Medicare does cover drug rehabilitation programs.

Medicare vs. Medicaid

There is often some confusion between Medicare and Medicaid.

The Basics Of Medicaid:

  • It is a state and federally government-funded program of health insurance.
  • It is only available to people who have an extremely low income or specific disabilities.
  • It has differing qualifications from state to state.
  • It is one of the top payers of insurance benefits to individuals with mental health issues in the United States.
  • Most people on Medicaid do not pay premiums. Some individuals on Medicaid who are at the higher end of the qualifying income brackets may pay a small monthly premium.

The Basics Of Medicare

  • It is a federally funded government program.
  • It offers affordable health care insurance for people over the age of 65 and for people with certain disabilities at any age.
  • Everyone over the age of 65 is eligible to enroll in Medicare.
  • Medicare coverage requires that the person pays premiums. It is available for qualified individuals regardless of their income level.

The Influence of the Affordable Care Act

The Affordable Care Act, which many people know as Obamacare, mandated that all insurance companies must offer the same level of coverage for substance abuse and mental health issues that they offer for other medical conditions. Thus, people on Medicare have coverage for substance use disorders that is equivalent to the coverage Medicare provides for other medical conditions. 

People who are covered by Medicare receive the same quality of treatment associated with any particular intervention, including rehab, like people with other types of insurance.

However,  they may not get the same coverage (payment rate) for the same services as individuals with private insurance receive.

Often, people on Medicare also enroll in supplemental private insurance programs or additional supplemental coverage from Medicare to cover costs that the standard Medicare policy does not cover.

How Medicare Is Funded


Funding for Medicare occurs through payroll taxes. The Self-Employment Contributions Act and the FICA (Federal Insurance Contributions Act) mandated that Medicare would be funded by payroll taxes (2.9 percent of wages). Half of this tax is paid by the employee, and the other half is paid by the employer. This money is placed in a trust fund, and it is only to be used for Medicare expenses by the government.

Individuals also contribute to Medicare when they pay premiums and copays associated with Medicare services.

Different Parts

The premiums people pay for Medicare coverage are based on their monthly income level. There are four different sections or parts of Medicare coverage, and each aspect addresses a specific domain of treatment. Most individuals will pay premiums for Part A, and they may or may not use the other services.

Medicare Part A:

This is the primary inpatient treatment service section of Medicare. This includes inpatient treatment in a psychiatric setting or hospital where a person is being treated for a substance use disorder.

Depending on the situation, there may be a deductible associated with this section (the number of services a person must pay out of pocket before the insurance coverage kicks in).  As of 2019, the deductible for Part A is $1,364.

The coverage of costs under Part A is typically 80 percent of the expenses. As mentioned above, people are free to enroll in supplemental insurances to help them pay for the other remaining 20 percent.

People who need inpatient psychiatric treatment at a freestanding psychiatric clinic (a clinic that is only devoted to the treatment of psychiatric issues) are limited to a total of 190 days coverage over their lifetime. However,  this time limit is not applied to placement in psychiatric wards in hospitals or being treated for psychiatric issues in a hospital that treats other issues.

Medicare Part B:

This is an optional program that addresses outpatient treatment. Part B can also cover up to 80 percent of outpatient treatment services, including rehab, medication management, therapy, and other services. The cost of the assessments associated with rehab is also covered under Part B when these tests are given on an outpatient basis prior to admission into a rehab, residential, or inpatient program.

Medicare Part C:

This is also an optional program that provides supplementary insurance coverage for people in addition to the basic services offered by Medicare.

Medicare Part D:

This is an optional program that covers the cost of prescription medications. Medications prescribed to individuals under Part D must have research evidence (empirical validation) to support their use for the specific condition being addressed. The prescribing physician must document the medical necessity of using this particular medication.

This policy has led to some discrepancies in the use of medications to treat substance abuse issues. For instance, the use of methadone in treating opioid use disorders is covered under Medicare Part A when the person is in a hospital or clinic being treated for opioid abuse. However, methadone for opioid abuse is not typically approved for treatment as an outpatient (under Part B), whereas the use of methadone for pain control is approved on an outpatient basis.

Some Services Not Covered Under Medicare Part a or Part B

There Are Some Services in Rehab That Will Not Be Covered Under Medicare, Including:

  • Personal hygiene items, such as toothpaste, mouthwash, and facewash
  • Private duty nurses
  • Private rooms unless the physician can demonstrate that a private room is medically necessary
  • Luxury treatments for substance abuse, such as massage, gourmet meals, or spa services
  • Treatments that are not supported by research to address the condition in question, such as acupuncture to treat a substance use disorder

Medical Necessity

The Concept of Medical Necessity in Medicare Means That the Service or Intervention:

  • Must be used for the purpose of evaluation, diagnosis, or treatment of the specific condition in question
  • Is used in accordance with accepted standards of practice (based on research evidence)
  • Is clinically appropriate for the type of issue being addressed
  • Is not being used for the convenience of the provider, client, or other physicians or other providers
  • Does not cost more than an alternative service that is likely to produce the same or very similar results

Medicare has typically been the organization that sets the standards for different types of interventions and their medical necessity in the treatment of specific conditions, as well as setting the standards regarding reimbursement rates for these services.

Is Medicare Universally Accepted?

Rehab facilities will typically inform potential clients whether they accept Medicare or not. Not every rehab center accepts Medicare.

In most cases, before an individual is admitted to a rehab program, the program evaluates the person’s insurance and determines whether or not the services in the program will be covered by that policy and how much the individual has to spend out of pocket. 

If you are concerned about whether or not Medicare will cover rehab services for specific treatment centers, go to Medicare’s website and find out whether the facility accepts Medicare. You can also use the treatment locator service from the Substance Abuse and Mental Health Services Administration (SAMHSA) to find rehab programs in your area that accept Medicare.

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