Medicare Advantage (MA) plans have long served as an alternative to traditional Medicare, often extending coverage through supplemental benefits that address broader health and wellness needs. However, as of 2026, these plans will no longer be able to include certain types of supplemental services that they have been permitted to cover for several years. These changes stem from updated directives issued by the Centers for Medicare and Medicaid Services (CMS), which alter the scope of benefits available to MA plan enrollees, particularly those with chronic conditions.
The backstory to these coverage changes dates to the Bipartisan Budget Act of 2018, a federal law that authorized Medicare Advantage plans to offer new supplemental benefits under a category known as Special Supplemental Benefits for the Chronically Ill (SSBCI). This provision aimed to allow MA plans flexibility to provide services and items not traditionally covered by Medicare but which could improve or maintain the health or functional status of individuals suffering from chronic illnesses.
Yet, in 2026, CMS is tightening regulations around this policy, issuing a revised rule that establishes clearer boundaries on what can qualify as an allowable supplemental benefit. The agency has explicitly identified several types of services and goods that no longer meet the criteria for coverage under these supplemental benefits and, therefore, must be excluded from Medicare Advantage plan offerings going forward.
CMS explained its rationale in a formal announcement, stating that by establishing a nonexhaustive list of excluded benefits, the agency aims to enhance transparency and certainty for both Medicare Advantage organizations and beneficiaries. The clarified guidance intends to delineate clearly permissible versus impermissible benefits, reducing ambiguity in plan design and enrollee expectations.
The categories of items and services flagged by CMS as no longer eligible for coverage under Medicare Advantage supplemental benefits include the following:
- Alcohol - Beverages containing alcohol cannot be provided as an MA supplemental benefit.
- Cannabis - Despite varied state-level legalization, cannabis products are excluded from coverage under these plans.
- Cosmetic surgeries - Procedures such as facelifts, treatments targeting facial lines, and therapies addressing loss of collagen or fat are not allowable.
- Funeral costs - Expenses related to funeral arrangements or services are disallowed.
- Hospital indemnity insurance - Policies designed to provide daily cash benefits during hospital stays cannot be covered.
- Life insurance - Life insurance products are excluded from coverage.
- Tobacco products - Items such as cigarettes or other tobacco goods cannot be included as benefits.
- Unhealthy foods - Foods considered detrimental to health are not permitted as coverage items.
These restrictions mark a significant limitation relative to previous years, in which some Medicare Advantage plans may have offered more expansive supplemental benefits under the SSBCI framework. The 2026 rule consolidates and formalizes what services are outside the scope of MA coverage parameters.
For Medicare Advantage plan enrollees, especially those living with chronic illnesses who may have benefited from some of these supplemental services, the upcoming changes necessitate a close review of their current plan details and coverage scope. Understanding which benefits remain accessible versus those no longer offered is crucial for care planning.
Furthermore, beneficiaries should recognize that neither traditional Medicare nor Medicare Advantage plans provide comprehensive coverage for all potential healthcare needs in retirement. This reality underscores the importance of personal financial planning, including dedicated savings or investments, to ensure adequate resources are available to cover healthcare expenses that Medicare does not address.
In summary, the 2026 CMS rule revision tightens Medicare Advantage supplemental benefit policies by restricting certain previously permissible items and services. This regulatory update prioritizes clarity and consistency but reduces the supplemental coverage options available to MA plan members, challenging beneficiaries to stay informed and financially prepared for healthcare necessities beyond Medicare’s direct coverage.
Key Points:
- Medicare Advantage plans had been able to offer broader supplemental benefits under the 2018 Bipartisan Budget Act, targeting chronically ill enrollees.
- CMS introduced new rules effective 2026 to clearly define which supplemental services cannot be covered by MA plans.
- Restricted items include alcohol, cannabis, certain cosmetic procedures, funeral costs, hospital indemnity and life insurance, tobacco products, and unhealthy foods.
Risks and Uncertainties:
- Medicare Advantage enrollees with chronic illnesses may lose access to certain supplemental benefits previously available, potentially impacting their overall health management.
- Limited coverage may increase out-of-pocket healthcare expenditures, necessitating enhanced personal financial preparations.
- Potential confusion or lack of awareness among beneficiaries regarding changing coverage rules could complicate care planning and benefit utilization.
Disclosure: This article is intended for informational purposes and does not constitute financial or healthcare advice. Beneficiaries should consult their Medicare plan representatives or financial advisors to understand how these changes affect their individual coverage and financial planning strategies.