UCare terminates Medicare Advantage plans for next year and lays off more than 140

UCare, one of the largest providers of privatized Medicare in Minnesota, is trimming its workforce and will not offer Medicare Advantage health plans used by thousands of Minnesota seniors in 2026 as it confronts financial challenges.

As of today, the Minneapolis-based health insurer has 158,000 Medicare Advantage (MA) members who will have to find a new provider next year if they want to stay in the privatized version of Medicare. UCare controls a 26% stake of Minnesota’s Medicare Advantage market.

Due to the coverage change, UCare will lay off 9% of its workforce, the nonprofit said Thursday. The cut amounts to an estimated 144 jobs, and is the second confirmed round of layoffs at the insurer this year.

UCare’s decision to exit the MA market will transform the state’s private Medicare market at a time when insurers face financial challenges from increases in health care use and payment rates that insurers say are insufficient.

“This decision was not made lightly,” UCare CEO Hilary Marden-Resnik said in a statement Thursday. “UCare remains deeply committed to the health of Minnesotans and to supporting members through upcoming transitions.”

If the U.S. Centers for Medicare & Medicaid Services accepts UCare’s request to terminate its MA plans, prospective enrollees will need to find new coverage during Medicare’s annual enrollment period, which is set to start in just over a month.

In 2025, UCare had the second-highest enrollment in the state for MA plans, which are Medicare-approved plans sold by private companies that may offer some extra benefits compared with traditional government-operated Medicare. Only Blue Cross and Blue Shield of Minnesota, with nearly 200,000 enrollees, has a larger Medicare Advantage business in Minnesota.

For decades, health insurers competed to grow their business in MA, which has become as popular as traditional Medicare administered by the federal government.

But earlier this year, UCare stopped offering commissions for brokers who signed up new MA members. The insurer reported an operating loss in 2023, which ballooned to more than $500 million in 2024.

The plans have become costly for insurers beyond just UCare.

MA patients have received far more medical care than projected, UnitedHealthcare chief executive officer Tim Noel said during a recent call with investors. The company announced in July it will drop MA plans covering more than 600,000 people amid its own financial turmoil.

UCare said in its statement Thursday that the cost of health care has dramatically increased in the past two years. Now, UCare is focusing its resources “on programs where it can have the most impact” to maintain stability, the nonprofit added.

In May, UCare announced it was laying off 80 workers, eliminating vacant positions and halting most hiring as part of a turnaround plan. The layoff amounted to roughly 4% to 5% of the insurer’s workforce of about 1,600. With the Medicare Advantage-related job cuts, the nonprofit’s layoffs this year now likely exceed 200 employees.

The turnaround plan consists of streamlining operations, merging departments, consolidating vendors and launching internal cost-saving strategies, the Minnesota Star Tribune reported in May. The insurer had said it’s looking for more efficiency in high-cost areas, including claims accuracy.