Medicare, the federal health insurance program for people aged 65 or older and certain younger people with disabilities, provides coverage for various rehabilitation services. How often Medicare pays for rehabilitation depends on the type of service needed, as the program is divided into different parts with distinct coverage rules. Rehabilitation services fall under either Part A (Hospital Insurance) for inpatient care, such as in a Skilled Nursing Facility (SNF), or Part B (Medical Insurance) for outpatient care, including physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP).
Skilled Nursing Facility Coverage Limits
For rehabilitation requiring an inpatient stay in a Skilled Nursing Facility (SNF), coverage is managed under Medicare Part A and is subject to a specific duration limit. Part A covers up to 100 days of skilled care per benefit period. This coverage is intended for short-term, medically necessary recovery following a hospital stay, not for long-term or custodial care.
The financial structure for a single SNF stay is split into two phases. For the first 20 days within a benefit period, Medicare covers the entire cost, and the beneficiary pays a $0 coinsurance. This assumes the Part A deductible has already been met, typically during the preceding hospital stay.
For days 21 through 100 of the same benefit period, the beneficiary must pay a daily coinsurance (e.g., $209.50 in 2025). Once a patient reaches the 101st day within that benefit period, Medicare Part A coverage for the SNF stay ends completely, and the beneficiary is responsible for all costs. Coverage is contingent on the patient continuing to need daily skilled services.
Defining the Medicare Benefit Period
The “benefit period” determines how many times an individual can access the 100 days of SNF coverage. This structure is the core concept of Medicare Part A and is not tied to the calendar year. A benefit period begins the day a patient is admitted as an inpatient to a hospital or Skilled Nursing Facility.
The period ends only after the patient has been discharged from any hospital or Skilled Nursing Facility and has remained out of both facilities for 60 consecutive days. If a patient is readmitted before that 60-day break is complete, the stay is considered a continuation of the previous benefit period, and the original 100-day count resumes.
A new 100-day allowance becomes available every time a new benefit period starts. Since a new benefit period begins on the 61st consecutive day following discharge, there is no limit to the number of benefit periods an individual can have over their lifetime. The 100-day SNF coverage can thus be accessed multiple times, provided the 60-day separation requirement is met.
Outpatient Rehabilitation Services
Outpatient rehabilitation services, including physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP), fall under Medicare Part B. Part B coverage does not use a benefit period structure or fixed day limits. Instead, coverage is determined by medical necessity. Medicare will continue to cover these services as long as the care is certified by a physician and the patient is showing improvement.
While a fixed cap on outpatient therapy was removed in 2019, a financial threshold remains to monitor utilization. Services for PT and SLP combined, and OT separately, are covered up to an annual dollar amount (e.g., $2,410 in 2025) for each category. Once costs exceed this threshold, the therapist must confirm the services are medically necessary by applying a specific “KX modifier” to the claim.
If costs significantly exceed an even higher amount, the claims may be subject to a Targeted Medical Review to ensure the services are appropriate and documentation supports the continued need. This system ensures coverage is limited by the patient’s ongoing need for skilled intervention, not by duration. The patient remains responsible for the Part B deductible and a 20% coinsurance of the Medicare-approved amount for these services.
Essential Eligibility Requirements for Coverage
Coverage for a Medicare Part A-covered Skilled Nursing Facility stay requires meeting strict initial eligibility criteria. The most well-known condition is the “Three-Day Inpatient Stay Rule,” which mandates that the beneficiary must have been admitted as an inpatient to a hospital for at least three consecutive days, not counting the day of discharge. Time spent in the emergency room or under observation status does not count toward this requirement.
The care received must be “skilled care,” defined as nursing or therapy services that can only be safely and effectively provided by, or under the supervision of, professional personnel like registered nurses or licensed therapists. This includes services such as complex wound care or daily physical therapy. Custodial care, which includes help with daily activities like bathing or eating, is not covered by Part A when it is the only care needed. The care must also be provided in a Medicare-certified facility, and the need for the skilled services must be certified by a physician.