Does Insurance Cover Rehab Treatment?
Figuring out if your insurance covers your addiction rehab services can sometimes be even harder than making the decision to attend treatment in the first place. Constant legislative shifts, changes to the industry itself, and different company policies and updates mean that there is no uniform answer to how or if health insurance coverage will cover the cost of treatment for addiction services.
But we’ve got your back. There are a few basic steps you can take before showing up to treatment to make sure you know your insurance covers rehab and, if it doesn’t, that you understand exactly how much you’ll owe in the end.
By the end of this article, you’ll know:
- How health insurance covers drug and alcohol treatment.
- To contact your insurance provider to find out what percentage of treatment is covered and what’s in network.
- Drug rehab programs often have caring employees that can help decipher your insurance and how it works with their facility.
- Alternative ways to pay for substance use treatment.
Finding Out What Insurance Will and Won’t Cover
To start, know that insurance won’t cover 100% of your addiction treatment. You’ll probably have a co-pay and/or deductible to pay first before your insurance kicks in. Even after that, your insurance provider will probably only pay a percentage of certain treatments. Once you’ve reached your out-of-pocket maximum for the year, your insurance will pay 100%.
Let’s go over some rehab insurance coverage basics to help you answer the questions, “Does my insurance cover rehab, and if so, how much will owe out-of-pocket?”
Types of Insurance
There are 2 main types of insurance coverage offered in the United States, with various subcategories within them. These are:
- Public insurance. This includes government-assistance and government-provided health coverage programs like Medicare and Medicaid. Qualifying for these programs is often dependent on an individual’s age, income, and health or disability status.
- Private insurance. These are group insurance plans provided by an employer, organization, or chosen by an individual through the Affordable Care Act (ACA) marketplace.
Public Insurance and Substance Abuse Treatment
Medicare and Medicaid are both programs funded by state and federal governments that provide treatment coverage and assistance to vulnerable populations. However, these 2 programs typically pertain to different groups of people.
What Is Medicare?
Medicare is a federal health insurance program that is available for:
- Seniors (65 years old and older).
- People with certain disabilities.
- People with permanent kidney failure.
Most (though not all) Medicare beneficiaries are provided with hospital care without having to pay monthly premiums. This level of coverage is called Medicare Part A (Hospital Insurance). Generally, this includes inpatient treatment for drug and alcohol use as well.
To qualify for Medicare Part B, which also provides coverage for outpatient treatment and doctor’s services, beneficiaries must pay monthly premiums.
All people with Medicare coverage will still have to pay the co-insurance rate, co-payment, and annual deductible when applicable.
What Is Medicaid?
Medicaid is a government assistance program catering to millions of Americans including:
- Low-income adults.
- Individuals receiving supplemental security income (SSI).
- Qualifying pregnant women.
- Children (through the Children’s Health Insurance Program, or CHIP).
- Some elderly people.
- People with disabilities.
Eligibility for Medicaid is largely based on financial need; however, other factors apply as well. Medicaid is managed by states under federal guidelines.
Both Medicare and Medicaid provide some insurance coverage for rehab. However, many private rehabilitation centers do not accept Medicaid.
Private Insurance and Substance Abuse Treatment
People that do not qualify for public insurance or prefer more customizability over their coverage can choose insurance offered by private companies.
Group insurance is a form of private insurance usually provided by an employer or organization. When individuals in a group pool their money together, it enables insurance companies to provide more coverage for routine health checkups and emergencies, with relatively low amounts paid monthly by each individual.
Due to the Affordable Care Act (ACA), private insurance purchased without the help of an employer or organization has become more popular in recent years. Because an individual does not have the benefit of pooling together money within a group, monthly premium rates tend to be higher when compared to insurance provided by an employer. These plans are purchased through the ACA marketplace website or the state-run equivalent.
Private insurance companies are required to provide coverage for mental health and substance abuse services, as the ACA made behavioral health treatment an “essential benefit.” The amount of coverage provided will vary depending on the plan that was picked. In most cases, plans with higher monthly premiums cover a larger portion of the treatment costs.
What Rehab Services Can Be Covered by Insurance?
When people recognize they have a drug or alcohol problem, often the first question they ask is, “Does insurance cover rehab?”
In most cases, your health insurance will provide some degree of rehab coverage. Since the ACA was passed, mental and behavioral healthcare are now essential. Also, insurance companies are prevented from denying coverage to customers that have a pre-existing condition, which used to be grounds for refusing to cover addiction treatment.
