Why Insurance Covers Drug Rehab but Not Sober Living Homes

A variety of addiction recovery services are not covered under medical insurance, but the mental health industry has evolved.

Why Insurance Covers Drug Rehab but Not Sober Living Homes
One of the most common questions presented to addiction recovery services providers is, do you take insurance? And this generally means any type of insurance, whether it’s HMO, PPO or even Medicare or Medicaid. It’s a critical matter too, because oftentimes by the time the drug addict is ready to get sober they’ve already exhausted all of their financial resources. In many cases the loved ones are able to help cover the cost of treatment or sober living, but not always. Regardless, when you pay for insurance each month you expect it to be there for you when you need it, and rightfully so!
As an owner or manager of a recovery housing residence, whether it is a sober living home, halfway house, transitional residence, or whatever, that is far and away the most common question being asked by prospective new residents. In many cases, they are just coming out of a residential or PHP drug rehab center and are accustomed to already paying with medical insurance.

The simple answer as to who takes (or can take if they choose) insurance is this. Any health/medical practitioner or company that is state licensed to provide an approved clinical service can potentially accept any number of health insurance plans and programs. These providers are all mandated to follow HIPAA guidelines and are provided with an NPI number which is generally used for the electronic filing of insurance claims, In example, an addictions therapist with a masters degree cannot accept medical insurance for payment until they become state licensed.

Drug & alcohol rehab centers (inpatient, residential, outpatient, etc.) are required to obtain state licensing prior to opening their doors. In most cases, these facilities have additional credentialing such as CARF, Joint Commission, and as of recent, LegitScript. Consequently, most substance abuse treatment centers accept some variation of health insurance plans. With each private insurance plan, it would be either an HMO, PPO in-network or PPO out-of-network. Public plans would consist of Medicare and Medicade. There are other plans too, like those that specialize in insurance veterans.

In the world of addiction recovery, there are a number of services that do not fall under the purview of state licensing, in the clinical sense. A few among these are interventionists, recovery/sober coaches, and sober living residences or addiction recovery homes (halfway houses, 3/4 houses, transitional housing). As such, these services are not able to accept insurance. And this is not due to any law or other restriction; the reason for this is because these are not approved services as deemed by the insurance companies.

Truth be told, once the health insurers come to terms with the benefit of long-term recovery-transitional housing, especially after completing residential treatment, they probably will begin covering sober living housing that adheres to their mandates.

More and more these days, there are recovery services providers that, in one aspect, do not accept health insurance, yet in another they can accept it. An example would be a licensed therapist that is also a recovery or life coach. Working with the same client, as a coach insurance is not an option, as a licensed therapist however, it is.

Over the past decade or so there has also been a shift in treatment taking place, whereas many drug rehab facilities are doing away with the residential (inpatient) model and going the route of PHP (partial hospitalization). This is when the client lives in one location, generally resembling a high-structure recovery home, and receives clinical services at a different location. While insurance won’t pay for the housing portion, the off-site clinical care is generally covered. This is basically a hybrid model and has numerous benefits to offer, aside from cost efficiency.

HMO – Health Maintenance Organization

HMO insurance is generally less expensive but also more restrictive. HMO plans require the patient to only see providers within a specified network. Additionally, before seeing a specialist the patient must first obtain a referral from their primary care physician.


PPO – Preferred Provider Organization

The PPO option is generally a more expensive plan but gives the patient much more flexibility, such as: you do not need to obtain a referral from your primary care physician before seeing a specialist, and you are free to see providers both in the network and outside the network.

Treating drug & alcohol addiction can be a costly endeavor, and unfortunately, many of us go through the recovery process numerous times. In addition, many of us pay hefty monthly premiums for medical insurance. Even still, often times a client/family will find themselves having to pay as much as 5, 6, 7, 8 thousand or more for a deductible that must be met prior to any mental health coverage kicking in. There are usually options, however – alternatives that offer a more affordable path. Sometimes a structured sober living home can offer the best of both worlds, a more affordable option and a more real-world approach to sobriety.


Progressive Living operates a network of sober living homes and addiction recovery houses throughout Pennsylvania, including; Levittown, Bristol and Morrissville (Bucks County), PA as well as a sober living apartment complex in Ewing, New Jersey — view our locations. Our recovery residences range from medium to higher structure and are available for men and women ages 18 and up that are new in their sobriety from drug or alcohol addiction. Reach us 7 days a week at: (215) 584-0340 or info@progressivelivingrecovery.com.


Progressive Living | An affordable and effective way to change your life TODAY!


Locations in Bucks County, PA and Ewing, NJ

(215) 584-0340



Progressive Living provides structured sober living homes and addiction recovery housing. Our focus is on helping men & women new in sobriety to re-acclimate into life in a manner that is conducive to living as a proactively sober individual. It is often the case that a client at any of our recovery residences will take part in outpatient treatment during their initial stay here. If requested, we are happy to provide clients with information on local outpatient rehab providers based on prior experience and their overall reputation. Information provided however, is not an endorsement nor based on any clinical matter or assessment.

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