Millions of older Americans enrolled in Medicare Advantage plans are noticing changes, with popular extra benefits reduced and future cuts likely. Experts attribute these changes to rising medical costs and tighter federal payments.
Core vs. Supplemental Benefits
Core benefits such as dental, vision, and hearing coverage remain widely available in Medicare Advantage plans. However, insurers are cutting or eliminating supplemental perks like over-the-counter allowances, meal benefits, transportation assistance, and fitness programs.
Michael Ryan, a finance expert, explains to Newsweek that insurers initially added extras such as OTC cards and Uber rides when CMS payments were generous. Now, with 2027 payment rates growing only about 2.5 percent, insurers are unable to touch legally required core benefits, making the supplemental perks the first to go.
Impact on Medicare Beneficiaries
More than half of Medicare beneficiaries use Medicare Advantage plans. Many older Americans rely on supplemental benefits to manage everyday expenses and access care. As these benefits decline, out-of-pocket costs could rise for retirees on fixed incomes.
“These perks were never guaranteed benefits. They were bait,” Ryan said.
A report by KFF highlights the decline in other benefits, showing a drop in the availability of OTC benefits—from 73 percent in 2025 to 66 percent in 2025. Other perks like meal benefits and transportation are also becoming less common.
Drew Powers from Powers Financial Group shared that as for-profit entities, insurance companies will only offer additional benefits if they don’t affect profits. When government payments are lower, cuts often target these additional benefits.
Plans choice has become limited, with the average Medicare beneficiary having fewer options: 32 prescription drug plans in 2026 versus 34 in 2025.
What Causes the Cuts?
Nationally, Medicare Advantage plans available for individual enrollment fell by 9 percent year-over-year. Furthermore, 13 percent of enrollees faced plan termination entering 2026, doubling the share affected in the previous year.
Kevin Thompson of 9i Capital Group mentions that lower Medicare spending pushes costs back onto consumers, potentially helping to lower overall expenses.
Insurers face higher healthcare costs and altered federal payment rules, leading them to trim extra benefits while keeping premiums low. Alex Beene, a financial literacy instructor, notes that while supplemental perks may evolve, they are unlikely to disappear completely.
Future Outlook
Heading into next year, beneficiaries might find OTC allowances less generous or disappearing altogether. Michael Ryan warns that these changes occur quietly, generally unnoticed as they are buried in the Annual Notice of Change letter.