Rehabilitation services typically covered by health insurance companies include:
- Inpatient or residential treatment. With inpatient or residential treatment, patients spend 24 hours a day, 7 days a week at a rehabilitation facility.
- Outpatient rehab. Outpatient services allow a patient to visit a rehab facility several times a week for a few hours at a time before returning home.*
- Prescription drugs.* In the case that medication-assisted treatment is necessary, prescriptions such as Suboxone or methadone may be covered.
The percentage of costs that are covered, the annual deductible amount, co-payment fees, and the out-of-pocket maximum may vary considerably depending on the type of insurance you have and the plan you chose.
*Please note that the minimum level of Medicare coverage (Medicare Part A) does not cover outpatient services or prescription drugs. Medicare Part B will cover outpatient services and Part D covers prescription drugs.
What Doesn’t Insurance Cover?
There are some forms of treatment that many people find useful in achieving and maintaining long-term recovery from drugs and alcohol that may not covered by health insurance. Generally, medical insurance plans will not cover:
- Sober-living facilities. While many people benefit from an extended stay in a sober-living home after completing rehab, health insurance tends not to cover this form of care.
- Non-medically approved treatment methods. Most insurance plans only cover treatment methods that have been empirically proven. That said, many rehab facilities covered by insurance companies provide alternative therapies in addition to evidence-based methods.
- Multiple visits to rehabilitation centers. Often, health insurance plans limit how many rehab stays they will approve in a calendar year.
Another important consideration is that insurance providers often limit the treatment facilities they provide coverage for to those within their care network. Depending on the plan, this could mean they provide no coverage for facilities outside the network, or that the deductible and out-of-pocket maximum is higher and that insurance pays a lower percentage of the total cost.
How Much Does Drug Rehab Cost?
Because rehab costs and individual plans vary so much, there is no way to provide ane xact figure on how much drug and alcohol treatment costs; however, this section should give you an idea as to how costs are calculated.
First, here are some key terms to understand:
- Deductible. This is the annual amount of money you have to pay on health services before your insurance begins covering costs. Sometimes, certain things are covered before you reach the deductible, such as prescription drugs, or preventive care appointments.
- Co-payment. Most insurance plans charge a co-payment fee for doctor’s visits and prescription refills. For example, you may have to pay a $20 co-pay to visit a physician for a check-up. Your insurance covers the remaining cost.
- Co-insurance rate. This is the percentage of costs you must continue to pay once you reach your deductible. For example, if your co-insurance rate is 20%, your health insurance provider will cover the remaining 80% until you’ve reached your out-of-pocket maximum.
- Out-of-pocket maximum. Once you hit your out-of-pocket limit, your insurance provider will begin paying 100% of your health-care costs, except for your monthly premium.
The specifics of your insurance policy and how it handles mental health and substance abuse issues can usually be found in your Summary of Benefits and Coverage brochure.
Other factors that may influence costs of drug and alcohol rehab include:
- The type of facility: Inpatient treatment generally costs more than outpatient rehab.
- Whether the facility is within your provider’s care network. Facilities outside the network may be covered at a lower rate or not covered at all.
- If prescription drugs are required in treatment. Medication is an important part of recovery for many people, especially when dealing with co-occurring disorders.
- If the treatment facility charges patients on a “sliding scale.” With this system, patient cost is adjusted according to their income level.
How Much Does Inpatient Rehab Cost?
Inpatient treatment is usually more expensive than outpatient rehab. Most insurance plans have certain preferred facilities that are within their network. If you’re considering treatment at a certain rehab center, check with your insurance provider to see if it is within your network. If not, your health insurance may provide little or no coverage.
With most plans, you will owe your deductible and then continue to pay a percentage until you meet the out-of-pocket maximum. You may also owe co-payments or co-insurance for prescription drugs.
How Much Does Outpatient Rehab Cost?
Outpatient rehab is usually less expensive than inpatient treatment, which makes it an attractive option for many people.
Costs for outpatient treatment may be split between patient and insurance the same way as inpatient treatment, with the patient owing a deductible and paying a co-insurance rate or costs may be shared another way. Sometimes, insurance policies require the customer to pay a co-payment for each visit to the outpatient facility instead of a percentage of the total cost.
