D-SNP Enrollment Triples as Medicare Advantage Carriers Chase Higher Margins

From analyzing five years of CMS enrollment files alongside Milliman's D-SNP valuation reports and KFF's SNP market analyses, the margin differential between D-SNPs and standard MA plans reveals a strategic tilt that has accelerated since the VBID model termination. The dual-eligible population, long regarded as actuarially complex and operationally costly, has become the most profitable growth segment in Medicare Advantage. Carriers that once pursued broad geographic expansion are now concentrating their capital and compliance infrastructure on plans designed for the 12.8 million Americans eligible for both Medicare and Medicaid.

KFF's February 2026 enrollment data tells the headline story: over 8 million people are now enrolled in a Special Needs Plan, an increase of nearly 900,000 from the prior year. That growth comprises 83% of total Medicare Advantage enrollment increases over the past twelve months. At the same time, total MA enrollment growth slowed to 3%, its weakest annual pace in nearly two decades, down from a long-run average of 9% between 2007 and 2024. The bifurcation between SNP expansion and standard MA contraction is the defining structural shift in Medicare Advantage for 2026.

The D-SNP Growth Surge: Seven Years of Compounding

Dual-eligible Special Needs Plans became a permanent part of the Medicare Advantage program in 2018, when Congress passed the Bipartisan Budget Act. At the time, D-SNP enrollment stood at 2.2 million. By 2024, that figure had reached 5.8 million. As of February 2025, it crossed 6.0 million, according to KFF's analysis of CMS enrollment data.

Through 2024, D-SNP growth accounted for more than 90% of all SNP enrollment increases since permanent authorization. The compound annual growth rate over this period runs approximately 17%, a pace that dwarfs standard MA enrollment growth of roughly 7% annually over the same span. Since 2018, total SNP enrollment has risen 215%, from 2.6 million to over 8 million, compared to 49% growth in general enrollment MA plans.

The composition of that growth reveals the concentration. Over four in five SNP enrollees, roughly 82%, are in D-SNPs, which serve people eligible for both Medicare and Medicaid. The remaining SNP enrollment splits between Chronic Condition SNPs (C-SNPs) at roughly 1.15 million and Institutional SNPs (I-SNPs) at approximately 115,000. The I-SNP segment has been essentially flat since 2024, while C-SNPs have surged (more on that below).

ATI Advisory's 2026 analysis notes that SNPs now represent about one-third of all MA plans by count, up from just over a quarter in 2025. Nearly one in four Medicare Advantage members is enrolled in some form of SNP, compared to just one in eight when the program gained permanent status. The shift is not merely incremental; it reflects a fundamental reorientation of where carriers are placing their bets.

Why D-SNPs Pay Better: The Margin Differential

The financial logic driving D-SNP expansion is straightforward: dual-eligible beneficiaries generate higher risk-adjusted payments from CMS, and plans serving this population have consistently reported wider margins than general enrollment MA plans.

MedPAC's data shows D-SNP margins averaging 7.5% in 2022, compared to 3.6% for all MA plans. C-SNPs posted similar margins at 7.4%. The differential has persisted across multiple years; D-SNP margins reached 7.8% in 2019 and 10.7% in 2020, though the pandemic year's figures reflect both favorable utilization trends and risk score dynamics specific to that period.

Several actuarial factors drive the margin gap. Dual-eligible beneficiaries carry higher risk scores because their clinical profiles include more diagnosed conditions, resulting in higher capitation payments per member. Medicare Advantage paid approximately 20% more in 2025 for MA enrollees compared to equivalent traditional Medicare spending, according to MedPAC's March 2026 report to Congress, and that premium is amplified for high-acuity populations. D-SNP members also qualify for Medicaid cost-sharing assistance, which shifts a portion of the member's out-of-pocket burden to the state Medicaid program, improving the plan's medical loss ratio on the Medicare side.

The risk adjustment model itself contributes. CMS's V28 model, now fully phased in, was designed to reduce coding intensity differentials between MA and fee-for-service Medicare. MedPAC estimates those differentials still inflate MA risk scores by about 4%. For D-SNP populations with genuinely higher clinical complexity, the risk adjustment payments more accurately reflect actual cost, creating a natural margin advantage over standard MA plans where coding intensity adjustments bite harder.

