Rishabh Parakh

Is mental illness covered under your health insurance policy?

Featured in Forbes on 16/06/2020

We spend a lot of time discussing our physical wellness and weight loss plans, but not nearly enough about our mental well-being? To top it all, do we consider the financial emergencies arising out of any medical emergency, and what a family may have to go through to deal with it? Let us understand how your health insurance plan is designed to take care of any financial emergency arising out of any mental illness.

What is a mental illness?
Every insurance company has to make a provision for the treatment of a mental illness in the same way they treat physical ailments. In fact, they have to follow the definition of mental illness as defined under the Mental Healthcare Act, 2017. The definition says, “Mental illness means a substantial disorder of thinking, mood, perception, orientation or memory that grossly impairs judgment, behaviour, capacity to recognise reality or ability to meet the ordinary demands of life, mental conditions associated with the abuse of alcohol and drugs, but does not include mental retardation, which is a condition of arrested or incomplete development of mind of a person, specially characterised by sub normality of intelligence.”

What is covered?
So, anyone who suffers from a mental condition as mentioned above is eligible to apply for a health insurance claim. The Mental Healthcare Act, 2017, also clearly expresses the fact that every policyholder suffering from a mental illness will be treated in the same manner as those applying for a claim out of any physical ailment. This will help many who are suffering from any mental illness like anxiety, clinical depression and other psychological disorders. IRDA (Insurance Regulatory and Development Authority) has also released guidelines for all insurers on the standardisation of exclusions. Therefore, any treatment for a mental illness will not be allowed as an exclusion in your health insurance policy.

How does it work?
As stated above, a health insurance company has to cover treatment for a mental illness, but whether you would get a cover for OPD, i.e. out-patient department apart from the hospitalisation would depend on the health insurance policy you had purchased. As per the guidelines, the insurer cannot differentiate between physical and mental illness, which means if your policy covers a physical illness for a hospitalisation, then it will also cover any mental illness as defined. Likewise, if your health plan provides you a cover towards OPD charges for a physical illness, then the OPD charges for any mental illness will be covered too. But you need to read between the lines and understand the dos and don’ts of your health insurance plan, because it comes with a lot of ifs and buts. Generally, a health insurance plan for a mental illness covers expenses for hospitalisation or rehabilitation and also the expenses one incurs towards OPD and consultation.

Does your existing health insurance plan cover mental illness?
Mental illness, as defined under the Mental Healthcare Act, 2017, will be covered in your existing health insurance plans. So, if a person is diagnosed with any mental illness after buying a health insurance plan, the insurance company cannot reject the claim. But it is a good idea to check the fine print of your policy because sometimes there is a waiting period for this to get covered, or you may need to pay a higher premium for any revision in your health insurance plan.

Can a person suffering from pre-existing mental illness get a cover?
There is a very important difference you need to understand: A mental illness in a health insurance plan does not impose an obligation on any insurer to insure anyone with a pre-existing mental illness. You might be aware of the fact that an insurance company is free to provide a cover for pre-existing ailments, subject to some waiting period or a reduced insurance cover. The same rule applies to mental illness too, where an insurance company can cover the same subject to a waiting period of say 2-3 years. So, a policyholder will not get a claim for medical treatment expenses during this window. But once the waiting period is over, the insurance company is liable to offer cover for all claims related to any mental illness treatment.

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