Medicare Coverage of Substance Abuse Treatment

Just like anyone else, seniors can struggle with substance use disorders, which the National Institute of Mental Health defines as mental disorders that affect a person’s ability to control their use of alcohol, prescription drugs or illicit substances. According to the National Institute on Drug Abuse, close to 1 million adults aged 65 and older had a substance use disorder in 2018. Because seniors often metabolize substances at a slower rate and have brains that are more sensitive to drugs, they are particularly susceptible to negative effects resulting from substance abuse. 

Veterans also struggle with substance use disorders in addition to mental illness. Of the 1.3 million veterans aged 18 and older with a substance use disorder in 2019, nearly 81% struggled with alcohol use, 27% with illicit drugs, 8% with both alcohol and illicit drugs, and 481,000 also had a mental illness as reported by the Substance Abuse and Mental Health Services Administration. Substance use disorders are especially common among veterans who sustained combat-related injuries or experienced some other type of trauma during their service.

Although Medicare is an excellent resource for seniors, it’s a bit confusing when it comes to coverage for substance abuse treatment. This guide explains what’s covered, details the out-of-pocket costs associated with each type of service and provides resources to help you find more information about how Medicare can help you relieve the financial stress of managing other health conditions.

Medicare Coverage of Substance Abuse Treatment: What You Need to Know

Medicare covers inpatient and outpatient treatment for substance use disorders. The amount of coverage available and the amount you pay may vary based on whether you’re enrolled in Original Medicare or Medicare Advantage. Original Medicare consists of Part A (hospital insurance) and Part B (medical insurance). Medicare Advantage includes hospital and medical coverage, as well as prescription drug coverage. Some plans also offer extra benefits that aren’t covered by Original Medicare.

Because Original Medicare has some coverage gaps, beneficiaries have the option of signing up for Medigap, also known as Medicare Supplement Insurance. If you’re enrolled in Original Medicare and also have Medigap, your out-of-pocket costs for substance abuse treatment may be lower than they would have been if you hadn’t purchased the supplemental insurance.

Covered Services

If you have Original Medicare, Part A pays for the services you receive as an inpatient, while Part B covers the services you receive as an outpatient. Since Original Medicare doesn’t cover prescription drugs, you will need to have a prescription drug coverage plan, known as Medicare Part D. Part D will cover the cost of medications you receive on an outpatient basis, provided those medications are on the list of drugs (also known as a formulary) covered by Medicare.

Medicare Advantage bundles Part A and Part B coverage with other benefits, so it generally covers Medicare-approved inpatient and outpatient treatments, including any prescription medications you take to control the symptoms of substance withdrawal or treat an addiction to opioids. The exception is if you have a private fee-for-service plan that doesn’t cover prescriptions. In that case, you’d need to purchase Medicare Part D to ensure you have coverage for the medications you need to treat your substance use disorder.

For services to be covered by Original Medicare or Medicare Advantage, they must be provided by Medicare-approved facilities or individuals. This may include doctors, physician assistants, nurse practitioners, clinical social workers or clinical psychologists. If you need substance abuse treatment, Medicare covers a variety of services, including full hospitalization, partial hospitalization, group counseling and medication-assisted treatment for opioid use disorders.

Out-of-Pocket Costs

The table below provides an overview of the services covered, along with any notable exceptions and the amount you can expect to pay for each service. Before reviewing the data, it’s important to understand a few Medicare-related terms.

• Medigap: Medicare Supplemental Insurance, also known as Medigap, covers some of the out-of-pocket costs incurred when you use your Original Medicare benefits. Medigap isn’t available to Medicare Advantage members, so you won’t be able to use this type of coverage if you’re enrolled in the Medicare Advantage program.
• Cost-sharing obligations: These are the out-of-pocket expenses you must pay when you use your Medicare benefits. They may include deductibles, co-insurance or copays.
• Benefit period: A benefit period begins on the day you’re admitted to an inpatient facility and ends when you haven’t received any hospital care or care in a skilled nursing facility for at least 60 days in a row. Depending on how often you need inpatient care, you may have several benefit periods in a year. If so, you’ll need to pay your Part A deductible and co-insurance for each one.
• Lifetime reserve days: If you have Original Medicare, lifetime reserve days are the additional days of inpatient treatment that Medicare will cover beyond the 90th day of a benefit period. Each Original Medicare beneficiary gets 60 lifetime reserve days to use as needed. If you use all 60, Medicare won’t cover any of your treatment costs after day 90 of a benefit period.
• Excess charge: In some cases, a health care provider is allowed to charge more than the Medicare-approved amount for a service. The difference between the actual charge and the Medicare-approved amount is known as the excess charge.
• In-network provider: Medicare Advantage Plans are sold to beneficiaries in specific service areas. Because these plans don’t provide nationwide coverage, you typically have to use in-network providers or health care providers who have contracted with your plan. If you don’t use an in-network provider, your Medicare Advantage Plan may deny your claim or require you to pay a higher percentage of the costs. Physicians can join and leave networks, so check to make sure they’re still in your plan before your appointments. 