Plans have leveraged this margin room to fund supplemental benefits that attract enrollment, creating a self-reinforcing cycle. The majority of 2026 D-SNP members are enrolled in plans offering no deductible (87%) and $0 cost sharing on preferred generic tiers (83%), benefit structures that are economically viable only because the underlying capitation payments support them.

VBID Termination Reshapes the 2026 Benefit Landscape

The single largest structural change to D-SNP economics in 2026 was the termination of the Value-Based Insurance Design (VBID) model. CMS ended VBID after 2025, citing substantial and unmitigable costs to the Medicare Trust Funds. The termination triggered a cascading recalibration of supplemental benefit offerings across the D-SNP market.

Milliman's 2026 D-SNP valuation report quantifies the impact. Total value added declined approximately $30 per member per month (PMPM) from 2025 to 2026. The nonuniform benefit component accounted for nearly the entire Part C decrease, falling roughly $26 PMPM. This represents a structural recalibration of supplemental offerings, not a wholesale retreat from benefits.

In 2025, approximately 90% of D-SNP members were enrolled in plans offering VBID benefits, which provided broad, flexible, cash-like supports across the dual-eligible population. With VBID's termination, plans transitioned primarily to Special Supplemental Benefits for the Chronically Ill (SSBCI). The prevalence of SSBCI benefits increased to approximately 90% in 2026, essentially replacing VBID's coverage footprint. However, the substitution is not one-to-one. SSBCI benefits require specific qualifying chronic conditions, making eligibility narrower than VBID's socioeconomic targeting framework. Fewer members qualify even though the same percentage of plans offer the benefit.

The benefit mix has also shifted in composition. Combo benefit offerings increased as a share of total Part C benefit value from 36% in 2025 to 42% in 2026, while benefits offered under VBID, uniform flexibility, or SSBCI declined from 29% to 21%. Plans have pivoted from defined standard benefit designs with VBID to Enhanced Alternative designs featuring supplemental $0 cost sharing on selected drug tiers. Traditional supplemental categories including dental, vision, and over-the-counter (OTC) allowances experienced modest reductions in richness, consistent with the broader MA benefit pullback but tempered by the D-SNP population's Medicaid safety net.

Despite the benefit value decline, D-SNP plan count grew approximately 10% in 2026, and 278 Enhanced Alternative D-SNP plans (33% of the total) reported negative basic premium amounts. The expansion of plan offerings even as per-member benefit value declined suggests carriers are competing on distribution footprint and network access rather than supplemental benefit generosity.

Standard MA Retreats While D-SNPs Expand

The D-SNP growth story becomes more striking when set against the simultaneous contraction in standard Medicare Advantage. A JAMA study published in February 2026 found that approximately 2.9 million MA enrollees in non-employer plans were forced to find new coverage for 2026 after their plan exited their county. The forced disenrollment rate hit 10%, up from a historical average of about 1%, a tenfold increase in two years.

The total number of non-SNP MA-only and Medicare Advantage prescription drug plans nationally declined 10%, from 3,719 in 2025 to 3,373 in 2026. National carriers including CVS Aetna, Elevance, Humana, and UnitedHealthcare each scaled back plan offerings in at least 100 counties. Yet the same carriers expanding their SNP footprints, often in the very counties where they were exiting standard plans.

KFF's February 2026 enrollment data captures this divergence at the carrier level. UnitedHealth Group lost 535,000 total MA enrollees but gained 266,800 in SNPs. Elevance shed 368,000 total members while losing 17,700 SNP enrollees, a markedly lower attrition rate. CVS Health lost 28,600 members overall but grew SNPs by 39,600. Humana was the outlier, growing across all categories with 1.2 million total additions and 179,700 in SNPs.

The strategic pivot is explicit in carrier communications. Elevance CFO Mark Kaye told investors the company would place "greater emphasis on D-SNP" for 2026. Molina Healthcare went further, announcing it would exit traditional MA prescription drug plans entirely in 2027 to focus exclusively on its $5 billion dual-eligible business. Molina described the MAPD product, representing approximately $1 billion in annual premiums, as misaligned with its strategic direction and costing an estimated $1.00 per diluted share in 2026. CareSource is taking a similar approach.

