Does Mental Health Coverage Make Health Insurance Costlier? Things To Know About Premiums and Policy Design

Mental health is no longer an afterthought in India’s health insurance market. What was once a largely an uncovered area began changing after the Mental Healthcare Act, 2017, which required insurers to treat mental and physical illnesses in equal measures. The Insurance Regulatory and Development Authority of India (Irdai) followed through with clear directions to insurers which notes that mental health must be covered in all health insurance policies.

Most standard health insurance policies today include inpatient hospitalisation for psychiatric treatment. This covers conditions, such as depression, schizophrenia, or anxiety disorders when hospitalisation is deemed medically necessary.

Says Dinesh Mosamkar, senior vice president, consumer underwriting, Tata AIG General Insurance: “While many health insurance policies in India now include mental health coverage, the extent of coverage can vary significantly. A policy may or may not have specific exclusions related solely to mental health. However, general policy exclusions, terms, and conditions often apply and are equally relevant to mental health treatments.”

These may include:

• Waiting periods for pre-existing conditions and specified illnesses

• Treatment for substance abuse, drug dependence, and addiction-related disorders

• Use of experimental, unproven, or alternative therapies not recognised by the Indian medical regulatory authorities

• Treatment availed outside the insurer’s empanelled network

• Conditions arising due to criminal acts or legal offenses

• Therapies or treatments conducted by unregistered or unlicensed medical practitioners

• Treatment undertaken for enhancement of performance, learning disabilities, or scholastic problems

The Coverage Scope of Mental Health Treatments

As Mosamkar puts it, coverage for counselling sessions with psychologists or other outpatient psychological therapies varies across insurers.

Some insurers include limited consultations or specific psychological therapy sessions within defined caps or monetary limits, while others treat it as an optional benefit available through riders or wellness programs.

Despite the regulatory push, not all mental health needs are covered uniformly. For instance, counselling sessions with psychologists or therapy for stress and anxiety are often excluded unless specifically mentioned in the policy. Where they are included, they may come with annual caps, say, a fixed number of sessions or a sub-limit within the total sum insured.

The extent of such coverage typically depends on the nature of the offering where the benefit may be available for a defined number of sessions per policy year. In contrast, some insurers may provide coverage based on a specified monetary limit, too.

“Additionally, many insurers may choose to offer these services through a defined network on a cashless basis to ensure quality care and enhance customer convenience,” Mosamkar adds.

How Inclusion Of Mental Health Benefits Affects Pricing Of Health Insurance Policies

The pricing of health insurance policies can be influenced by the inclusion and scope of mental health benefits.

According to Mosamkar, the premiums tend to vary based on the comprehensiveness of the mental health coverage offered. “For instance, policies that provide only basic benefits, such as limited consultations, typically have lower premiums compared to those offering a broader spectrum of mental health support, including therapy sessions, counselling, rehabilitation, and wellness programs, assuming all other policy terms and features remain constant,” he says.

Some insurance plans include mental health coverage as a standard, inbuilt feature. Others provide it as an optional add-on or rider, allowing customers the flexibility to choose whether or not to include mental health benefits in their coverage. This modular approach, Mosamkar says, empowers policyholders to tailor their coverage based on their individual needs and adjust their premiums accordingly.

Mosamkar adds: “Claims related to mental health have been observed to have a notable increase in India over the last 3-5 years, driven by greater awareness, reduced stigma, and regulatory mandates requiring coverage.

He added that the Covid-19 pandemic accelerated this trend, as more individuals sought help for anxiety, depression, and related conditions. To meet this growing requirement, insurers are enhancing product offerings and claim management for mental health.

At the time of policy purchases, insurance policy buyers should check the extent of coverage of mental health treatments in insurance plans. Whether reviewing specific mental health coverage or the policy details as a whole, it is essential to carefully understand the terms and conditions to avoid any potential issues or misunderstandings at the time of claims.