Clarifying Medicare Advantage Flex Cards and Their Impact on Public Benefits

The federal government has recently issued important guidance regarding Medicare Advantage “flex cards” and their effect on eligibility for public benefits. This guidance aims to resolve confusion about whether the benefits provided by flex cards are considered income for programs such as Medicaid and SNAP, and it clarifies how these benefits impact eligibility for rental assistance. In summary, the guidance indicates that flex cards should not be treated as cash benefits for the purposes of qualifying for these programs.

 

Flex Cards Background

Over half of Pennsylvania’s nearly three million Medicare beneficiaries are enrolled in Medicare Advantage plans, which serve as an alternative to Original Medicare. These managed care plans often require members to adhere to specific rules to access covered care, including using in-network providers, obtaining referrals for certain services, and securing prior authorization for tests or treatments. Despite these requirements, Medicare Advantage plans are increasingly popular.

One significant factor contributing to this popularity is the supplemental benefits offered to individuals with chronic illnesses. These benefits can cover health-related items and services that go beyond what Original Medicare typically covers. Flex cards, which operate like pre-loaded debit cards, are commonly used to administer these supplemental benefits. Members can utilize flex cards to purchase health-related items such as over-the-counter medications, incontinence products, blood pressure monitors, shower chairs, and grab bars. Additionally, flex cards can be used for groceries and to assist with rent and utility costs.

 

Federal Guidance Issued

Recent guidance from various federal agencies clarifies that flex cards should not be counted as income or resources for determining eligibility for Medicaid or the Supplemental Nutritional Assistance Program (SNAP). The guidance also outlines when flex card benefits should be included as income for rental assistance and when they should be excluded.

In an official letter Rep. Lloyd Doggett dated January 8, 2025, the Centers for Medicare & Medicaid Services (CMS) stated that Medicare Advantage flex cards “are not benefits themselves” and “are not cash benefits and cannot be treated as such.” This letter was a response to the Representative’s request for clarification regarding the use of flex cards in public benefit eligibility determinations.

CMS also referenced guidance from the U.S. Department of Agriculture (USDA), issued on December 5, 2024, which mandates that “State agencies must exclude all Medicare Advantage supplemental benefits when determining income for SNAP purposes under Section 5(d)(5) of the Food and Nutrition Act of 2008.”

Furthermore, the U.S. Department of Housing and Urban Development (HUD) released a Frequently Asked Questions (FAQs) clarifying that flex cards should only be counted as income for rental assistance calculations when an individual actually uses the flex card benefits to pay for rent or utilities. Merely having access to the benefits without utilizing them for rent or utility payments should not affect rental assistance eligibility. HUD also stated that all other expenditures from flex cards, excluding rent and utility support, are exempt from annual income calculations. The FAQ document includes examples of how these exclusions should be calculated and guidance for housing providers on verifying Medicare Advantage supplemental benefits.

PHLP will continue to provide updates on this topic as further developments arise.