Occupational therapy, when medically necessary to help you perform day-to-day tasks, is covered by Medicare.
Medicare Part A covers inpatient occupational therapy and Medicare Medicare Part B covers outpatient occupational therapy.
In 2018, Medicare eliminated a cap that limited how much occupational therapy was covered in a benefit year.
Occupational therapy at home is usually covered by Part A and can be effective in helping you return to normal after an injury or illness.
Medicare covers occupational therapy, and the amount of therapy covered is no longer subject to an annual cap.
Medicare defines occupational therapy as a therapy to “help you perform activities of daily living (like dressing or bathing).”
If you are dealing with an injury or illness, occupational therapy may be prescribed to help you return to performing daily tasks at or near the level you could before. If you are dealing with a degenerative condition, occupational therapy can help you slow down any decline in your ability to take care of yourself.
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Medicare covers all types of occupational therapy services. Where the therapy is administered impacts how Medicare covers the services rendered.
Part A Coverage
Suppose you need medically necessary occupational therapy during an inpatient hospital stay. Medicare Part A, commonly referred to as hospital insurance, covers those services.
- Part A of Original Medicare typically is available to U.S. citizens when they turn age 65.
- In most cases, Part A is offered without a monthly premium if you paid Medicare taxes through an employer for at least 10 years.
Part A also covers occupational therapy in other facilities and inpatient situations, including:
- Hospice care facilities
- Nursing home care (that isn’t custodial or long-term)
Part B Coverage
Suppose you need medically necessary occupational therapy on an outpatient basis. In that case, those services are covered by Medicare Part B. Commonly referred to as medical insurance, Part B of Original Medicare typically is available to U.S. citizens when they turn age 65 and requires that you pay a monthly premium.
The part of Medicare that covers your occupational therapy determines how much Medicare will pay and follows the typical payment rules prescribed by Medicare.
While you usually will bear some financial responsibility for occupational therapy, that may not always be the case if it’s covered by Part A.
Part A requires that you pay a benefit period deductible for each inpatient stay, which is $1,632 in 2024. If you’re in the hospital for no more than 60 days, that’s all you pay out of pocket for hospital-related services. So, if you’ve been in the hospital fewer than 61 days and require medically necessary occupational therapy, you won’t have to pay for the care.
You must pay daily coinsurance for days 61-90 in the hospital ($408 in 2024). Beyond 90 days, your daily coinsurance doubles ($816) and you must use any of your 60 “lifetime reserve days” to be covered by Part A.
For outpatient occupational therapy, most people will always bear some financial burden. But if you require a lot of occupational therapy, Medicare changes over the last several years may have lessened that burden.
The Bipartisan Budget Act of 2018 lifted the cap on how much outpatient occupational therapy Medicare will cover.
Before the act, occupational therapy under Part B for the benefit year was limited by a dollar amount that changed every year but that had been in the $2,000 range in recent years. That number still exists ($2,230 in 2023), but thanks to the legislation it now instead represents the dollar total at which your occupational therapy must be documented as medically necessary in order for coverage to continue.
You are still responsible for some costs under Part B, both before and after the threshold. When you begin occupational therapy in a benefit year, you are responsible for any portion of your annual deductible that you haven’t yet paid. After that, Medicare Part B will pay 80% of your costs and you will be responsible for coinsurance of 20%.
If you have a Medigap supplemental policy, which you can add to your Original Medicare coverage if you have Parts A and B, you may not have to pay as much out of pocket for occupational therapy.
All 10 of the standard Medigap plans offered by private insurance companies with guidance from Medicare pay at least 50% of Part B coinsurance. Nine of the 10 cover at least half of the Part A deductible (six of them pay 100%).
If you have Parts A and B of Original Medicare, you have the option of switching to a Medicare Advantage plan offered by private insurance companies with guidance from Medicare. Your costs for occupational therapy will vary based on your specific Medicare Advantage plan, though regardless of your specific plan:
- Medicare Advantage will offer at least the same coverage as Parts A and B.
- You will have the protection of an out-of-pocket maximum. Original Medicare doesn’t have an out-of-pocket maximum; two Medigap plans do.
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If medically necessary, Medicare will cover in-home occupational therapy as a part of home health care, which is covered by Part A.
Occupational therapy at home may be especially beneficial because you can receive your care in the very space where you carry out many of your day-to-day tasks. The Centers for Medicare and Medicaid Services (CMS) is continuing a program to develop the effectiveness of in-home care with the most recent extension of the Independence at Home Demonstration.
In addition, the declaration of a national emergency related to COVID-19 opened the door for occupational therapists to be reimbursed by Medicare for therapy performed via telehealth.