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By Suzanne Blake
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Millions of older Americans enrolled in Medicare Advantage plans have already seen popular extra benefits scaled back, with further cuts anticipated as insurers grapple with rising medical costs and tighter federal payments, according to experts.
While core benefits such as dental, vision and hearing coverage remain widely available, a growing number of plans are reducing or eliminating supplemental perks that have attracted seniors to Medicare Advantage. These include over-the-counter allowances, meal benefits, transportation assistance and fitness programs.
Newsweek has reached out to the Centers for Medicare & Medicaid Services (CMS) for comment via email.
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"Insurers added OTC cards, grocery allowances, and Uber rides to win enrollment when CMS payments were generous," Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. "Now that 2027 payment rates are only rising about 2.5 percent, nowhere near what medical costs are running, insurers can't touch the legally required core benefits. So the bait is the first thing that gets pulled."
More than half of Medicare beneficiaries receive their coverage through Medicare Advantage plans. Because many older Americans rely on supplemental benefits to help cover everyday expenses and access care, reductions in allowances or services can increase out-of-pocket costs for retirees on fixed incomes.
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What to Know
KFF's 2025 report on this year's Medicare Advantage offerings found that OTC benefits are available in 66 percent of plans, down from 73 percent in 2025. The decline comes as Medicare Advantage insurers are pulling back on supplemental benefits after years of rapid expansion. KFF reported that meal benefits, transportation assistance and other extra perks are also becoming less common in some plans.
And Ryan said these types of cuts are likely to escalate moving into 2027 plan offerings.
“These perks were never guaranteed benefits. They were bait,” he said.
Despite some of the cuts, most plans continue to offer core benefits like dental, vision and hearing coverage. KFF noted that "virtually all" Medicare Advantage plans provide these benefits in 2026, similar to previous years. However, plan choice has become somewhat more limited. The average Medicare beneficiary can choose from 32 Medicare Advantage prescription drug plans in 2026, down from 34 in 2025.
“We first have to remember that Medicare is a government program while Medicare Advantage is provided by for-profit insurance companies,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek. “As for-profit entities, insurance companies offering Medicare Advantage are going to offer additional benefits only to the extent those benefits don’t cut too deep into profits. When government payments are lower than expected, such as in this year, the money has to be recouped somewhere, and additional benefits are an easy cut.”
Nationally, the number of Medicare Advantage plans available for individual enrollment has fallen 9 percent year-over-year.
KFF also found that 13 percent of Medicare Advantage prescription drug plan enrollees were affected by a plan termination heading into 2026, roughly double the share affected the previous year.
“It all comes down to lower Medicare spending. If insurers receive less, they will have to cover less,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “The government may see many of these supplemental coverages as non-medically necessary and view these ancillary benefits as something that could be pushed back onto the consumer, which, in theory, could help force costs down overall.”
What's Behind the Cuts?
Experts say insurers have been facing higher healthcare costs and changes to federal payment rules, prompting some companies to scale back supplemental benefits while still preserving low premiums.
Rather than eliminating core medical coverage, many plans appear to be trimming the extra benefits that helped originally differentiate Medicare Advantage from traditional Medicare.
“This is not surprising given the financial pressures insurers are facing. Rising medical costs and changes to how federal payments are reimbursed are forcing insurers to make choices, and many are looking to keep low premiums and core medical coverage by cutting supplemental perks,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “For seniors, however, those perks can represent real savings, so beneficiaries should expect the benefits to keep evolving rather than disappear altogether.”
By the Numbers
Source: KFF analysis of 2026 Medicare Advantage offerings.
What Happens Next
Continuing into next year, beneficiaries may find that some of the perks they have come to expect, particularly OTC allowances, are becoming less generous or disappearing altogether.
“The real problem is that it happens quietly, buried in an Annual Notice of Change letter almost nobody reads line by line,” Ryan said. “So, the plan looks the same on the outside while the value inside has eroded.”
Contact Newsweek editors for this story: Jason Lemon and Anthony Murray.
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