Overview of Medicare Coverage of Substance Abuse Treatment Services

*Your out-of-pocket costs depend, in part, on whether you receive services on an inpatient or outpatient basis. For services offered in both inpatient and outpatient settings, this column lists the cost-sharing obligations for both types of care.

Inpatient Treatment for Substance Abuse

Medicare Part A and Medicare Advantage cover inpatient treatment in a specialized psychiatric hospital when your health care provider certifies that you need active psychiatric treatment. However, its coverage of inpatient psychiatric care isn’t as comprehensive as the coverage available for other types of hospital care. For example, Medicare Part A only covers up to 90 days of inpatient treatment per benefit period.

There’s also a limit of 190 days of inpatient treatment at a specialized psychiatric hospital in your lifetime. You should note that the limit only applies to psychiatric hospitals. If you receive inpatient care at a general medical/surgical hospital, then the 190-day lifetime limit doesn’t apply.

If you have Medigap, your plan may reduce your out-of-pocket costs by paying your Part A co-insurance and all or part of your Medicare Part A deductible. Original Medicare beneficiaries have the following out-of-pocket costs for inpatient treatment:

• $1,632 deductible for each benefit period
• $408 per day in co-insurance for days 61 to 90 of your stay

Medicare Advantage providers are allowed to set their own out-of-pocket costs, so although each plan must cover the same services as Original Medicare, your costs will vary based on the terms of the plan you selected. Below is a list of covered inpatient services, along with a description of each service and information about coverage limits and notable coverage exceptions.

Full Hospitalization

If you need active psychiatric treatment for substance abuse, full hospitalization is one of the most comprehensive options. Full hospitalization refers to admission to a specialized psychiatric hospital or other medical facility for 24/7 treatment. As an inpatient, you may participate in group counseling, individual counseling and other programs designed to address the root causes of your substance use disorder and help you stop using drugs or alcohol.

Does Medicare Cover Full Hospitalization?

Although Medicare Part A covers inpatient care, some of the services you receive may be billed under Medicare Part B. One example is physician care that’s considered separate from your inpatient care. If you receive Part B services, then you’ll also have some Part B out-of-pocket costs. For example, if you haven’t already met your Part B deductible, you’ll need to pay the $240 deductible before Medicare starts covering any services billed under Part B. You should also expect to pay 20% of the Medicare-approved cost of each Part B service you receive as an inpatient.

Am I Eligible?

For Medicare to cover full hospitalization, your doctor must determine that you need active psychiatric treatment. You must also stay at a hospital that has been approved to provide services to Medicare beneficiaries. If you have Medicare Advantage, you also need to receive treatment at a hospital in your plan’s network.

Drug and Alcohol Rehab

Drug and alcohol rehab programs aim to help participants identify and replace harmful behaviors and ways of thinking. If you stay at a drug and alcohol rehab center, you may participate in group therapy, individual therapy, family therapy and other programs. Many rehab centers also offer medical detox,  or withdrawal management, which helps manage the physical and psychological symptoms associated with withdrawal from alcohol, prescription drugs and illicit substances.

Drug and alcohol rehabilitation can take the form of outpatient treatment or residential long-term treatment, which is 24/7 treatment that’s usually provided in a non-hospital setting.

Does Medicare Cover Inpatient Drug and Alcohol Rehabilitation Programs?

Medicare covers drug and alcohol rehab the same way it covers full hospitalization. Part A covers inpatient services, while Part B covers services provided on an outpatient basis. Rehab is only covered by Medicare when it’s provided by Medicare-approved facilities. Unfortunately, many private rehab centers don’t accept Medicare. If you want to use your Medicare benefits to cover this type of treatment, look for a rehab center that’s been approved by the Centers for Medicare & Medicaid Services. Even if you receive services at a Medicare-approved rehab center, Medicare will only pay for them if they’re considered medically necessary. You’re also limited to 190 days of this type of care in your lifetime, even if you’d benefit from additional rehab services.

Am I Eligible? 

As with full hospitalization, a physician has to determine if a drug and alcohol rehabilitation program is right for you, and whether an inpatient or outpatient program is best suited for your needs. To be eligible, your doctor has to show that treatment is reasonable and necessary. 

