Sonder Health Plans Inc. will be liquidated on October 1, ending its Medicare Advantage, chronic special needs and dual eligible special needs plans.
The insurer was placed under administrative supervision in April to address a capital surplus deficiency, but regulators concluded it could not continue without creating risks for policyholders and providers.
As of December 31, 2024, Sonder’s risk-based capital ratio stood at -577.8% with a $12.2 million deficit. By mid-2025, the ratio had improved to -332%, but the shortfall had widened to $47.2 million, according to a Best Wire report.
To protect policyholders, Georgia has worked with the Centers for Medicare and Medicaid Services to open a special enrollment period through October 31. Members who do not select new coverage by September 30 will be enrolled in original Medicare and automatically placed in Medicare Part D.
Sonder’s collapse highlights wider difficulties for insurers in the Medicare Advantage market. Rising medical costs, reduced federal payments, and tighter regulation have led some insurers to scale back their presence, the report said.
Humana, one of the largest Medicare Advantage providers, exited unprofitable plans earlier this year, cutting around 550,000 members, though most transferred to other Humana offerings. The move helped boost its profitability, with net income rising nearly 67% in Q1.
Bright Health Group, once a fast-growing insurer, also pulled back sharply. It exited multiple Affordable Care Act markets, sold its California Medicare Advantage business to Molina Healthcare, and has since withdrawn from insurance altogether.
Meanwhile, industry analysts noted that smaller and regional insurers like Sonder often lack the financial strength to withstand market pressures that larger, more diversified carriers can absorb. While Sonder was not rated by AM Best, its negative capital position underscored the challenges facing weaker operators.
The liquidation adds to concerns that financial strain and regulatory demands could trigger further exits, leaving fewer options for consumers in an already consolidating Medicare Advantage marketplace.
