CMS Narrows Medicare Custody Definition to Expand Coverage Access in 2025
In November 2024, the Centers for Medicare and Medicaid Services (CMS) finalized a rule that narrows the definition of "custody" in Medicare regulations to mean physical confinement. This regulatory adjustment improves Medicare coverage access for older adults and people with disabilities who are under community supervision such as pending trial release, parole, probation, home detention, or residing in halfway houses. Previously, Medicare broadly interpreted custody to include many who were not physically confined, thus disqualifying them from coverage despite having no other payment source for healthcare services.
Medicare generally does not cover services for enrollees "in custody of a penal authority" based on the expectation that healthcare is covered by correctional institutions. However, before this change, the broader custody definition led to access barriers since it encompassed individuals not confined in jails or prisons. The new CMS rule, effective January 1, 2025, limits the no-payment rule to individuals physically detained, allowing community-supervised enrollees to retain Medicare Part A and B coverage.
This rule maintains exclusions for Medicare payment to enrollees incarcerated in jails, prisons, on medical furlough, escaped confinement, or those required to reside in mental health facilities under penal statutes. Meanwhile, Medicare Part C (Medicare Advantage) and Part D (prescription drug coverage) rules continue to exclude individuals physically confined due to criminal offenses from participating in those plans' service areas.
Additionally, the CMS rule facilitates Medicare Special Enrollment Periods (SEPs) for individuals released from incarceration who are not yet enrolled, providing opportunities to enroll year-round without late penalties. This amendment addresses previous enrollment challenges and supports smoother healthcare access transitions for formerly incarcerated Medicare-eligible populations.
Advocacy groups like Justice in Aging provide resources and technical assistance to support beneficiaries and their advocates in navigating these regulatory adjustments and enrollment pathways. The Medicare Beneficiary Ombudsman is also available to assist with issues related to Medicare payment for healthcare services after release from incarceration.
Overall, this regulatory clarification reflects an effort to align Medicare coverage policies with community-based supervision realities, reducing healthcare access gaps for justice-involved older adults and people with disabilities. It also underscores the ongoing interplay between carceral system involvement and federal health insurance eligibility and payment regulations.