Changes to Medicare’s Custody Definition Improve Access to Care for Older Adults Leaving Incarceration

July 21, 2025

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In November 2024, the Centers for Medicare and Medicaid Services (CMS) finalized a rule that narrows Medicare’s description of “custody” to physical confinement. As a result of this change Medicare-eligible older adults and people with disabilities who are released to the community pending trial, on parole, on probation, under home detention, or required to reside in halfway houses, will have better access to Medicare services.

What has changed?

Medicare generally prohibits payment for services provided to enrollees who are “in custody of a penal authority.” This rule is based on a presumption that healthcare services are covered by another entity, like a prison or jail.

Prior to 2025, Medicare used a broad description of “custody” that included many people who were not physically confined in a carceral institution and whose health care was not paid for by any penal authority. Thus, Medicare generally would not pay for services for enrollees released to the community pending trial, on parole, on probation, under home detention, or in halfway houses. This barrier prevented some older adults leaving incarceration from accessing health care, even if they were enrolled in Medicare, because Medicare would not pay and they could not afford the care out-of-pocket.

In the 2024 rule, CMS narrowed Medicare’s description of custody to limit its general rule prohibiting payment to people who are physically detained.^[1] This change took effect January 1, 2025. Now, under 42 CFR 411.4(b)(3), individuals living in the community under supervision who are no longer considered to be in custody for purposes of Medicare include people who are:

Released to the community pending trial (including those in pretrial community supervision and those released pursuant to cash bail);
On parole;
On probation;
On home detention or home confinement; or
Required to live in a halfway house or other community-based transitional facility.

These individuals should not experience Medicare payment issues tied to their custody status. Please note that these are examples of individuals no longer considered to be in custody for the purposes of Medicare payment; there may be other supervision situations that are also no longer considered to be in custody for the purposes of Medicaid payment.

What hasn’t changed?

Medicare will still generally not pay for services for Medicare enrollees who are incarcerated in a jail, prison, penitentiary, or similar institution; outside of a carceral institution on medical furlough; escaped from confinement; or are required to reside in a mental health facility under a penal statute or rule.^[2]

The rules for Part D prescription drug coverage and Part C Medicare Advantage, which were already tied to physical confinement, have remained the same: individuals who are in jail, in prison, or in a mental health institution as a result of a criminal offense are considered to be outside of the service area for the purpose of Part C and Part D plan eligibility.^[3]

What does this change mean for people with Medicare leaving incarceration?

Now, Medicare enrollees who are released to the community, including pending trial, on parole, on probation, under home detention, or living in halfway houses, will generally have their Medicare Part A and B services covered by Medicare.

In addition, individuals leaving incarceration who are not yet enrolled in Medicare will have easier access to a Special Enrollment Period that will help them enroll in Medicare year-round and without late enrollment penalties for Part B or Premium Part A. For more information, see Justice in Aging’s issue brief, “Medicare Special Enrollment Period for Formerly Incarcerated Individuals: What Advocates Need to Know.”

What can advocates do?

If clients are having trouble with Medicare paying for services after leaving incarceration, contact the Medicare Beneficiary Ombudsman. Advocates can also reach out to Justice in Aging for technical assistance.