Mental Health Treatment Must Get Same Insurance Cover As Physical Illness, Rules Ahmedabad Consumer Commission

An Ahmedabad consumer commission has held that health insurers cannot deny hospitalisation claims for mental illness by relying on policy exclusions that conflict with statutory protections and insurance regulations.

The Ahmedabad District Consumer Disputes Redressal Commission (additional) directed National Insurance Company Ltd to reimburse a policyholder for treatment related to psychosis, observing that mental illnesses must receive insurance coverage on the same footing as physical ailments.

The commission also ordered the insurer to pay interest at 7 per cent on the claim amount, along with Rs 4,000 towards mental harassment and litigation costs.

Claim Rejected For Psychosis Treatment

The case involved a Vastrapur resident who had purchased a mediclaim policy with a sum insured of Rs 3 lakh from National Insurance Company.

In October 2022, he spent four days in a private hospital for psychosis treatment. The bill was Rs 44,409, and he later sought reimbursement from the insurer.

The insurer turned down the claim, saying the policy did not cover hospitalisation linked to mental illness.

He then moved the consumer commission, claiming that the insurer had wrongly denied his claim. He argued that the rejection was unjustified, particularly when mental health treatment is legally required to be treated at par with treatment for physical ailments, according to a recent report by The Times of India.

The insurer defended its decision on the grounds that the exclusion was part of the policy terms and conditions. It maintained that the treatment did not qualify for reimbursement under the cover purchased by the policyholder.

Mental Illness Cannot Be Treated Differently

The commission did not accept the insurer’s position. It referred to the Mental Healthcare Act, 2017, which requires every insurer to make provision for medical insurance for treatment of mental illness on the same basis as treatment for physical illness.

It also took note of the insurance regulator’s directions issued in August 2018. These directions required insurers to provide coverage for mental illness treatment in line with the provisions of the Mental Healthcare Act.

The commission observed that the insurer had failed to provide a convincing explanation for why the statutory provision and regulatory directions should not apply in the matter.

The commission said the insurer could not reject the claim using a policy clause that went against the law and insurance rules. It is termed the rejection as arbitrary and invalid.

The ruling may help policyholders whose mental health treatment claims are rejected under standard health plans. Insurers may impose policy conditions, but they cannot refuse a claim only because the treatment was for a mental illness.

Treatment for mental health issues may include hospital care, medicines, counselling, and regular consultations with specialists. The costs can add up quickly, particularly where inpatient care becomes necessary. Policyholders should therefore read the wording of their health insurance policy carefully and check whether mental health treatment, psychiatric hospitalisation, and related expenses are specifically covered.

Those whose claims are rejected should ask the insurer for a written reason for repudiation and examine whether the denial is consistent with the Mental Healthcare Act and insurance regulations. Where necessary, they may use the insurer’s grievance mechanism and subsequently approach the Insurance Ombudsman or consumer commission.

The Ahmedabad order underlines that health insurance cannot distinguish between the mind and the body when the law requires equal treatment for both.