topic Medicare Advantage Over the Counter (OTC) Benefit - Income Tax and Sales Tax Question in Retirement tax questions

Medicare Advantage Over the Counter (OTC) Benefit - Income Tax and Sales Tax Question

kvanvoo — Tue, 24 Feb 2026 06:52:42 GMT

My Medicare Advantage plan has an OTC benefit of $105 per quarter for items listed in the OTC catalog which can be ordered online and/or purchased at CVS. I was wondering if I’m supposed to claim the amount of the benefit I used as income (I haven’t in the past).

Also, when I placed orders online no CA State sales tax was added, so am I supposed to pay that amount when filing CA state taxes when they ask for the amount for online orders that no sales tax was paid?

Re: Medicare Advantage Over the Counter (OTC) Benefit - Income Tax and Sales Tax Question

Katherine S 63 — Wed, 26 Jul 2023 16:38:17 GMT

Hello,

From what I am understanding from your question, this is just a discount so you would only report the medical expenses paid that are out of pocket if it totals to over 7.5% of your adjusted gross income. Usually people do not reach this threshold so they take the standard deduction.

https://www.taxes.ca.gov/sales_and_use_tax/whatstaxable.html#:~:text=Some%20items%20are%20exempt%20from,medicine%20and%20certain%20medical%20devices

This link says that prescription medications are not taxable in CA. You can click on this link or copy and paste it into a browser.

I hope you found this helpful.

Katie S.

Re: Medicare Advantage Over the Counter (OTC) Benefit - Income Tax and Sales Tax Question

kvanvoo — Wed, 26 Jul 2023 16:48:06 GMT

I'm not sure you understood the question. The Over the Counter benefit isn't for prescription medications or medical doctor services. It's for other types of products including vitamins, OTC pain relievers, oral hygiene care products, band ages, wraps for sore muscles, canes, blood pressure monitors, etc.

Thank you.