Medicare Advantage (MA) plans have long appealed to many seniors, especially those managing chronic health conditions, due to their ability to offer comprehensive benefits that extend beyond what traditional Medicare covers. They provide valuable supplemental services that can enhance quality of life and meet complex health needs. However, a forthcoming policy update set to take effect in 2026, announced by the Centers for Medicare and Medicaid Services (CMS), imposes stringent new limitations on the scope of services that MA plans can cover.
These restrictions mark a significant shift in coverage capabilities for MA plans, specifically removing the option to cover certain ancillary services that many seniors—particularly those battling chronic illnesses—find essential. Three categories of services, previously permissible within the framework established by the Bipartisan Budget Act of 2018, will no longer be eligible for coverage under these plans:
- Life insurance
- Funeral services and funeral pre-planning
- Hospital indemnity services
The Bipartisan Budget Act of 2018 had recognized the diverse needs of chronically ill beneficiaries by authorizing MA plans to include coverage for certain treatments and services that, while not directly linked to immediate medical health care, contribute significantly to improving function and overall quality of life. By aiding in managing the broader impact of chronic conditions, these services helped fill critical gaps for many beneficiaries.
However, the upcoming CMS rule change reverses this allowance by explicitly prohibiting MA plans from covering the three aforementioned services starting from the 2026 contract year. This policy revision will require MA plans to remove these benefits from their offerings, thereby altering the support landscape for seniors who have come to depend on them.
For individuals contending with chronic illnesses, the consequences of this restriction are considerable. Life insurance coverage accessible through MA plans has served as an important tool for ensuring that families are financially protected in the event of a beneficiary's death. Funeral services and funeral pre-planning assistance provided peace of mind by allowing seniors to prepare for end-of-life arrangements ahead of time, thereby reducing stress and unforeseen expenses for loved ones.
Similarly, hospital indemnity services, which offer supplemental payments during hospital stays to cover non-medical costs, often help mitigate financial burdens beyond direct treatment expenses. Losing coverage for these services may leave seniors exposed to out-of-pocket costs that were previously mitigated, creating additional challenges for those already facing substantial medical expenditures.
Since Medicare Advantage plans are mandated to comply with the CMS restrictions, beneficiaries cannot expect these services to be reinstated under MA coverage lines. Seniors desiring to retain access to such services must consider sourcing them independently, recognizing the associated financial implications. Planning to cover these needs through personal resources or retirement savings will likely become essential for affected individuals.
The new policy limits illustrate a tightening regulatory environment that prioritizes streamlining covered services within MA plans but, in doing so, creates gaps in coverage that may impact vulnerable populations significantly. While detailed guidance on alternative provisions or supplemental insurance options outside MA plans remains outside the scope of this update, the change signals increased responsibility on beneficiaries to anticipate and plan for these coverage voids.