What Medicare Covers for Inpatient Rehabilitation vs. Nursing Homes

After a serious injury or medical event, navigating the path to recovery is your top priority and  understanding how you’re going to pay for it can be stressful. For millions of Americans, the answer lies with Medicare, but the system is confusing, especially when choosing between an Inpatient Rehabilitation Facility (IRF) and a Skilled Nursing Facility (SNF), often called a nursing home.

While both provide post-hospital care, Medicare views—and covers—them very differently based on the intensity of care provided. Let's break down what you need to know.

The Foundation: It’s All About Medicare Part A

For any post-hospital stay, the coverage you’ll be using is Medicare Part A (Hospital Insurance). This is the part of Medicare that helps pay for care you receive as an inpatient. The costs we'll discuss below generally apply once you've met your Part A deductible for your "benefit period."

A benefit period begins the day you're admitted as an inpatient and ends when you haven't received any inpatient care for 60 days in a row.

Medicare Coverage for an Inpatient Rehabilitation Facility (IRF)

An IRF, like REHAB Hospital of the Pacific, is considered hospital-level of care. Medicare covers this type of facility when a patient requires frequent physician monitoring and management, 24/7 care by registered nurses and an intensive multidisciplinary therapy program.

How You Qualify for IRF Coverage:

• Your doctor must certify that you have a medical condition that requires intensive rehabilitation.
• You must require at least two types of therapy (physical, occupational, speech-language).
• You must be able to participate in at least 3 hours of intensive therapy per day, 5-7 days a week.
• A rehabilitation physician must supervise your care, seeing you at least three times per week. This level of care is often essential for recovery from complex conditions like Stroke, Traumatic Brain Injury (TBI), or major Orthopedic surgery.

What Medicare Part A Covers in an IRF:

Because it's considered hospital care, Medicare pays for your IRF stay using a bundled payment that covers most services, including:

• A semi-private room
• All meals and nursing services
• All required physical, occupational, and speech-language therapy
• Drugs, medical supplies, and equipment used in the facility

Medicare Coverage for a Skilled Nursing Facility (SNF)

An SNF provides "skilled" nursing and therapy services, but at a lower intensity than an IRF. Medicare coverage for a SNF is more limited and has a tiered cost structure.

How You Qualify for SNF Coverage:

• You must have a qualifying hospital stay. This is a critical rule: you must have been a formal inpatient at a hospital for at least three consecutive days before your SNF admission.
• Your doctor must certify that you need daily skilled care.
• The care you receive must be for a hospital-related medical condition.

What Medicare Part A Covers in an SNF (And What You Pay):

SNF coverage is broken down by the length of your stay within a benefit period:

• Days 1–20: Medicare covers 100% of the approved amount. You pay $0.
• Days 21–100: You are responsible for a daily coinsurance payment. For 2025, this is $208 per day (this amount can change annually).
• Days 101 and beyond: You are responsible for all costs. Medicare covers nothing past day 100 in a benefit period.

Crucially, Medicare only covers skilled nursing care. It does not cover "custodial care," which includes help with daily activities like bathing, dressing, or eating.  If custodial care is the only care you need, Medicare will not cover a SNF stay.

Medicare Coverage: IRF vs. SNF at a Glance

Medicare Coverage: IRF vs. SNF at a Glance

1. What about Medicare Advantage Plans (Part C)? Medicare Advantage Plans must, at a minimum, cover everything Original Medicare covers. However, they are managed by private insurers and can have different rules, costs, network restrictions, and prior authorization requirements. It is crucial to contact your specific plan provider directly to understand their rules and costs for both IRFs and SNFs.

2. Does the 3-day hospital stay rule apply to IRFs? No. The 3-day minimum inpatient hospital stay is a specific requirement for Medicare to cover a stay in a Skilled Nursing Facility (SNF). It does not apply to Inpatient Rehabilitation Facilities (IRFs), which have their own medical necessity criteria.

3. What's the difference between "skilled care" and "custodial care"? This is a key distinction for Medicare. Skilled care is care that must be performed by a licensed medical professional (e.g., a nurse or therapist) to treat a medical condition. Custodial care is help with daily living activities like bathing, dressing, or eating. Medicare Part A covers skilled care in an SNF for a limited time, but it does not cover long-term custodial care.

4. How does a Medigap (Supplemental Insurance) plan help? Medigap plans are sold by private companies to help cover the "gaps" in Original Medicare, like coinsurance. For a skilled nursing facility stay, most Medigap plans will cover the daily coinsurance payment that is required for days 21–100, which can save you a significant amount of money.

5. What happens if Medicare stops covering the stay? If Medicare determines that you no longer meet the criteria for your level of care (e.g., you no longer need "skilled" care or can't participate in 3+ hours of therapy), they may stop coverage. The facility must issue an "Advance Beneficiary Notice of Noncoverage" (ABN). You always have the right to appeal this decision.

6. Does hospital time under "observation" count toward the 3-day rule? No. This is a critical point that trips up many families. For the 3-day rule to apply for SNF coverage, you must have been formally admitted to the hospital as an "inpatient" for three consecutive days. Time spent in a hospital bed under "observation status" does not count. Always ask the hospital staff if your loved one is admitted as an "inpatient" or is under "observation."

The REHAB Hospital Advantage: Clarity and Support

Choosing the right level of care is about achieving the best possible recovery. For patients who are able to participate in intensive therapy, the IRF model is designed to get you home faster and with greater independence.

We know that navigating Medicare rules can be challenging. The admissions team at REHAB Hospital of the Pacific is here to help. We work directly with you, your family, and your insurance provider to verify your benefits and give you a clear understanding of your coverage.

Don't make this critical decision alone. Contact us today to learn how we can help you on your road to recovery.