Last Updated on 19 June 2020

Does Private Health Insurance cover Drug Addiction Rehab?

Drug addiction can occur in any family, from any background.

As awareness about the nature of drug addiction and its treatment options grows, so does the number of people seeking treatment. In Australia alone, the number of people seeking treatment for drug addictions increased nearly 12% between 2013 and 2016. The demographics for those who seek drug addiction are also diversifying.

Key Points
  • Drug addiction is a chronic disease that requires extended and personalised care.
  • Drug addiction treatment includes many medical and therapeutic specialties that can include in-patient and outpatient care.
  • While Medicare will cover some treatment for drug rehabilitation, coverage can be limited depending on where a patient lives and what services he or she requires.
  • Private Health Insurance can provide more comprehensive coverage and shorter wait times, but it is important for customers to be proactive, as benefits may not start immediately.

Now, people 40 years and older account for one-third of those treated in the country.
If you or someone you know is suffering from drug addiction, it is important to understand what treatment options are available. Furthermore, it is important to know how health insurance can help pay for drug treatment and what types are treatments are covered.

Drug use prevalence in Australia 2016

What Is Drug Addiction?

While many people view drug addiction as the choice of the addict, it is actually a complex and chronic disease.

The disease of drug addiction is often characterised by compulsive and destructive drug seeking behaviour that is difficult or impossible to control. Drug addiction is the result of repeated drug use that causes changes in the brain. Those brain changes negatively affect the addicted person’s ability for self-control and make it challenging for him or her to resist the urge to take drugs.

Drug addiction is considered a chronic disease because the brain changes are often persistent and cause the person to relapse even after not using drugs for an extended period of time.

Quality medical and therapeutic treatment is the most effect way to manage and overcome drug addiction. As is typical with chronic conditions, relapse rates can be high. With drug addiction specifically, relapse rates range between 40 and 60 percent. This does not mean that treatment is not effective. Rather, it means effective treatment must be ongoing. Effective treatment must also evolve with the patient as his or her life circumstances evolve.

How drug addiction works

How Is Drug Addiction Treated?

Through extensive research, medical professionals have developed the most effective methods for the treatment of drug addiction. They include:

  • Behavioral counseling
  • Medication
  • Medical devices or applications that treat withdrawal symptoms
  • Evaluation and treatment for potential co-occurring mental health issues
  • Long-term follow-up and treatment reevaluation

Oftentimes, treatment programs include more than one treatment method. This multi-method approach allows addiction treatment providers the flexibility to customise care based on each patient’s needs. The customisation often includes medical and mental health services and provides greater chances of success without recurrent relapses.

As follow-ups and treatment reevaluations are critical to the success of drug addiction treatment programs, many follow-up and long-term care solutions also include community, family, or faith-based recovery support systems.

The cycle of addiction

Medicare Coverage

Many of the options for those using public health insurance to treat drug addictions depend on where the individual lives. As state and territory governments fund most of the drug and alcohol rehabilitation services, patients living in different areas may not have access to the same level of care through Medicare.

While the Australian Government does provide funding for some drug rehabilitative services, most are run by non-government and charity organisations. Therefore, specific drug treatment services may not be available to all people in all areas of the country under Medicare.

Treatment types for drug addiction in each Australian state


Furthermore, while state, territory, or the Federal Government may cover all costs for portions of a patient’s drug treatment, some government-funded, but community based rehabilitation services will require a co-payment.

Admittance to such community based residential rehabilitation facilities can also come with wait times of up to six months.

Since using Medicare to pay for drug addiction treatment can amount to many unforeseen costs and wait times, it’s best to consult your doctor about potential gap pays, Medicare rebates and waits.

Private Insurance Coverage

There are a variety of Private Health Insurance options to assist those seeking drug addiction rehabilitation.

Private Health Insurance often covers many of the facets of drug addiction treatment that might be left uncovered with Medicare.

