Federal officials have finalized a rule that will allow coverage of some hemp products as specialized, non-primarily health-related benefits through Medicare Advantage (MA) plans.
In a filing set to be published in the Federal Register on Monday, the Centers for Medicare & Medicaid Services (CMS) is clarifying that certain cannabis products that are legal under both state and federal laws are eligible to be reimbursed under the Special Supplemental Benefits for the Chronically Ill (SSBCI) program.
Under a previous update to the program adopted in April 2025, CMS determined that all cannabis products are not eligible for coverage under certain health plans for chronically ill patients. But the new rule only prohibits coverage of “cannabis products that are illegal under applicable State or Federal law.”
The development is separate from a program CMS launched this week to allow Medicare coverage of hemp-derived CBD and THC products that meet certain requirements, with this one instead focusing on allowing MA organizations to offer hulled hemp seed, hemp seed protein powder and hemp seed oil as covered benefits.
Coverage under new policy is contingent on the Food and Drug Administration’s (FDA) determination that the products are generally recognized as safe (GRAS) and that they meet a standard on there being a “reasonable expectation of improving or maintaining the health or overall function” for SSBCI benefits.
“For example, there is evidence that hemp seed protein powder may offer nutritional benefits,” CMS said.
The agency’s filing notes that under the 2018 Farm Bill signed by President Donald Trump during his first term, hemp products with less than 0.3 percent delta-9 THC on a dry weight basis are legal under federal law but that a more recently approved change that’s set to take effect this November will recriminalize any products with more than 0.4 milligrams of total THC per container.
“Therefore, this regulation will allow MA organizations to offer hulled hemp seed, hemp seed protein powder, and hemp seed oil, consistent with FDA’s review of the GRAS notices, as SSBCI to qualifying enrollees, to the extent otherwise appropriate as SSBCI and under federal and applicable state law. Additionally, at the time of this rulemaking, any cannabis product with a delta-9 THC content above the 0.3 percent threshold is still considered marijuana, remains a Schedule I controlled substance, and therefore is illegal under federal law and would be subject to CMS’s prohibition. Barring subsequent legal changes, any product that does not comply with the amended definition of hemp after the November 12th, 2026 effective date will be a Schedule I controlled substance and therefore will be illegal under federal law and subject to CMS’s prohibition.”
The new rule, which was first proposed in November and is now being finalized, also clarifies that state laws that are more strict than federal law could narrow what types of products are eligible for coverage by MA organizations in their jurisdictions.
“The amended language also clarifies that MA organizations remain prohibited from covering any cannabis product, including any hemp-derived cannabis product, that is illegal under state law within their service area regardless of the product’s federal legal status,” it says.
The filing also contemplates the possible expansion of the types of products that could be able to be covered in the future.
“At the time of this rulemaking, there are only three products that are permissible under applicable state and federal law and therefore may be covered as SSBCI. Those products are hulled hemp seed, hemp seed protein powder, and hemp seed oil,” it says. “However, should additional products become allowable as the law continues to evolve, this regulation would allow MA plans in a subsequent plan year the option to increase their offerings without requiring additional rulemaking from CMS.”
“Therefore, should other cannabis-derived products become allowable as SSBCI due to changes in state or federal law, MA plans must wait until their next bid submission for the following plan year to add these items to their list of covered SSBCI,” the agency noted.
CMS also responded to a public comment about the potential impact of federal marijuana rescheduling under a still-ongoing process that Trump directed to be completed “in the most expeditious manner” in December.
“Should cannabis be rescheduled to Schedule III, this would change its status under the Controlled Substance Act,” CMS said. “However, rescheduling alone would not automatically make cannabis products allowable SSBCI unless the relevant products also meet other applicable State and Federal laws, including the” Federal Food, Drug, and Cosmetic Act.
The separate CMS hemp product coverage initiative rolled out this week is being challenged in a lawsuit filed by a coalition of anti-marijuana organizations. A federal judge denied their motion for a temporary restraining order to halt it from launching, but scheduled a hearing for April 20 on their separate request for a preliminary injunction.
Meanwhile, the White House Office of Management and Budget is holding a series of meetings this week and next week about an FDA CBD products enforcement policy.
Also this week, FDA issued guidance making clear that it does not intend to interfere with implementation of the Medicare hemp-derived products coverage plan.
