Mental Illness in Health Plans: What you can look forward to after IRDA’s recent directive

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In a bid to help policyholders, the Insurance Regulatory and Development Authority (IRDA) has recently directed insurance companies to make provisions to cover mental illness as well. The circular, dated 16 August, prompt insurers to make available the treatment of mental illness in the same way as the treatment of physical illness.

According to the National Mental Health Survey conducted by the National Institute of Mental Health and Neuro Sciences, a startling 15 crore people at varying stages of mental illness need immediate intervention. Till now, insurers have not covered mental illnesses. But, they will need to make room for mental illness too as per the Mental Healthcare Act, 2017.

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WHO has estimated that over 450 million people suffer from mental disorders (out of which 150 million belongs to India alone). Currently, mental and behavioural disorders account for 12 per cent of the global burden of diseases, which is likely to reach 15 per cent by 2020.

“Owing to a lack of awareness and limited access to professional help, in India, only 10-12% of the sufferers seek help. There is a gap in terms of coverage as the majority of people see health insurance as a tax-saving instrument and the sum insured opted doesn’t match the inflation costs even in the corporate health insurance plans,” says Adarsh Agarwal of Digit Insurance. ‘

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As per the Mental Healthcare Act, mental illness has been defined as a substantial disorder of thinking, mood, perception, orientation or memory that grossly impairs judgments, behaviour, capacity to recognise reality or ability to meet the ordinary demands of life. It also includes the 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 the mind of a person.

A typical health insurance pays for in-patient hospitalisation and not out-patient treatment. Meaning consultation with your doctor or medicines that you buy will not be payable. Given the challenges in a new insurance plan, data from various sources need to be analysed to work out the premium for coverage. One option can be to introduce two variants, a) mental illness treatment on hospitalisation basis and b) Treatment on hospitalisation as well as OPD basis.

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According to Shreeraj Deshpande, health insurance head of Future Generali India insurance, it’s too early to access the impact on pricing given the lack of data. The industry can implement a disease-based exclusion period where named ailments are excluded for the first couple of years to avoid anti-selection.

The IRDAI circular mandates bringing a provision to include mental illnesses at par with physical illnesses. It will involve setting a product structure, pricing, and terms and conditions after having a complete awareness of the inclusions and exclusions.

According to Nikhil Apte, Chief Product Officer at Royal Sundaram General Insurance Co Ltd, “OPD is excluded from a lot of policies. It becomes payable if the inpatient claim is payable under pre/post hospitalisation. OPD may not be payable and only IPD may be payable, but the coverage of OPD will vary from product to product.”

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Abhijeet Ghosh, Director of Vertical Market at Lexis Nexis Risk Solutions, adds that “insurers will deal with the treatment of mental disorders like a routine treatment. Hence, after coming up with the scope of coverage related to IPD, OPD and Day Care, things will start taking shape.”

As per data of WHO, between 76% and 85% of people with a mental disorder receive no treatment for the disorder in low and middle-income countries. The number of psychiatrists is 0.3 per 100,000 in India vis-a-vis 6.6 per 100,000 in developed countries. In light of the above data related to mental health, the decision to include mental illness in healthcare is surely a step towards achieving well-being blanketed with empathy.


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