An Over-the-Counter (OTC) card is a prepaid debit-style card provided to members of specific health insurance plans. It offers a supplemental financial allowance used to purchase certain health and wellness products not covered by standard medical benefits. The purpose of this benefit is to help reduce members’ out-of-pocket costs for everyday health items. Qualification for the OTC card is directly linked to an individual’s specific health plan enrollment, as it is not a universal benefit.
Determining Eligibility Based on Plan Type
Qualification for an OTC benefit is not automatic for all health insurance beneficiaries; it is a supplemental offering tied to the plan an individual chooses. The benefit is predominantly offered to individuals enrolled in a Medicare Advantage plan, also known as Medicare Part C. Original Medicare, which consists of Part A (Hospital Insurance) and Part B (Medical Insurance), does not include an OTC allowance benefit.
The specific plan chosen by the beneficiary dictates whether an OTC card is provided and the amount of the allowance. In 2024, approximately 88% of all individual Medicare Advantage plans included an OTC benefit, making it a common but not guaranteed feature. Certain plans, such as Dual-Eligible Special Needs Plans (D-SNPs) for individuals who qualify for both Medicare and Medicaid, often provide higher allowance amounts or more expansive benefits.
Individuals must check the plan’s Summary of Benefits or Evidence of Coverage (EOC) document to verify their current coverage or when considering a plan switch. The private insurance carrier administering the Medicare Advantage plan determines the benefit structure, including the allowance amount and the frequency of fund deposits.
How Qualified Individuals Receive and Activate the Card
Once an individual is enrolled in an eligible health plan, the physical OTC card is typically distributed automatically by the insurance provider or its third-party benefits administrator. The card is usually mailed to the member’s address shortly after the enrollment confirmation process is complete or just before the benefit period begins. This process ensures the member has access to the funds as soon as their coverage is active.
The card must be activated before it can be used for the first time, a mandatory step to secure the funds and confirm receipt. Activation is most commonly performed by calling a dedicated toll-free number provided on the card’s packaging or on a sticker affixed to the front of the card. Alternatively, many benefit administrators offer an online portal where the card number and a secondary verification detail, such as the member’s date of birth, can be entered to complete the activation process.
After activation, members can check their current balance and benefit start date through the online portal or a mobile application offered by the plan’s benefit manager. When making a purchase, the card is generally processed like a credit card, not a debit card, and does not require a Personal Identification Number (PIN).
Using the OTC Benefit: Purchases and Limitations
The OTC card is designed for the purchase of non-prescription health and wellness products from participating retailers, both in-store and online. Eligible items commonly include pain relievers (such as NSAIDs), cold and allergy medications, vitamins, dietary supplements, first aid supplies, dental hygiene products, and personal care items.
A key limitation is that the card cannot be used for all items sold in a pharmacy or grocery store. It specifically excludes non-health-related items, including general groceries, alcohol, tobacco products, and prescription medications. Each health plan provides a specific list of eligible items, and the card will only approve transactions for products that match the plan’s defined catalog.
The benefit is structured as a set allowance, usually reloaded on a monthly or quarterly basis, with the average annual benefit amount being around $400 per enrollee. A defining rule of the OTC benefit is that unused funds typically do not roll over to the next funding period and will expire.