This week, 16,000 kūpuna received a troubling letter from the state’s largest health insurance company. 

At the top, in bold print, it said: “IMPORTANT NOTICE: Your Medicare plan won’t be offered in 2027.” It continued that action needed to be taken before the end of the year, or else patients with HMSA’s specific Medicare Advantage plans would lose their prescription drug coverage. 

“You need to make some decisions about your Medicare coverage,” said the letter, which included contact information for the federal Medicare hotline. “We appreciate the trust you placed in HMSA for your healthcare needs and apologize for any inconvenience this may cause.” 

The letter, reviewed by Civil Beat, caused panic for some recipients amid a national wave of insurers dumping Medicare Advantage plans over ballooning costs. 

The Hawaii Medical Service Association is ending two of its existing plans for Medicare patients — Akamai Advantage Complete Plus and Akamai Advantage Standard Plus — and creating three others, which could increase monthly premiums and out-of-pocket costs for patients.

Medicare is a federal health insurance program primarily for adults 65 and older, as well as some younger people with disabilities.

The cheapest plan available before the change, the Akamai Advantage Complete PPO, charged a monthly premium of $20 and had a maximum out-of-pocket cost of $7,700 for in-network services. 

Of the new options, the cheapest PPO has a $55 monthly premium and maximum out-of-pocket cost of $8,200 in network. 

A new cheaper option called Select Plus offers a $45 premium with a maximum spend of $5,200 in network, but it’s an HMO, which requires patients to get referrals to specialists, and out-of-network care can cost more. 

In a press release, HMSA said the new plans will “expand member choice and support the long-term sustainability of high-quality, locally based Medicare coverage.” But the company’s notices to patients, with language that differed from the news release, have confused and concerned kūpuna who were afraid their insurance coverage was going to be discontinued. 

“HMSA is is not going to leave the market,” Kimberly Takata Endo, HMSA’s vice president of Medicare told Civil Beat, “but unfortunately, we did have to make some difficult decisions now so that we can continue to provide affordable, high quality care for our members.”

This change comes as the Trump administration ends subsidies for Medicare drug premiums at the national level, and Hawaiʻi’s healthcare system is under enormous stress from rising healthcare costs. Medicare Advantage Plans, for a few extra dollars beyond the basic Medicare plan each month, offer enhanced benefits such as dental, vision and gym access, among other perks. But insurers are now trimming those kinds of benefits.

This is happening all over the country, as major national healthcare insurers scale back their Medicare Advantage plans and narrow their provider networks. Dominant carriers such as UnitedHealthcare, Aetna and Humana, are increasing out-of-pocket costs and exiting regional markets altogether. Federal reimbursement rate growth has slowed, while patient use of medical services and the cost of overall care continues to surge. 

In Hawaiʻi, hospitals and insurers have been losing money while patients, especially on neighbor islands, are having trouble finding a doctor. HMSA took a $117.4 million hit in its operations in 2024 despite $4.4 billion in premiums, and stayed in the black only through investment and other income.

HMSA has adjusted its Akamai Advantage plans in the face of financial strain before. In 2014, according to reporting by the Star-Advertiser, HMSA discontinued five Akamai Advantage plans for 46,000 seniors, citing an estimated $64.1 million loss the previous year from higher-than-expected claims and lower federal reimbursements. It replaced them with higher-premium plans.

Takata Endo, HMSA’s vice president of Medicare, said that they have received “quite a few inquiries” about the letters they sent out on Monday. 

Regarding the language of the letter, Takata Endo said that the Center for Medicare and Medicaid Services required that a templated notice be sent out, so “we are not allowed to alter the language in it at all” or “include any other information in the envelope that we send.” 

She added that HMSA will be following up with an additional packet mailed to their members that describes the changes in “more plain language,” before Oct. 15, when the annual enrollment period is set to begin. 

Keali‘i Lopez, Hawai‘i State Director of AARP, with more than 130,000 members in its Hawaiʻi chapter, advised that “it’s important to shop around,” when it comes to insurance. The organization, which does not sell insurance, offers free workshops to help kūpuna choose their Medicare plan. 

“It is so confusing for anyone,” she said. “All the options just make it that much harder.”

HMSA’s letter signs off: “We hope to serve you again in the future.”