Just like with inpatient rehab, many insurance plans require or prefer patients to use facilities within their network. Co-payments or co-insurance will likely be owed for prescription drugs as well.
If you’re unsure about the specifics of your insurance policy and how they cover rehab costs, there are a few other ways to learn more and additional things to consider.
Ask Your Insurance Provider
We get it, insurance is confusing. That’s why it might be best to call your insurance provider—their number should be on your insurance card or easily found online—and ask if the treatment is in-network. Many insurance providers make it even easier by providing a general breakdown of benefits on their website.
Your insurance might have a shortlist of treatment services that are automatically approved up to a certain dollar amount with the referral of a doctor. These will vary but may include basic services such as certain medications for the treatment of withdrawal from certain drugs, outpatient therapies or programs, and others.
For the approval of coverage for services that are more in-depth, long-term, preventative, or expensive, the process may be more complex. Most health insurance providers will want proof that a requested addiction treatment service is “medically necessary.”
For example, while most health insurance providers will cover some portion of the cost of outpatient treatment services for a finite period, they will require evidence that inpatient treatment and/or long-term care is necessary before they will provide coverage.
Verify Your Benefits Below
Should I Choose Outpatient vs Inpatient Rehab?
Everyone that chooses to enter drug and alcohol rehabilitation has different needs and may require a specific level of care. As a general rule:
Inpatient treatment is often necessary for people that are:
- Expected to have moderate to severe withdrawal symptoms or a higher risk of relapse.
- Living in an unstable or unsafe environment and lack a supportive network of friends and family to look after and encourage them.
- Benefit from having medical staff on hand 24/7.
- Outpatient rehab is appropriate for people who are in less dire circumstances but still need help getting sober and learning or reinforcing the skills necessary to live in recovery.
For many people beginning their sobriety, inpatient treatment is a great starting place before moving onto less intensive forms of treatment. Inpatient or residential treatment facilities provide a safe, sober, and supportive environment with peers and staff that can empathize and understand the struggle and complexities of addiction and recovery.
- Medical detox. This is often the first step for people receiving drug and alcohol treatment. It allows people to safely withdraw from substances under 24/7 medical supervision. Afterward, they are encouraged to move onto one of the other levels of care.
- Inpatient treatment. Inpatient treatment involves 24-hour observation and daily visits from a physician. It is an excellent option for people with acute or chronic problems.
- Residential treatment. Like with inpatient rehab, patients in residential treatment stay at the facility 24/7; however, this option is less intensive, allowing patients to stay in hotel- or dorm-style rooms each night and attend classes and therapy sessions during the day.
- Partial hospitalization program (PHP). This is usually recommended as a “step-down” from residential treatment. It allows patients to return home at night, but still requires attendance at the facility for 6 hours a day, 5 days a week.
- Intensive outpatient program. This option requires attendance at River Oaks facility treatment sessions for a minimum of 3 hours a day, 3 days a week.
Cost of Rehab vs. Cost of Addiction
Even with the help of insurance, rehab can be costly. However, the cost of treatment pales in comparison to the costs of drug and alcohol abuse. These costs include:
- The cost of substances themselves. Dependency on drugs and alcohol demands a lot of money. Even spending just $20 a day on drugs or alcohol results in losing about $7,300 per year.
- Loss of income. Abusing substances often lead to poor work performance, missed opportunities, and even termination. Job loss resulting from addiction can lead to financial ruin.
- The cost of imprisonment. Unfortunately, many people that abuse drugs and alcohol end up serving time in jail. According to the National Institute on Drug Abuse (NIDA), approximately 65% of incarcerated people suffer from substance use disorder.
- Medical costs. The physical and mental effects of prolonged substance abuse also come with a price tag. Addiction to drugs or alcohol can cause dental problems, cancer, heart disease, cognitive decline, and mental illness.
Even when ignoring the immeasurable personal costs of addiction, rehab is almost always cheaper than years of abusing substances.
What if Insurance Doesn’t Cover Rehab?
If insurance denies your claim and you have to pay more than you bargained for, or is out-of-network with the facility you’d like to attend, don’t lose hope. There are other ways to pay for addiction treatment.
- See if your insurance plan has a health savings account (HSA). If you’ve been paying into it for a while, chances are you may have enough to get started with treatment.
- See what unnecessary expenses you can cut out of your monthly budget. Are there necessities that you can minimize cost on?
