Our objective is to design efficient coded modulation techniques with multi-stage decoding (MSD) for Rayleigh fading channels. The well known rate design rule is conventionally used for AWGN channels. We extend the application of the rate design rule for multi-level coding by considering MSD for Rayleigh fading channels with interleaving. We model the fading channel as a time invariant additive non-Gaussian noise channel by assuming that the perfect channel state information is available at the receiver. The equivalent channel capacity curves that can be used for the multi-level code design for Rayleigh channels, and a code design example are presented. We demonstrate that very good coding gains can be achieved if code rates are selected correctly.