Medicaid Rehab: The Complete 2026 Guide

Who Qualifies for Medicaid Rehab?

Eligibility depends heavily on where you live. The Affordable Care Act (ACA) gave states the option to "expand" Medicaid to cover nearly all low-income adults. Most states accepted this, but some did not.

1. The "Income Test" (MAGI)

Most states use Modified Adjusted Gross Income (MAGI) to determine eligibility. In "Expansion States," you qualify if your household income is below 138% of the Federal Poverty Level (FPL).

2. Categorical Eligibility (Non-Expansion States)

If you live in a state that did not expand Medicaid (such as Texas, Florida, or Georgia), income alone is usually not enough. To qualify, you must also fall into a specific category:

• Pregnant women
• Parent or caretaker of a minor child
• Blind or disabled (receiving SSI)
• Age 65 or older

*Childless adults without disabilities generally do not qualify in non-expansion states, regardless of how low their income is.

What Addiction Services Does Medicaid Cover?

While benefits vary slightly by state, federal rules mandate coverage for "essential health benefits," which includes substance use disorder treatment.

Does Medicaid Cover Inpatient Rehab? (The "Yes, But..." Rule)

The short answer is yes, Medicaid covers inpatient rehab—but federal regulations create a massive bottleneck known as the IMD Exclusion. Understanding this rule is the key to finding a facility that can actually accept your insurance.

The "16-Bed Rule" (IMD Exclusion)

Under a federal law from 1965, Medicaid cannot pay for addiction treatment in an "Institution for Mental Diseases" (IMD) with more than 16 beds for adults ages 21–64.

This means a massive, 100-bed luxury rehab center cannot bill Medicaid for your stay, even if they wanted to. This rule was originally created to prevent the federal government from funding large state asylums, but today it accidentally limits access to residential rehab.

Inpatient Services Typically Covered

If you find a facility that fits the criteria (small facility OR in a waiver state), Medicaid covers:

• Room and board (in specific residential settings)
• 24/7 nursing and medical supervision
• Individual and group therapy
• Medication management
• Post-discharge planning

Medication-Assisted Treatment (MAT) Coverage

Unlike inpatient rehab, which has complex facility rules, coverage for MAT is straightforward: It is mandatory.

Under the SUPPORT Act and recent federal updates, all state Medicaid programs are required to cover FDA-approved medications for opioid use disorder (OUD). States cannot arbitrarily deny these life-saving medications.

Do I Need Prior Authorization?

In the past, many states required doctors to get special permission ("Prior Authorization") before prescribing Suboxone. Many states have removed this barrier to combat the opioid crisis, allowing you to get your prescription immediately at the pharmacy.

Expansion vs. Non-Expansion States: Why Geography Matters

Your access to Medicaid rehab depends almost entirely on one question: Did your state expand Medicaid under the Affordable Care Act?

In "Expansion States," federal funds were used to widen eligibility. In "Non-Expansion States," eligibility remains extremely strict, often excluding childless adults regardless of how low their income is.

*Note: Even in non-expansion states, you may still qualify for subsidized treatment through state-funded block grants (SAPT) if you don't qualify for Medicaid.

How to Find Facilities That Actually Accept Medicaid

The biggest frustration for Medicaid patients is calling a rehab center, only to hear: "Sorry, we don't take that insurance."

Private luxury centers rarely accept Medicaid because the reimbursement rates are lower than private insurance. To find help, you need to look for specific types of facilities.

Target These 3 Types of Facilities

Using Our Directory to Filter

You don't have to call blindly. Our national directory allows you to view facilities by state. When browsing, look for the "Payment Accepted" section on any listing.

Navigating Waitlists & How to Skip the Line

The hard truth about Medicaid rehab is that demand often exceeds supply. Popular state-funded centers may have waitlists ranging from a few days to several months. However, federal laws mandate Priority Admission for certain high-risk groups.

Who Gets Priority Access?

If you fall into one of these categories, you can often bypass the general waitlist under federal Block Grant (SAPT) rules:

• Pregnant Women: Federal law requires pregnant women to be treated immediately or given interim services within 48 hours.
• IV Drug Users: Due to HIV/Hep C risks, intravenous users typically receive priority placement.
• Overdose Survivors: Many states now have "warm handoff" programs from the ER directly to treatment.

Is Medicaid Rehab Really Free? (Copays & Spend-Downs)

For most enrollees earning below the poverty line, Medicaid addiction treatment has zero out-of-pocket costs. However, depending on your specific plan and income, you might face small fees.

1. Nominal Copays

Some states charge small copayments for services to prevent overuse, though these are often waived for rehab. Typical costs might look like:

• Inpatient stay: $75 per admission (often waived)
• Outpatient visit: $3 – $5 per session
• Prescriptions (e.g., Suboxone): $1 – $3 per fill

2. The "Medicaid Spend-Down"

If you earn slightly too much to qualify for regular Medicaid, your state might offer a "Medically Needy" program with a Spend-Down.

Think of a Spend-Down like a monthly deductible. If your Spend-Down is $500, you must pay the first $500 of your medical bills each month. Once you hit that amount, Medicaid kicks in and pays 100% of the remaining costs (like a $20,000 rehab stay) for the rest of the month.

Special Coverage Rules for Vulnerable Groups

Frequently Asked Questions