Medicare Advantage Members Leave $5 Billion in Unused OTC Benefits Annually

The Five Billion Dollar Reminder: Why OTC Benefits Matter More Than Ever for Medicare Advantage Members

Every year, Medicare Advantage members collectively leave an estimated five billion dollars in over the counter healthcare benefits unused. That amounts to nearly seventy percent of available allowances going untapped. For an industry focused on driving better outcomes and smarter spending, it raises an important question: why are so many members missing out on a benefit designed to make everyday health management easier and more affordable?

Many older adults live on fixed incomes. OTC allowances support them by covering items that help maintain routines that might otherwise strain monthly budgets. Yet these dollars expire annually and do not roll over, which turns unused benefits into lost value instead of improved health.

“OTC benefits are one of the simplest ways plans can help members maintain everyday wellness at no extra cost.”
Healthcare Benefits Analyst

Why OTC Allowances Influence Member Behavior

Research suggests that while consumers generally stick to their health routines, price still affects how consistently they use certain products. When OTC costs are removed from the equation, members can maintain personal care and wellness habits with fewer interruptions. In practice, this means less avoidance of needed products and stronger adherence to recommended routines.

Kenvue, the consumer healthcare company behind Band Aid, Neutrogena, Listerine, Tylenol and other household brands, has been working with retailers and healthcare providers to encourage smarter use of these allowances. By helping members understand what is eligible and how to access their benefits, they are aiming to close the awareness gap that contributes to underutilization.

“Most members do not realize how broad the eligible product list is or how easy it is to use the benefit before it expires.”
Partner Retail Pharmacist

Where Members See the Most Value

Medicare Advantage OTC benefits are surprisingly versatile. Members often use them to stay ahead of seasonal or chronic needs, but the full scope of eligible items is still underappreciated. A few of the most common categories include:

• Pain and arthritis relief

• Cold and flu preparation

• Digestive and gastrointestinal support

• Skincare and sun protection

• Oral care essentials

• First aid restocking

How Members Access Their OTC Dollars

To simplify usage, many plans now offer multiple access points. Members can order from curated catalogs, swipe an OTC debit card during in store purchases, or submit receipts for reimbursement. These flexible methods are reducing friction, but awareness remains a hurdle.

The Cost of Underutilization

When benefits go unused, both members and plans lose out. Members miss opportunities to invest in their health, and plans miss the chance to influence downstream costs through improved preventive care behaviors.

Here is a quick snapshot of the current landscape:

A Path Forward for the Industry

Raising awareness and improving education around OTC benefits represent low lift, high impact opportunities for insurers. Clear communication, proactive reminders, and partnerships with consumer health brands can all help members maximize the value already built into their plans.

For an industry increasingly focused on whole person well being, ensuring members actually use the benefits designed for daily health maintenance is not just a financial consideration. It is a critical step toward better outcomes, stronger engagement, and a more empowered Medicare Advantage population.