- Ask your support system, mostly likely your family, if they’d be willing to help with the cost. Apps like GoFundMe can make it easy to reach out to your network who may be willing to help you reach your goal of finding recovery.
- Ask rehab centers about sliding scales, scholarships, and financing options.
What to Do in Case of Job Loss
There’s still a way to hold onto your insurance, even if you lose your job. The Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, allows for people who have lost their jobs to retain the insurance their company provides for several months, depending on the state.
You’ll have to pay your entire premium, which may go up substantially depending on what percentage your ex-employer used to pay, but you’ll be entitled to the same insurance benefits as you had when you were employed. Because your benefits will remain the same unless your employer changes theirs, the benefits you had for mental health or substance abuse treatment while you were working will remain the same.
Insurance-Covered Rehab Facilities at AAC
American Addiction Centers (AAC) runs many high-quality rehab locations across the United States. All AAC treatment facilities accept private health insurance, and some may even offer financial assistance or a sliding-scale payment option for people in need.
Each facility is unique, but all are equipped to:
- Provide evidence-based therapy and medication-assisted treatment. Many also provide optional, supplemental treatment methods such as art therapy, music therapy, yoga therapy, etc.
- Treat people with comorbid physical illnesses and co-occurring mental disorders.
- Provide an individualized approach to rehabilitation treatment. There is no one-size-fits-all solution to addiction, so AAC evaluates each individual and tailors a treatment path best suited for their unique needs.
- Provide amenities that make your time spent in the facility as comfortable as possible.
- Provide or facilitate aftercare to help you stay in recovery well after completing treatment. For example, River Oaks has an alumni app that enables peers in recovery to stay in contact with and support each other.
Potential patients at AAC can choose a rehab facility close by or travel to one across the country if they prefer to leave their current environment far behind.
How Will You and Your Family Cover the Cost of Treatment?
When you begin the process of seeking out a drug addiction treatment program, your primary focus should be on which services will best support you or your loved one in transitioning from active addiction to recovery safely and effectively.
Though finances are important, choose a drug rehab program based on its ability to provide your loved one with treatment services that will be genuinely helpful, otherwise, no matter how inexpensive the bill, it could add up to a wasted investment.
Once you have identified the best program for your loved one, begin to address the issue of finances with your family and with the program you have chosen. Take the time to map out all your options and start putting rough numbers on the page to visualize what you have and what you need to turn your loved one’s treatment goals into a reality.
Avoid postponing treatment due to cost. Working toward recovery takes time, and every day spent in addiction is a day that may put you or your loved one at risk for overdose, an accident under the influence, and other medical emergencies.
Insurance can be difficult to deal with when trying to get into the right treatment facility. But know that recovery is possible, and once you start this journey, you will be on the road to sobriety.
Figure It Out Early
Determining how much of the cost that your bill will be covered by health insurance should be addressed as early as possible. It is important to talk to your doctor, talk to your health insurance company, and work with your chosen drug rehab program to figure out how to expedite the process.
It is rare that a health insurance policy will cover the full cost of addiction treatment services, especially for a comprehensive drug treatment program. Most families will pull from different resources to cover the cost of treatment. While health insurance is the first stop, most will need to look to other options to pay the rest of the bill.
There are two pieces of legislation you should know about going into treatment. The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 makes health insurance providers offer the same amount of monetary coverage for mental health disorders including substance use disorders as they do for other medical needs. And the Affordable Care Act (ACA, or Obamacare), has classified substance abuse treatment as an “essential service.”
The reality of this coverage, however, is murky. At what point does addiction treatment become “essential”? You may find that insurance companies might push a less expensive treatment option or require proof of medical need for treatment before agreeing to other, more intensive, forms of treatment.
Contact the Addiction Treatment Facility You’d Like to Attend
If you still have questions after this step, the facility you are interested in attending for addiction treatment can be your next go-to resource.
Drug rehab programs will have administrative personnel who regularly work with insurance companies regarding payment for treatment. It can be helpful to talk to them in advance and determine:
- If they accept your insurance
- What their experience is with your insurance company
- What you can do to make getting coverage easier
- How to cover the amount of the bill not covered by health insurance.
American Addiction Centers, River Oaks Treatment Center’s parent company, has a group of compassionate, knowledgeable Admissions Navigators at your disposal anytime of the day or night. Just call to find out more information about your insurance and how it works with our facility. You can also verify your insurance benefits at the bottom of this page.