Nursing Care

Medicare Part A typically covers the nursing care you receive as an inpatient. While you’re admitted to a hospital or treatment center, nurses monitor your vital signs, administer treatment medications and provide other services to ensure you stay healthy as you recover from a substance use disorder. 

Does Medicare Cover Inpatient Nursing Care?

Medicare only covers nursing care and other inpatient services if you receive them at a Medicare-approved facility.

Am I Eligible? 

If a licensed medical professional deems nursing care medically necessary, then you’re eligible. 

Individual Therapy

During individual therapy, you meet with a licensed health professional to discuss your history of substance abuse and work toward becoming sober. Several types of individual therapy are available, but one of the most common is cognitive behavioral therapy, which is designed to help you understand how your thoughts and feelings affect your behavior. While working with a therapist, you have the opportunity to address harmful thought patterns and replace them with healthier ones.

Does Medicare Cover Inpatient Individual Therapy?

Medicare only pays for this type of inpatient treatment when it’s provided in a Medicare-approved facility by a Medicare-approved provider.

Am I Eligible? 

To be eligible, a licensed health professional has to show that the individual therapy you’re receiving is medically necessary.

Group Counseling

The National Library of Medicine defines group therapy as a meeting of two or more individuals who have a shared treatment goal. There is evidence that participation in group counseling can contribute to individual success because participants recognize their own dependencies in others and see how others have overcome them. 

Does Medicare Cover Inpatient Group Counseling?

This type of counseling is one of the treatments covered by Medicare, provided it’s facilitated by a Medicare-approved provider. However, Medicare doesn’t cover participation in support groups that are primarily for socialization. For group counseling to be covered, it must be overseen by a Medicare-approved treatment professional.

Am I Eligible? 

If group counseling is a necessary medical treatment for your condition as per a physician or certified counselor, then you’re eligible for services. 

Drug and Alcohol Testing

The analysis of biological material, such as blood, urine and saliva, are needed to determine the presence of drugs and alcohol in the body for diagnosis and treatment of drug or alcohol abuse. 

Does Medicare Cover Inpatient Drug and Alcohol Testing?

If you’re admitted to an inpatient program, Medicare will pay for drug and alcohol testing, as long as it’s necessary for making treatment decisions. For example, Medicare will cover testing to determine what substances are in your body, so treatment professionals can recommend appropriate medications and services. 

Medicare doesn’t cover blood and urine tests performed to detect the same substance at the same time. If your treatment provider wants to determine if you have cocaine in your body, for example, Medicare will pay for a blood or urine test — not both. Medicare also doesn’t cover court-ordered testing or drug and alcohol testing for employment purposes.

Am I Eligible? 

You’re eligible for drug and alcohol testing if your health care provider determines it’s necessary for you to get proper medical treatment. 

Opioid Treatment Programs

According to a 2021 National Institutes of Health (NIH) and Centers for Disease Control and Prevention (CDC) study , 2.5 million people aged 18 and older had an opioid use disorder in the past year. This is still a national concern today. Opioids include both illegal drugs, such as heroin and fentanyl, and prescription drugs, such as oxycodone, codeine and morphine. Treatment programs are necessary to stop dependency on these addictive drugs.

Does Medicare Cover Inpatient Opioid Treatment Programs?

As of January 1, 2021, Medicare covers opioid treatment programs for people who are determined to be addicted to opioids. As with other treatment options, Medicare only pays for these services if you receive them from a Medicare-approved provider.

Am I Eligible? 

As with other services, eligibility is dependent on proving a medical need for treatment. Talk to your health care provider to see if you qualify. 

Outpatient Treatment for Substance Abuse

Outpatient treatment is provided in a non-residential setting. Depending on the severity of your substance use disorder and the type of treatment you choose, you may receive services at a rehab center, clinic or another location. If you have Original Medicare, outpatient services are covered by Part B, which has a $240 annual deductible. You should also expect to pay 20% of the Medicare-approved amount for each outpatient service. There are a few exceptions, which are discussed below.

Original Medicare enrollees who also have Medigap coverage may have lower out-of-pocket costs for these services, as some plans cover the Part B deductible, Part B co-insurance and/or Part B excess charges. If you have Medicare Advantage, your out-of-pocket costs will vary based on the terms of your plan, as Medicare Advantage providers are allowed to set their own deductibles, copays and co-insurance requirements.

Partial Hospitalization

Partial hospitalization is more intensive than other types of outpatient treatment, but you don’t have to stay at a treatment facility overnight, making it ideal for individuals who work or have other obligations that make it difficult to commit to an inpatient program. 

