December 15th 2025
By Ari Parker
Seniors miss out on 5 billion in OTC dollars annually. Learn about the value of OTC benefits as well as how and where to use them.
Medicare Advantage over-the-counter (OTC) benefits are insurance-provided allowances that enable seniors to buy everyday health and wellness products. They work similarly to FSA accounts and the average person on Medicare Advantage has $400 in OTC credits to purchase items they would otherwise pay for out of their own pocket.
These funds are included as an ancillary benefit for many Medicare Advantage plans, yet they frequently go unused because seniors aren’t aware they have them, don’t know which items are eligible, or find the purchasing process too confusing.
Every year, $5 billion dollars in OTC benefits goes unspent.
Medicare Advantage OTC allowances can be used on more than just over-the-counter medicines. Seniors can use their OTC dollars on everyday items, like toothpaste, toilet paper, lotion, and sunscreen.
These OTC allowances have become even more important for seniors as inflation and the cost of consumer goods go up. Many seniors, who often live off of fixed incomes and limited retirement accounts, rely on these benefits to get by.
The cost of everyday essentials, from pain relievers to vitamins to basic personal care items, has climbed over the past few years. For many older adults, even small price increases can force difficult tradeoffs. OTC benefits are meant to ease this burden, helping seniors access the products they depend on without dipping into limited monthly funds.
If you are someone who relies on OTC benefits, it’s important to check your plan during Medicare enrollment periods. Plans change, and many of these benefits are being reduced or eliminated.
Despite their value, these benefits are shrinking. Between 2024 and 2025, the share of Medicare Advantage plans offering OTC benefits declined from 85% to 73%. 2026 Medicare Advantage plans will continue reducing ancillary benefits.
While many Medicare Advantage plans will continue to offer OTC benefits, allowances may decrease or go away entirely. So, if you have an OTC benefit, use it while you can!
The barriers are limited awareness, long or confusing plan materials, and difficult purchasing systems. Many older adults struggle with small-print catalogs or websites that require account setup and item codes. Expiration dates add another layer of complexity, as OTC credits often reset monthly or quarterly—meaning unused funds simply disappear when the cycle ends.
Some health plans now send reminders when an allowance is about to expire. Third parties are also providing guides and easy-to-use OTC apps to make it easier for seniors to cash in on their benefits. Pharmacies and caregivers are increasingly stepping in as well, helping beneficiaries select eligible items or place orders on their behalf.
Seniors can redeem these benefits at many major retail pharmacies, through mail-order catalogs, or via online stores and OTC apps that are connected to their insurance plan.
The problem is that many beneficiaries simply don’t know how and where to use OTC dollars. Using your allowance is made all the more challenging by differences between insurance carriers. Each carrier has its own OTC program with its own catalog, list of approved retailers, and disbursement system. If someone switches insurance carriers during the Medicare Open Enrollment Period, they usually have to learn a new system. And some of the OTC systems are more difficult to figure out than they’re worth.
If you’re having a hard time using your benefit, think about asking for help or using an OTC app that makes it easy to redeem your allowance, regardless of your carrier.
Standard over-the-counter health items, like bandages, allergy medicine, throat lozenges, cold medicine, and vitamins are eligible. Even if you don’t need typical “health” items though, most people need basic wellness and hygiene products (like toothbrushes, toothpaste, incontinence supplies, lotion, sunscreen, shampoos, and cleansers) which are usually included in OTC catalogs. Some catalogs even include items like heating pads and wheelchair cushions.
To get the most use out of your OTC allowance, make a list of eligible items that don’t expire quickly. This way, when you don’t have any specific needs, you have a list of things you can purchase that you will need eventually. Check your balance at the end of every benefit period (either every month or quarter depending on your plan), then buy items you know you’ll use eventually before your allowance resets.
When seniors consistently use their OTC benefits, they’re better able to manage day-to-day health needs without sacrificing money meant for food, rent, or utilities. In an inflationary environment, the difference between using or losing these covered items can have a real impact on quality of life.
As prices continue to rise, experts stress that seniors cannot afford to overlook benefits designed specifically to help them stay healthy and financially stable. Now, more than ever, it pays to understand your plan, track your OTC balance, and use these dollars before they expire. Your health and your wallet will thank you.