ATI Advisory summarizes the dynamic: official enrollment numbers showed roughly a 1% decrease across the board for "jumbo plans," with an increase of around 3.5% in regional carriers. HealthScape Advisors Senior Partner Alexis Levy characterized the shift: "Plans are focused on a more targeted growth strategy rather than grow-across-the-board."

Carrier Concentration: Two Insurers Hold 54% of SNP Enrollment

The market structure of SNP enrollment raises concentration risk concerns that should factor into actuarial assessments of dual-eligible population stability. KFF's 2025 data shows UnitedHealth Group and Humana together control 54% of total SNP enrollment.

UnitedHealth Group alone holds 40% of all SNP enrollees, 51% of C-SNP enrollees, and 38% of D-SNP enrollees. UnitedHealthcare markets itself as "the most chosen" D-SNP carrier based on CMS enrollment data. Humana holds 14% of overall SNP enrollment and 20% of C-SNP enrollment. Elevance Health follows at 10% of overall SNP enrollment and 12% of C-SNPs.

Nonprofit insurers account for just 14% of SNP enrollees, leaving the overwhelming majority of the dual-eligible population served by publicly traded carriers whose capital allocation decisions follow quarterly earnings logic.

The concentration risk operates in both directions. If UnitedHealth or Humana were to retrench from specific SNP markets, as both have done in standard MA, the disruption would be disproportionate for dual-eligible beneficiaries who face greater barriers to switching plans: cognitive impairments, limited English proficiency, complex care coordination needs, and simultaneous Medicaid enrollment that must align with the new plan. The CMS Star Ratings overhaul sending $18.6 billion to MA insurers over the next decade may provide some stabilization, but quality bonus payments flow to highly rated plans regardless of the population they serve.

UnitedHealth's recent financial turbulence illustrates the risk. The company lost 535,000 total MA members in the latest enrollment data while simultaneously growing its SNP book by 267,000. If internal capital allocation priorities shift, or if regulatory changes reduce the D-SNP margin advantage, a pullback by the carrier holding 40% of SNP enrollment would force millions of the most medically complex beneficiaries through a disruptive plan transition.

C-SNPs: The Fastest-Growing Segment

While D-SNPs dominate by volume, Chronic Condition Special Needs Plans represent the fastest-growing SNP subcategory and signal a new frontier for carrier product strategy. KFF data shows C-SNP enrollment surging from 674,500 in 2024 to 1.15 million in 2025, a 71% year-over-year increase. That growth rate is triple the D-SNP pace over the same period.

The growth is concentrated in three chronic condition categories: diabetes mellitus, chronic heart failure, and cardiovascular diseases. Milliman's 2026 C-SNP market landscape report notes that all other C-SNP types remain relatively uncommon, creating a market where the vast majority of enrollment clusters around a small number of conditions with well-established clinical pathways and predictable cost profiles.

UnitedHealth Group dominates C-SNP enrollment at 51%, compared to its 38% D-SNP share, suggesting a deliberate overweighting of chronic condition products. C-SNP margins tracked at 7.4% in 2022, essentially matching D-SNP profitability, and the narrower clinical populations may offer more predictable loss ratios because the targeted conditions have extensive actuarial data for trend estimation.

The product design features fueling C-SNP growth mirror those driving D-SNP appeal. The most frequently offered member premium in 2026 is $0, consistent with general enrollment MA plans. More than half of C-SNPs offer a formulary with specialized drug tiers that provide specific cost sharing on medications relevant to the targeted chronic condition. SSBCI benefits, including food and produce allowances and general living supports, are frequently offered.

ATI Advisory's May 2026 launch of a public C-SNP dashboard tracking eligible populations signals growing analytical infrastructure around this market segment. With 42% year-over-year plan growth reported by ATI, C-SNPs are approaching the scale where they influence overall MA market dynamics rather than operating as a niche product line.

Regulatory Crosscurrents: Look-Alikes, Integration, and Oversight

Federal policy is simultaneously encouraging D-SNP growth and tightening the rules around it, creating compliance complexity for health plan actuaries.