As part of your partial hospitalization program, you may receive individual therapy, group counseling and other services to help you recover from your substance use disorder. Some programs also provide nursing care to participants. 

Does Medicare Cover Partial Hospitalization?

Medicare covers partial hospitalization if your doctor certifies that you’d need inpatient treatment if you didn’t participate in a partial hospitalization program (PHP). Services are covered by Medicare when they’re delivered at a community mental health center or hospital outpatient department.

Medicare doesn’t cover program-related meals, transportation or participation in social support groups, and testing or training for job skills is only covered if it’s directly related to your substance abuse treatment.

Am I Eligible? 

As long as a licensed health care provider certifies that partial hospitalization is medically necessary for your treatment, you’re eligible.

Screening, Brief Intervention and Referral to Treatment (SBIRT)

SBIRT is an early intervention that aims to identify people who need help with their substance use before they become dependent and need more intensive treatment. It consists of three steps: screening, brief intervention and referral to treatment. During the screening step, a health care provider uses specific tools to assess the severity of substance use and identify the correct treatment level.

Brief intervention is a short conversation designed to make the individual aware of the risks of their substance use and motivate them to change their behavior. If the screening shows that the individual needs additional treatment, the health care provider makes a referral for brief therapy or specialty care.

Does Medicare Cover Outpatient SBIRT Programs?

Coverage for SBIRT is a little different from the coverage available for other types of outpatient treatment. Medicare covers one screening and up to four brief counseling sessions each year at no cost to you. That means you don’t have to pay the usual deductible and/or co-insurance for these services.

Am I Eligible? 

Once your health care provider completes the screening process, showing you’re medically in need of early intervention for substance use, you’re eligible for SBIRT. 

Drug and Alcohol Testing

Testing for drugs and alcohol in your body is necessary before treatment can begin. A simple blood, urine or saliva sample will be collected and analyzed. Once the results are in, the process of recovery can start.

Does Medicare Cover Outpatient Drug and Alcohol Testing?

Medicare Part B also covers outpatient drug and alcohol testing when it’s necessary for determining the right treatment or monitoring you to determine if the treatment is working. 

Outpatient testing has the same exclusions as inpatient testing — Medicare won’t pay for blood and urine tests performed to test for the same substance at the same time, nor does it cover court-ordered testing or testing done for employment purposes. All tests must be directly related to your substance abuse treatment

Am I Eligible? 

As with inpatient eligibility, as long as your doctor states that testing is necessary for you to get outpatient drug and alcohol testing, you can have it done.

Opioid Treatment Programs

Opioids are pain relievers that have morphine-like effects on the brain. Although these substances have legitimate uses, they have addictive properties, which can cause some users to develop a dependence on them. Outpatient opioid treatment programs may include counseling, medications, drug testing, periodic assessments, individual therapy and group therapy. 

Does Medicare Cover Outpatient Opioid Treatment Programs?

Outpatient opioid treatment is covered by Medicare Part B. Although you have to pay your Medicare Part B deductible, you don’t have to pay co-insurance for opioid treatment from a Medicare-approved provider. 

Medicare doesn’t cover meals or transportation associated with your participation in an outpatient opioid treatment program. It also doesn’t cover treatment delivered by providers that haven’t been approved by Medicare.

Am I Eligible? 

You are eligible when a licensed medical professional confirms that an outpatient opioid treatment program is medically necessary to relieve you of your drug dependency.

Medication-Assisted Treatment for Substance Abuse

If you participate in an inpatient program, medications are covered by Medicare Part A, as long as they’re listed on the Medicare drug formulary. Coverage for outpatient medications is a little different. Medicare Part B only covers certain medications that you can’t administer yourself. It doesn’t cover the medications you purchase from a pharmacy.

Part D covers most medications prescribed for the outpatient treatment of a substance use disorder. Because Part D plans aren’t part of Original Medicare, your out-of-pocket costs will depend on which plan you have. The medication also needs to be on your plan’s formulary for Part D to cover it. If you have Medicare Advantage, your out-of-pocket costs will also vary based on the terms of your plan.

Methadone, a medication-assisted treatment (MAT) to help people stop using opiates or heroin, is an important exception to these guidelines. You can’t purchase methadone from a pharmacy, so your Part D coverage doesn’t apply. Instead, methadone treatment is covered by Medicare Part B. For Medicare to cover methadone, you need to get it from an outpatient treatment program that has been certified by the Substance Abuse and Mental Health Services Administration.

Additional Information on Medicare Coverage

Seniors with substance use disorders often have additional health problems or difficulty affording necessities. Visit the pages below to learn more about how Medicare coverage can help make health care more affordable and alleviate some of your stress.