a cooperative tone Monday when describing the deal.

“Combined, UCare and Medica have nearly a century of industry expertise and a shared commitment to community-driven coverage for those who need it,” said Hilary Marden-Resnik, the UCare CEO, in a statement.

There are no changes to patient coverage this year.

Individuals enrolled in UCare’s Medicaid and individual market plans for 2026 will continue to receive services without interruption, the insurers say.

UCare previously announced it would exit the Medicare Advantage business, the private form of Medicare in which it’s been the state’s second largest insurer. Monday’s news does not affect that decision, which is forcing about 154,000 seniors to find new coverage for next year.

UCare is Minnesota’s sixth-largest nonprofit group by revenue. It’s a type of health insurer called a Health Maintenance Organization, or HMO, that was ascendent in Minnesota at the time UCare was founded in the 1980s.

The idea was that HMOs would have financial incentives to better coordinate care and reduce unnecessary services, so patient care would be managed for better quality and more efficiency.

Medica is a health insurer that employs about 2,500 people and is the fifth-largest nonprofit group in Minnesota by revenue.

It provides coverage to about 760,000 people spread across the individual health insurance market, fully insured employer groups as well as health plans for people who qualify for coverage from the Medicare or Medicaid government programs.

In addition, the company serves as third-party administrator for about 610,000 people in “self-insured” health plans, where employers take the financial risk for the cost of claims and hire companies like Medica to handle operations.

At times over the past decade, Medica’s strategy has focused on expansion outside Minnesota, which has been the insurer’s home state since the founding of predecessor companies more than 40 years ago.

Medica dates to the mid-1970s, when doctors in the Twin Cities created an HMO called Physicians Health Plan of Minneapolis. This insurer merged with another health plan in 1991 to create Medica.

Medica went on to suffer steep financial losses and ultimately dropped the contract, clearing the way for UCare’s return. The two nonprofits then tangled over the fallout in Ramsey County District Court.

From the 1980s until 2017, Minnesota law effectively reserved for nonprofit health insurers these large managed care contracts in Medicaid, the state-federal program for low-income people. The state’s block against for-profits in Medicaid was restored last year.

The Minnesota Department of Human Services (DHS) handles contracts through which the state hires Medicaid managed care organizations.

Most enrollees, roughly 275,000, who have already signed up for Medicaid coverage through UCare, do not need to take additional steps, DHS says, since their enrollment will continue in 2026 with their UCare-branded plan.

DHS is working on an enrollment plan for people in Medicaid plans from UCare that incorporate Medicare benefits.

“We know any time there is an announcement like this, there can be confusion and concern,” John Connolly, DHS deputy commissioner and state Medicaid director, said in a statement. “For most enrollees, the process should be seamless.”