The D-SNP look-alike threshold, which restricts non-SNP plans from enrolling disproportionately dual-eligible populations, dropped to 70% in 2025 and is scheduled to fall to 60% in 2026. This forces carriers to formally designate dual-eligible-heavy plans as D-SNPs, which triggers additional state contracting, benefit coordination, and CMS reporting requirements. The effect is to push enrollment that was previously captured in standard MA plans into the regulated D-SNP category, inflating D-SNP growth figures while raising the compliance bar.

At the state level, integration requirements are accelerating. CMS implemented new enrollment, benefit, and coordination requirements for Fully Integrated Dual Eligible (FIDE) and Highly Integrated Dual Eligible (HIDE) SNPs in 2025. Of 35 states with coordination-only D-SNPs in 2024, just over half required additional state-specific provisions beyond federal minimums. FIDE and HIDE SNPs operated in fewer than half of states. The push toward exclusively aligned enrollment, where a D-SNP member's Medicare and Medicaid coverage are administered by the same parent company, is reshaping carrier strategy. ATI Advisory notes that on the D-SNP side, growth was concentrated in exclusively aligned, more integrated products, correlating with federal and state policy momentum toward Medicare-Medicaid integration.

MedPAC's March 2026 report adds a broader payment context. The commission estimated Medicare will spend roughly $76 billion, approximately 14%, more for MA enrollees than it would for similar beneficiaries in traditional fee-for-service Medicare. While this overpayment estimate spans all MA, D-SNP populations with genuinely higher clinical needs may represent a smaller share of the gap. The CMS 2027 rate reversal to 2.48% and the full V28 risk model phase-in are compressing MA margins broadly, but the compression hits standard plans harder than D-SNPs whose risk scores more accurately reflect actual cost.

Why This Matters for Health Plan Actuaries

The D-SNP growth surge creates several actuarial considerations that cut across pricing, reserving, and enterprise risk management.

Bid strategy recalibration. The June 2026 bid deadline arrives with D-SNP economics in transition. The $30 PMPM value-added decline from VBID termination must be offset against sustained enrollment growth and stable margins. Plans that bid too aggressively on supplemental benefits risk margin compression; those that pull back too far risk losing enrollment to competitors still willing to invest in benefit richness. The 278 plans reporting negative basic premiums suggest the market has not yet reached equilibrium.

Concentration risk modeling. With two carriers holding 54% of SNP enrollment, the UnitedHealth Q1 MBR dynamics and any potential retrenchment have outsized implications for dual-eligible populations in specific geographies. State insurance departments should be monitoring SNP market share thresholds; if a dominant carrier exits a county, the remaining plans may face adverse selection as the sickest members scramble for alternatives.

SSBCI eligibility estimation. The transition from VBID to SSBCI changes the denominator of eligible members. VBID eligibility was broad, tied to socioeconomic factors. SSBCI requires specific chronic conditions, meaning actuaries must now model which members qualify for supplemental benefits and which do not, adding a layer of clinical classification to what was previously a simpler coverage structure. Getting this wrong in either direction affects both member satisfaction and plan economics.

C-SNP trend credibility. The 71% C-SNP enrollment surge introduces credibility challenges for trend selection. A population that grew by 476,300 members in a single year is experiencing rapid mix shifts in age, severity, and geographic distribution. Loss ratio experience from 2024 may not be representative of the 2026 enrolled population. Pricing actuaries should apply explicit credibility adjustments to C-SNP trend factors, blending plan-specific experience with industry benchmarks until the enrolled population stabilizes.

Integration requirements and state contract complexity. The compliance burden of D-SNP state contracts, FIDE/HIDE integration requirements, and look-alike threshold enforcement adds fixed costs per plan that erode economies of scale differently across carriers. Smaller carriers without established Medicaid partnerships face a structural disadvantage, which helps explain why the market is consolidating around a few large players. For actuaries working on market entry or expansion analyses, the compliance cost layer is as material to profitability projections as the medical loss ratio.

The dual-eligible population represents some of the highest-cost, highest-need beneficiaries in the U.S. health system. That carriers are competing aggressively for this population is, in one reading, a sign that managed care can deliver value for complex patients. In another reading, the margin differential and competitive dynamics suggest a market where payment design, not clinical efficiency, is the primary profit driver. Which interpretation holds will determine whether the D-SNP growth surge ultimately serves the 12.8 million Americans living at the intersection of Medicare and Medicaid, or merely concentrates them into a profitable but fragile segment of the insurance market.