Explained: How Mental Health Insurance Works And What You Should Know

Most insurance plans still prioritise hospitalisation expenses and exclude outpatient care, therapy sessions or psychiatric consultations.

The Insurance Regulatory and Development Authority of India mandated that all health insurance policies must offer coverage for mental illnesses (Photo: Pexels)

Mental well-being is increasingly being recognised as important as physical health these days. While emotional and psychological aspects have long been sidelined, focus has now shifted to mental health as well in recent years, especially after the Covid-19 pandemic. But what does this mean in terms of insurance coverage?

While opting for a health insurance plan, it's important to include therapy and psychiatry treatments as well as to know what the policy actually covers.

Let's explore the key factors related to mental health insurance and what the plans cover:  

Why Does It Matter?

Mental health includes a person's emotional, psychological, behavioural and social well-being. It influences how we think, feel, act and make choices. From handling stress and maintaining relationships to working productively, mental health affects every aspect of daily life.

Mental illnesses can arise due to genetic factors, traumatic life events or even chronic stress. Knowing one's family history can also help anticipate risks, as some conditions could be hereditary.

Also Read: Eight Things You Must Do To Have Your Finances In Place For Early Retirement

Is Mental Health Covered Under Insurance In India?

Yes, it is. In a move towards inclusivity, the Insurance Regulatory and Development Authority of India mandated that all health insurance policies must offer coverage for mental illnesses. This direction falls under the larger framework of the Mental Healthcare Act, 2017, which aims to provide for mental healthcare and services for people with mental illness and to protect, promote and fulfil the rights of such persons.

"All insurance products shall cover mental illness," the Irdai circular clearly said.

This means insurers are now required to treat mental health conditions on par with physical illnesses when offering policy coverage.

Common Challenges

Despite the mandate, there remain several gaps in practice. Most insurance plans still prioritise hospitalisation expenses and exclude outpatient care, therapy sessions or psychiatric consultations unless these are specifically included as part of the policy or added as optional riders, often against an additional premium.

Another issue is disclosure. When buying a health plan, one must honestly declare all pre-existing medical conditions — including any mental health diagnoses. If you fail to do this, your claims might be denied later.

It's also important to read the policy terms carefully. All plans may not offer the same benefits and exclusions vary. A policy that includes mental health might also keep the coverage limited to only a few mental health conditions.

How Can One Get Insured For Mental Health Treatment?

If you already hold a health insurance policy, start by checking with your provider to see if mental health coverage is included or if it can be added. Many insurers now offer top-ups or upgraded plans with mental health benefits.

Alternatively, you can buy a new health policy that covers both physical and mental healthcare. As awareness grows, more providers are offering detailed packages. But be mindful that benefits vary across policies, especially when it comes to outpatient consultations or long-term therapy.

For example, not all plans will cover psychiatric counselling or medication unless stated clearly in the policy document. Always check with your insurer to understand the exact scope of coverage.

Why Does This Matter Now More Than Ever?

The Covid-19 pandemic laid bare the impact of mental health issues. With increased awareness, there is now a push to treat mental illnesses with the seriousness they deserve. Higher mental health insurance coverage could be a major step in making treatment more accessible and affordable for everyone.

Also Read: Eight Things You Must Do To Have Your Finances In Place For Early Retirement

Watch LIVE TV, Get Stock Market Updates, Top Business, IPO and Latest News on NDTV Profit.
WRITTEN BY
P
Personal Finance Desk
Our team of personal finance writers covers what matters for your wallet. F... more
GET REGULAR UPDATES