Insurance Coverage For Substance Abuse Treatment

By Edmund Murphy

Last updated: 15 March 2024

Does health insurance cover substance use treatment?

Yes, almost all health insurance providers will cover the cost of substance use disorder and addiction treatment under their plans, as well as other mental health conditions. Most health insurance providers will offer different plans that will cover varying amounts of substance use treatment, with the remainder to be paid out-of-pocket. 

It is always recommended to check with your health insurance provider before beginning treatment to see how much of your treatment will be covered. 

Important terms to remember when looking for health insurance

Out-of-network provider - A healthcare provider that does not have a treatment arrangement with your health insurance provider.

In-network provider - A healthcare provider that is affiliated with your insurance provider that will provide a discounted rate for treatment.

Out-of-pocket cost - The amount you will have to cover for your treatment yourself after your insurance cover. 

Out-of-pocket limit - The maximum annual out-of-pocket payment you may have to pay.

Deductible - The agreed amount you will pay for healthcare treatment before your insurance coverage kicks in. If your deductible is agreed at $3,000, this is the amount you will pay for treatment before your insurance provider will begin to cover costs. 

Copayment - A fixed sum that you agree to pay toward treatment after your deductible is reached. For example, you may agree to pay a percentage or fixed amount per doctor visit.

Insurance providers

What types of rehab does insurance cover?

Almost all forms of evidence-based addiction treatment are covered by health insurance. This means that treatments for substance use disorders that have been documented to be successful will often be covered by health insurance. Some holistic and alternative treatments may not be covered. 

Types of substance use disorder treatment that are typically covered by health insurance include:

• Inpatient rehab

• Outpatient treatment

• Intensive outpatient care (including partial hospitalization)

• Medical detox

• Medication-assisted treatment (MAT)

• Treatment for co-occurring disorders and dual diagnosis

• Continuing care/aftercare (counseling, medication, therapy, etc.)

Going to rehab without insurance

As of 2021, 90% of Americans had some form of health insurance. However, for those who don’t have access to private health insurance, there are other ways of getting addiction treatment. There are numerous state-funded and or free rehab options available across the country as well as financial assistance and government schemes. Visit our rehab directory to find rehab options without insurance near you.^[1] 

Other options to consider when looking to finance rehab include:

• Scholarships or grants - Some rehab facilities offer grants and or funding to cover part or all of your substance use disorder treatment. Some states will also offer grants for addiction treatment in certain cases.

• Payment plans - Treatment centers will often have a payment plan system to allow those requiring treatment to pay for it in incremental sums. 

• Loans/financial support from loved ones - Asking for help from loved ones can often be difficult, especially when it comes to treating substance abuse. It is always worth asking though, as you may be surprised at just how willing your network of family, friends, and loved ones are to support you. 

The Affordable Care Act and health insurance coverage

The Affordable Care Act (ACA), also known as Obamacare, was signed into law in 2010 to make health insurance affordable and accessible to more Americans and expand the level of care available under Medicaid. The ACA also states that no one can be denied access to health insurance based on pre-existing conditions, including substance use disorder. It also lists substance use disorders under mental health conditions, which all health insurance providers are now required to cover by law, including rehabilitation and mental health services.^[2][3]

Can I have more than one insurance provider?

Yes, it is not uncommon to have coverage from multiple insurance providers. If you are covered by two or more insurance plans, one will be designated as your primary coverage. Your primary provider will pay first up to their cover limit, at which point the secondary provider will pay the remainder or up to its limit of care. This is often referred to as ‘coordination of benefits’ and can occur under certain circumstances, such as:

• If you are married you may be covered under your partner's insurance plan as well as your own

• If you are under 26 years old you may be covered by your parent's plan and your own

• Your parents are divorced and you are covered by both of their insurance plans (and are under 26)

• If you are over 65 years old and not retired, you may be covered by your work health insurance plan and Medicare.

Even if you are covered by two health insurance plans, you may still be required to pay out-of-pocket for part of your treatment plan.

Types of healthcare plans

In the U.S., there are three types of healthcare plans that insurance providers will usually offer. These are:^[4]

1. Health maintenance organization (HMO) plans

2. Preferred provider organization (PPO) plans

3. Point of sale (POS) plans

All three types of health insurance will cover substance use treatment, though in slightly different ways. 

