Medicare Over-the-Counter (OTC) benefits are a “supplemental benefit” that allows members to purchase health-related products without out-of-pocket costs. Unlike standard medical coverage, this benefit provides a pre-funded allowance—typically via a prepaid debit card—to buy everyday items like vitamins, pain relievers, and first aid supplies.
How People Qualify
Qualification is not based on a specific medical diagnosis, but rather on the type of plan you choose.
-
Enrollment Requirement: You must be enrolled in a Medicare Advantage (Part C) plan that offers the OTC benefit. Original Medicare (Part A and Part B) does not include OTC coverage.
-
Dual Eligibility: People who qualify for both Medicare and Medicaid often have access to higher OTC allowances through Dual Special Needs Plans (D-SNPs).
-
Geographic Availability: Since private insurers (like UnitedHealthcare, Humana, or Aetna) manage these plans, availability varies by zip code and provider.
A Brief History
The concept of OTC benefits grew alongside the evolution of the Medicare Advantage program:
-
The Origins (1997–2003): The Balanced Budget Act of 1997 created “Medicare+Choice” (later renamed Medicare Advantage). Initially, plans focused on basic dental or vision to attract members.
-
Modern Expansion (2018–2019): A major shift occurred when the Centers for Medicare & Medicaid Services (CMS) expanded the definition of “primarily health-related” supplemental benefits. This allowed insurers to offer more flexible benefits, like OTC allowances, to help prevent emergency room visits by encouraging self-care for minor ailments.
-
Current State: As of 2025, approximately 85% to 88% of Medicare Advantage plans now offer an OTC benefit, making it one of the most common “extra” perks alongside dental and vision.
The Benefits Provided
The core value of the OTC benefit is financial relief for items usually paid for out-of-pocket. Benefits generally fall into three categories:
| Category | Common Examples |
| Medicine Cabinet | Pain relievers (Ibuprofen/Aspirin), cough/cold meds, antacids, and allergy relief. |
| Personal Care | Toothpaste, toothbrushes, denture cream, sunscreens, and hand sanitizer. |
| Supplies & Equipment | Bandages, thermometers, blood pressure monitors, canes, and compression socks. |
| Extended Benefits | Some D-SNP plans also allow these funds to be used for healthy groceries or utility bills. |
How the Allowance Works
-
The “Use It or Lose It” Rule: Most plans provide a monthly or quarterly allowance (e.g., $100 every three months). In many cases, if you don’t spend the balance by the end of the period, it does not roll over.
-
Where to Shop: You can typically use your card at major retailers like CVS, Walgreens, and Walmart, or order through a plan-specific mail-order catalog.