Key takeaways
- Medicare parts A and B cover medically necessary inpatient and outpatient rehabilitation services, helping to restore quality of life after a surgery, illness, or injury.
- For inpatient rehabilitation, Part A requires a deductible of $1,736 in 2026 for each benefit period, while Part B covers 80% of outpatient therapy costs up to $2,410, after which continued treatment must be deemed medically necessary.
- To be eligible for inpatient rehabilitation coverage, Medicare requires a physician’s confirmation that the individual needs round-the-clock access to doctors and nurses, multidisciplinary care, and at least 3 hours of therapy per day.
Medicare is a health insurance program that is available in different parts. Each part of Medicare provides different levels of coverage of several aspects of healthcare. Enrollment in Medicare can help to cover costs of specialist health services.
Inpatient rehabilitation involves an intensive rehabilitation therapy program, physician supervision, and coordinated care from doctors and therapists. People may require inpatient rehabilitation to recover from surgery, illness, or injury.
These services are available through clinic visits, but some people require round-the-clock doctor and nurse availability as well as several hours of therapy per day.
Glossary of Medicare terms
- Out-of-pocket cost: This is the amount a person must pay for care when Medicare does not pay the total amount or offer coverage. Costs can include deductibles, coinsurance, copayments, and premiums.
- Premium: This is the amount of money someone pays each month for Medicare coverage.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before Medicare starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, coinsurance is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare covers medically necessary inpatient and outpatient rehabilitation services.
A Medicare beneficiary may be responsible for self-funding some of the costs of treatment. For example, this may be necessary if they have not met their deductible or are using services that require coinsurance under Medicare Part B. Depending on the nature of their treatment, they may also have outstanding deductibles or coinsurance to pay.
In 2026, a $1,736 deductible applies to each benefit period of inpatient care. A benefit period begins the day a person is admitted to the hospital and ends when they have not received any inpatient care for 60 consecutive days. There is no limit to the benefit periods per year.
The Part A coinsurance costs for inpatient care are as follows:
- Days 1 to 60: $0 after the deductible is met
- Days 61 to 90: $434 per day
- Days 91 to 150: $868 per day while using lifetime reserve days
- After day 150: all costs
If a hospital transfers an individual directly to an inpatient rehab facility, or a person receives admission to a rehab facility within 60 days of discharge, the person will likely have met their deductible. In this instance, they would not have to pay extra for inpatient rehabilitation services until day 61.
An individual will need to pay 20% of all Part B costs for all outpatient services or inpatient services not eligible under Part A. This includes the doctor services a person receives during their admission. They will also need to meet a $283 deductible for outpatient services.
Medicare Advantage (Part C) plans may have different costs as they are provided by Medicare-approved private insurance companies.
Medicare pays for the following services for inpatient rehab:
- skilled therapy, including:
- a semiprivate room
- meals
- nursing
- prescription medications
- hospital supplies and services
- social worker assistance
- psychological health services
- prosthetic and orthotic services
What does Medicare not cover?
The following are ineligible for coverage under Medicare:
- nursing to cover private duties
- an in-room television or phone, if the facility charges separately
- personal effects, such as socks or toothpaste, unless a hospital provides them as part of a person’s admission
- a private room
If a person pays for their room and board costs or is ineligible for coverage under Part A, Medicare might pay for skilled therapy services from Part B instead of Part A.
Home healthcare
Depending on eligibility, both Parts A and B may cover medically necessary skilled therapy at home from a Medicare-approved home health agency.
Medicare pays for home care if a person is:
- homebound
- needs on-and-off skilled care
- receives care from an approved agency
For Medicare to grant approval for home care, a Medicare beneficiary must have developed a care plan during a face-to-face consultation with a doctor.
Medicare requires a physician’s confirmation that a person meets the following guidelines before they pay for inpatient rehabilitation care:
- The individual needs full-time access to a doctor, involving direct, regular physician contact at least every 48 to 72 hours.
- The beneficiary needs a registered nurse with specialized rehabilitation experience or training.
- At least 3 hours of intensive therapy per day are necessary unless an individual is not well enough to withstand this amount of therapy.
- A multidisciplinary team, including at least a doctor, a rehab nurse, and a therapist, is central to providing care.
Conditions such as brain injury, stroke, or spinal cord injury may qualify an individual for inpatient rehabilitation. However, not every recovery period from a condition or surgery requires inpatient rehabilitation.
For example, if a person is recovering from a knee replacement with no other complications, Medicare may not fund inpatient rehabilitation. This is because it is not medically necessary to oversee many elements of care.
Outpatient therapy will need to take place at the following facilities for Medicare to pay:
- a doctor or therapist’s office
- Comprehensive Outpatient Rehabilitation Facilities (CORFs)
- skilled nursing facilities (SNFs)
- home health agencies.
Inpatient rehabilitation services aim to restore quality of life to individuals who have been through life changing surgery, illness, or injury. These life changing events may severely impair their physical, mental, psychological, emotional, and social function.
They may have complex nursing or medical management needs. People need inpatient rehabilitation care when they require high levels of specialist care that another facility, such as an SNF, cannot provide.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare pays for medically necessary inpatient and outpatient rehabilitation care after a debilitating illness, injury, or surgery.
Part A pays for inpatient rehabilitation, which means a person may have to pay a deductible if they have not already met this in the same coverage period. Part B covers 80% of outpatient therapy costs up to $2,410, at which point a doctor must confirm the medical necessity of continuing therapy.
Medicare only funds inpatient rehabilitation if an individual needs round-the-clock access to doctors and specialist nurses, multidisciplinary care, and three or more daily hours of certain therapies.