HMO - A health maintenance organization plan allows patients to see a primary doctor/physician and will see that individual for the majority of their healthcare needs. The benefits of an HMO are that you have one point of contact for your healthcare needs who will understand your medical history, and often comes with lower premiums as well as low or no deductibles. However, If you need to see a medical professional outside of your doctor network, you will need to get a referral. Seeing a medical professional outside of your in-network coverage will often result in an out-of-pocket payment.^[5][6] 

PPO - Preferred provider organizations allow for healthcare from any chosen provider without a referral whether they are in-network or not. PPOs offer greater flexibility for choosing healthcare providers, though you will pay lower premiums if they are in-network. You will also pay higher premiums with a PPO and they generally have lower copays for treatments received.^[6][7]

POS - Point of sale are similar to HMOs with the difference being that you may be able to see care providers outside of your in-network coverage. POS coverage specificities can vary between insurance providers so it is recommended to compare this between providers to ensure you are getting the best coverage. 

Drug and alcohol addiction coverage and cost

While all health insurance providers will cover part of the cost of drug and alcohol rehab, exactly what is covered, what the premiums will be, and what the out-of-pocket costs are can vary between providers. Additionally, rehab treatment costs can also vary widely based on the level of care provided. 

Addiction treatment coverage is considered a requirement for insurance providers and there are no distinguishing criteria for the type of addiction that is covered. This means that if you have health insurance your provider will cover you regardless of what substance(s) you have a disorder with. The same is also true if you have a co-occurring disorder or dual diagnosis, as all mental health conditions will be covered. 

The main variables for how much addiction treatment will cost with insurance include the type of treatment, the level of care offered, whether they are a private or not-for-profit organization, the level of aftercare required, and how much the insurance provider's premiums cover.

What mental health conditions are covered by insurance?

When the Affordable Care Act came into effect it outlined that mental health conditions were to be treated with the same priority as physical health concerns. This means that substance use disorders and mental health conditions are to be given the same level of coverage by insurance providers as physical conditions. According to The American Psychological Association, these parity laws apply to various programs including those coming through healthcare exchanges, those provided by employers, and those coming through Medicaid.^[8]

Parity laws do not state directly which mental health conditions should be covered by insurance, but the rules are similar to addiction treatment coverage. If your provider covers mental health conditions (which they will) then they won’t discern which conditions are covered and which aren’t.

Are medications covered by health insurance?

Most treatment centers will offer aftercare treatment which will often include maintenance programs for those who require medication to withdraw safely from substance abuse and to function normally. 

Maintenance therapy can help reduce tolerance and dependence, reduce cravings, and make the withdrawal process easier through the implementation and gradual tapering of medication. Opioid maintenance therapy for example uses suboxone, buprenorphine, and methadone to help manage opioid withdrawal symptoms, cravings, and early recovery, as well as helping prevent relapse. These medication treatments can be pricey though so it is advised to check with each insurance provider regarding what their policy covers. 

The Substance Abuse and Mental Health Administration (SAMHSA) suggests that while some private insurance providers will have coverage for maintenance therapy under their policies, Medicaid and Medicare will not provide full coverage. Medicare and Medicaid programs will only cover medication costs if it is deemed vital for ongoing health and recovery. If an individual is deemed to be able to go through treatment and start recovery on their own, then they will not be covered for medications. 

The Cost of Rehab vs. The Cost of Addiction

The cost of addiction isn’t just limited to the financial cost of the individual and how much they spend on substance abuse. It is also related to the damage to family, friends, the community, and larger societal impact. In the U.S. it is estimated that the cost of addiction to the country exceeds $532 billion per year.^[9][10]

While substance use disorder treatment may seem costly, even with health insurance, being able to live a fulfilling life without the burden of addiction will always be worth it.

Addiction Treatment Insurance FAQ

How do I bill my insurance for substance abuse treatment?

Calling your insurance provider directly and speaking to someone about the billing process will help avoid any confusion when billing for substance abuse treatment. Additionally, the admin staff at the facility you are receiving treatment from should be able to guide you through the process to make it as simple as possible.

How do I get financial assistance for substance abuse treatment?

There are many avenues to finding funding for substance abuse treatment, from federal and state grants to local government financial assistance. Certain demographics, such as veterans or low-income families, may be able to receive grants from SAMHSA.

Does insurance cover luxury rehab treatment?

Insurance providers will always cover substance abuse treatment, however, they may not cover luxury accommodation and resources provided by some centers. These institutes tend to have lavish settings and a wealth of comforts for patients. Most insurance providers won’t cover amenities like these that aren’t considered vital to treatment.