Does Medicare Cover Rehab Facilities?

Medicare provides healthcare coverage to millions of Americans, and understanding its role in covering rehabilitation services is a common concern. While Medicare covers various rehabilitation facilities and services, specific conditions and requirements must be met. This article clarifies the types of rehab services and facilities Medicare covers, eligibility criteria, financial responsibilities, and how Medicare Advantage plans factor into this.

Types of Facilities and Applicable Medicare Parts

Medicare coverage for rehabilitation services depends on the type of facility and services rendered. Different parts of Original Medicare, specifically Part A and Part B, cover services in distinct settings.

Skilled Nursing Facilities (SNFs) provide short-term, skilled nursing care and therapy services following a hospital stay. This care requires medical or rehabilitative services from licensed professionals. Medicare Part A covers eligible services received in an SNF. This coverage is for skilled care needs, not for long-term custodial care or assistance with daily activities if skilled care is not also required.

Inpatient Rehabilitation Facilities (IRFs) offer intensive rehabilitation for individuals recovering from severe conditions like stroke, spinal cord injuries, or traumatic brain injuries. Patients receive a higher level of therapy for several hours each day to regain function and independence. Medicare Part A covers services provided in an IRF, focusing on comprehensive, coordinated rehabilitation.

Outpatient therapy services encompass physical therapy, occupational therapy, and speech-language pathology received in various non-hospital settings, including private practices, hospital outpatient departments, or freestanding clinics. Medicare Part B covers these outpatient rehabilitation services. This coverage is for necessary diagnostic and therapeutic services that help restore function, improve mobility, or prevent disability.

Eligibility Requirements for Coverage

Medicare’s coverage for rehabilitation services is not automatic; specific eligibility criteria must be satisfied. These requirements ensure services are medically necessary and provided in the appropriate setting.

All rehabilitation services must be medically necessary, certified by a doctor for diagnosis, treatment, or to improve a malformed body part. The care must also be reasonable and necessary for the patient’s condition. A comprehensive care plan, established and regularly reviewed by a physician, is also required.

For SNF coverage under Part A, a qualifying inpatient hospital stay of at least three consecutive days is required. Time spent under observation status in a hospital does not count. The SNF admission must be for a condition treated during the hospital stay or one that arose while receiving SNF care for the original condition.

Care in both SNFs and Inpatient Rehabilitation Facilities (IRFs) must be skilled nursing or therapy services, provided by or under the direct supervision of licensed nurses or therapists. The patient’s condition must require these skilled services daily. For IRFs, the “3-hour rule” mandates at least three hours of intensive therapy per day, five days a week, or 15 hours over a seven-day period.

Understanding Your Costs and Coverage Limits

Navigating the financial aspects of Medicare coverage for rehabilitation services involves understanding various out-of-pocket costs and benefit limitations. These costs, including deductibles and coinsurance, vary based on whether services fall under Medicare Part A or Part B.

For services covered under Medicare Part A, such as those received in an SNF or IRF, costs are structured around a “benefit period.” A benefit period begins the day a patient is admitted as an inpatient in a hospital or SNF and ends when they have not received inpatient hospital or skilled care for 60 consecutive days. In 2025, the Part A deductible is $1,676 per benefit period, which must be paid before Medicare covers costs.

Once the Part A deductible is met, Medicare covers the full cost for the first 20 days of a Medicare-approved SNF stay, with no coinsurance. For days 21 through 100 of a skilled nursing facility stay within a benefit period, the patient is responsible for a daily coinsurance amount, which is $209.50 in 2025. Medicare does not cover SNF or IRF stays beyond 100 days in a benefit period; the patient is responsible for all costs from day 101 onward.

Outpatient therapy services, covered under Medicare Part B, have a different cost structure. In 2025, the annual Part B deductible is $257. After this deductible is met, Medicare pays 80% of the Medicare-approved amount for most outpatient therapy services, with the patient responsible for the remaining 20% coinsurance. Services not covered by Medicare include private duty nursing, personal care items, or custodial care not tied to a skilled need.

Rehab Coverage Through Medicare Advantage Plans

Many Medicare beneficiaries are enrolled in Medicare Advantage (Part C) plans, offered by private insurance companies approved by Medicare. These plans provide an alternative way to receive Medicare Part A and Part B benefits, including coverage for rehabilitation services.

By law, Medicare Advantage plans must cover at least the same benefits as Original Medicare, with the exception of hospice care. This includes services provided in skilled nursing facilities, inpatient rehabilitation facilities, and outpatient therapy settings.

While the scope of coverage is similar to Original Medicare, Medicare Advantage plans have different cost-sharing requirements. These can include varying deductibles, copayments, or coinsurance amounts for rehab services. Some plans may charge a copayment per day for the first several days of an SNF stay, even for the first 20 days that Original Medicare covers at no cost. These plans also have an annual out-of-pocket maximum.

Medicare Advantage plans operate with network restrictions, meaning beneficiaries may need to receive care from providers or facilities within the plan’s network for full coverage. Additionally, these plans require prior authorization for certain services, including inpatient rehabilitation stays or extensive outpatient therapy. Individuals enrolled in a Medicare Advantage plan should contact their specific plan directly to understand their exact costs, network requirements, and any necessary pre-authorization procedures.