Changes to Supplemental Benefits in Medicare Advantage Plans

Millions of older Americans enrolled in Medicare Advantage plans are experiencing reductions in supplemental benefits, with more cuts anticipated due to rising medical costs and tighter federal payments. While core benefits like dental, vision, and hearing coverage remain widely available, many plans are decreasing or removing perks that attracted seniors to Medicare Advantage. These include over-the-counter (OTC) allowances, meal benefits, transportation assistance, and fitness programs.

Insurers introduced OTC cards, grocery allowances, and transportation services to attract enrollment when CMS payments were more generous, says Michael Ryan, a finance expert. However, with 2027 payment rates rising only about 2.5 percent, insurers cannot alter legally required core benefits. Thus, supplemental benefits are being reduced first.

More than half of Medicare beneficiaries receive coverage through Medicare Advantage plans. Many seniors rely on these extra benefits to cover everyday expenses and access care. Reductions in allowances or services can lead to increased out-of-pocket costs for retirees on fixed incomes.

In 2025, OTC benefits were available in 66 percent of plans, down from 73 percent the previous year.

This decline reflects a pullback by insurers on supplemental benefits after years of rapid expansion. Meal benefits, transportation assistance, and other extras are becoming less common in some plans. Despite cuts, most plans continue to offer core benefits. KFF notes that virtually all Medicare Advantage plans provide dental, vision, and hearing coverage in 2026, similar to past years. However, plan options have narrowed slightly, with beneficiaries able to choose from 32 Medicare Advantage prescription drug plans in 2026, a decrease from 34 in 2025.

Medicare operates as a government program, while Medicare Advantage is offered by for-profit insurance companies. Drew Powers explains that these companies will offer additional benefits only if they do not significantly impact profits. When government payments are below expectations, insurers need to recover funds somehow, making supplemental benefits an easy area to cut.

Nationally, the number of Medicare Advantage plans available for individual enrollment decreased by 9 percent year-over-year. KFF found that 13 percent of enrollees in Medicare Advantage prescription drug plans faced plan termination heading into 2026, roughly double the share affected the previous year.

Kevin Thompson notes that lower Medicare spending results in reduced coverage by insurers. The government views many supplemental coverages as non-medically necessary, potentially shifting these costs back to consumers, which might lower overall costs.

Insurers have been facing higher healthcare costs and changes to federal payment rules, pushing some companies to trim supplemental benefits while maintaining low premiums. The emphasis appears to be on preserving core medical coverage and low premiums over supplemental perks.

Alex Beene, a financial literacy instructor, states that financial pressures caused by rising medical costs and reimbursement changes are forcing insurers to make these choices. Many aim to keep premiums low and core medical coverage intact, leading to cuts in supplemental perks.

Beneficiaries may find that perks they expect, such as OTC allowances, are becoming less generous or disappearing. Michael Ryan notes that such changes occur quietly, often buried in an Annual Notice of Change letter that few read thoroughly, making the plan seem unchanged while underlying value decreases.