Starting January 1, 2027, the debit and flex cards that Medicare Advantage plans issue for groceries, over-the-counter items and other supplemental benefits will have to confirm what is actually in the cart before a purchase clears at the register. The Centers for Medicare & Medicaid Services finalized a rule requiring these cards to run real-time, item-level verification against a list of covered products at checkout, replacing a system that mostly approved charges based on which store a card was swiped at. The rule also cuts the cards off the moment a plan year ends, closing a gap regulators say let mismatched purchases and leftover balances slip through unchecked.
What CMS Is Requiring at the Point of Sale
The requirement appears in CMS’s contract year 2027 Medicare Advantage and Part D final rule, detailed in an April 2, 2026 fact sheet from the agency. Supplemental-benefit debit cards, often marketed as flex cards, must be electronically linked to a defined list of covered items and services, with a real-time system checking eligibility for each specific product at checkout rather than approving a purchase because of the merchant category alone. CMS says the change is meant to make sure a card loaded for groceries or over-the-counter medication cannot be used to pay for something the plan never intended to cover.
The same contract year 2027 fact sheet ties that requirement to a second change: supplemental-benefit cards are now restricted to the specific plan year in which they were issued. A card loaded for calendar year 2027 will not be able to carry an unspent balance, or even the working card number, into 2028 the way some plans have allowed. CMS frames point-of-sale verification and the plan-year boundary as one policy: every dollar loaded onto a supplemental card should be both correctly spent and spent inside the year it was granted.
The point-of-sale requirement is not a proposal still working through the regulatory process. CMS’s policy became document 2026-06600 in the Federal Register on April 6, 2026, formally titled the Medicare Program’s contract year 2027 and certain contract year 2026 policy and technical changes to the Medicare Advantage, Part D and Medicare Cost Plan programs. That filing carries the rule past the comment-and-response stage that produced an earlier proposed-rule fact sheet in November 2025, so Medicare Advantage organizations are now working against a fixed 2027 compliance date rather than a rule still open to being withdrawn.
What the plan letter does not do: An Annual Notice of Change lists what changed, but never compares the plan against the alternatives on cost, drugs and doctors. Run the comparison in The 2027 Medicare Open Enrollment Decision Kit.
The Merchant-Code Problem the Rule Replaces
Before this rule, most supplemental-benefit cards relied on merchant category codes, the same billing codes that tell a card network whether a swipe happened at a grocery store, a pharmacy or a big-box retailer, to decide whether to approve a purchase. That system could approve a transaction simply because it happened at an approved store, even if the specific item in the cart, such as a television bought at a retailer that also sells eligible groceries, was never something the plan was supposed to pay for. CMS describes the shift as moving verification from where a purchase happens to what is actually being purchased.
The gap mattered because supplemental benefits have become one of the largest selling points Medicare Advantage plans advertise during enrollment season, with flex cards commonly loaded with hundreds of dollars for food, utilities or over-the-counter products. When a card checks only the store rather than the item, a benefit meant for medically supportive groceries or approved health products can end up paying for goods with no connection to the plan’s stated purpose, with limited ability for plans or CMS to audit those charges after the fact.
CMS’s final rule pairs the verification mandate with a separate disclosure requirement: Medicare Advantage organizations must now publicly post the objective eligibility criteria they use for Special Supplemental Benefits for the Chronically Ill, the card-based benefit category created after the Bipartisan Budget Act of 2018 let plans target extra, non-medical benefits to enrollees with complex chronic conditions. CMS’s Medicare Drug & Health Plan Contract Administration Group, in 2019 guidance signed by group director Kathryn Coleman, defines a chronically ill enrollee as someone with a life-threatening or function-limiting chronic condition, a high risk of hospitalization, and a need for intensive care coordination, the three-part test plans must now show the public they are actually applying.
The Plan-Year Lock and What Still Qualifies
The plan-year restriction closes a related loophole: without it, a card’s verification rules could effectively apply to purchases made well after the coverage period the benefit was budgeted for, letting balances or active card numbers persist into a plan year with a different covered-item list entirely. Under the final rule, a supplemental card issued for 2027 stops recognizing covered purchases once that plan year ends, so enrollees must use loaded balances within the year or lose access to them, rather than carrying access forward into a redesigned 2028 benefit.
The same rule narrows what can count as an SSBCI item in the first place. CMS’s fact sheet states that cannabis products illegal under state or federal law are not allowable supplemental benefits, closing off a category some plans had explored offering through flex cards in states with permissive marijuana laws. Combined with point-of-sale verification, the practical effect is that a card cannot approve a cannabis-related purchase even at a retailer that also sells eligible items, because the item-level check, not the merchant code, now determines whether the charge goes through.
For Medicare Advantage organizations, the compliance clock now runs from a fixed filing rather than a proposal that could still change: Federal Register document 2026-06600, covering contract year 2027, requires the point-of-sale linkage, the plan-year cutoff and the public SSBCI disclosure to be in place by the time next year’s plan benefit packages take effect. CMS has not indicated any separate enrollee paperwork is required before then, but the practical shift is that the flex and debit cards issued for the 2027 plan year will check the item, not just the store, before a supplemental benefit dollar is spent.
Checking What a Plan Card Will Cover
The verification and eligibility changes CMS finalized for supplemental-benefit cards do not tell an enrollee which of their own plan’s covered items, drug list or provider network will look different heading into the next plan year. Annual Notice of Change letters carry those specifics, but they arrive in dense, plan-specific language that rarely spells out what a changed formulary or network actually means at checkout or in the exam room. Reading that letter against the new point-of-sale rules is the step that turns a compliance change into a decision an enrollee can act on before Open Enrollment closes.
The 2027 Medicare Open Enrollment Decision Kit is a 42-page decision kit built around a provider call script and the Open Enrollment calendar for tracking exactly what changes before coverage locks in for the year.
Read the provider call script in The 2027 Medicare Open Enrollment Decision Kit.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