It provides an array of options to cover ongoing prescription needs, potential hospitalisation, residential treatment facilities, and mental health services. As customers get the option to personalise their care coverage with private health insurance, they can opt to include more comprehensive benefits that cover items such as psychology and pharmaceuticals.

However, because drug addiction treatment could include in-patient and outpatient care, it is important to note that Private Health Insurance may be most effective when covering in-patient services. Medicare will generally provide most assistance with outpatient care.

With that, those with Private Health Insurance are not subjected to the potentially long wait times for residential treatment facilities as are those who plan to use only Medicare. Admittance to private facilities is normally immediate and many insurance plans cover most, if not all of the treatment costs.

Without Private Health Insurance, the cost to attend a private residential drug treatment facility generally costs about $800 a day.

Sources of funding for drug addiction treatments in Australia

Does private health cover rehab?

Drug addiction insurance is a controversial topic, but an important one to discuss for the sake of thousands of Australians struggling with a drug problem. Their wellbeing—financially, emotionally, physically and mentally—depends on this information being made free, available and easily accessible.

The simple answer is yes—some private health insurers cover rebab. For example, they may offer rebates on drug and alcohol rehabilitation.

How much exactly you’d need to pay out-of-pocket, however, is dependent on the nature of your condition.

Drug and alcohol addictions often go hand in hand with psychiatric and mood disorders, mental health problems and a myriad of physical conditions related to substance abuse.

This means that the type of insurance you need for your drug addiction may cover ground across multiple categories, so that you can achieve whole body recovery (and not just a quick fix for one issue.)

The more complicated your case is, the more comprehensive your private health insurance may need to be, in order to give you the best degree of coverage.

Whether you can claim successfully or not is related to the type of policy you have.

If you want to be covered as a private patient for psychiatric treatment or drug and alcohol rehabilitation, you can purchase hospital cover.

This sort of insurance covers the cost of hospital accommodation and a portion of the medical fees. Not all hospital policies will give you full cover for rehabilitation, so you need to make sure that you choose a policy that does not restrict access to (or only partially cover) these services.

It’s also important to find out if you have a drug or mental health-related restriction on your health insurance policy, as this could potentially affect your cover for drug related rehab.

Luckily, the new reforms have required insurers allow people who hold hospital cover (that does nott offer full coverage for mental health treatment) to upgrade their cover and access mental health services without a waiting period on a once-off basis.

This waiting period exemption will make it easier for patients to access care in a timely manner, without facing hefty out-of-pocket costs. This means they can stay overnight or several nights in a private hospital for a serious mental health condition without having to deal with additional stress.

Another benefit thanks to the new reforms: the government has removed limits on the number of mental health sessions or treatments a patient can access.

Does insurance pay for rehabilitation?

Yes, private health insurance can cover day programs, in-patient stays and other medical services associated with rehabilitation.

Hospital psychiatric care is available to holders of Basic, Bronze, Silver and Gold private health insurance policyholders, but only those who have a Gold policy will be able to access this service in an unrestricted way in a private hospital.

Electroconvulsive therapy and transcranial magnetic stimulation are also services no longer subject to limited access under the 2019 reforms.

Perhaps you’re wondering what severity of drug addiction insurance can cover, or whether this even matters.

The good news is that both severe and comparatively minor drug and alcohol issues can benefit from private health insurance.

Determining the best insurance method to help with drug addiction treatment depends on the individual needs of the addict. While Medicare does provide some benefits, the patient will have to consider potential wait times, access to care, and gap costs. With Private Health Insurance, it is important for a customer to find the provider that offers plans with comprehensive care that will allow for the multi-faceted and diverse nature of drug treatment plans.

It is also important that the customers take a proactive approach to all of their healthcare needs as some Private Health Insurance coverage benefits may not be available as soon as a customer signs up


Still have questions? Let's talk!

Confused? Not sure if this applies to your situation? Phone us on 1300 163 402 for some free, no obligation advice.


Or want to compare policies now?