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Is Mental Illness Covered by Health Insurance?

By Juhi Walia
30 August 2022, 12:51 PM

For a long time, society, family and friends have stigmatised and avoided psychological disorders. While there have been several discussions about physical health issues, there have been few about the growing prevalence of mental illness due to the shame associated with it. However, according to the Mental Healthcare Act of 2017, which went into effect in 2018, mental diseases are now covered under health insurance. 

In India, costs associated with mental diseases were not covered under health insurance before the new rules came into effect in 2018. Only physical health problems and disorders were covered by health insurance. However, a significant change in this direction has been noted in recent years. Mental health issues are gaining traction, and those suffering from mental illnesses are stepping forward.

Understanding Mental Health or Well-Being

A person's mental health encompasses psychological well-being, social well-being, and emotional well-being. It greatly influences how people think, act, and feel.  At every stage of life, mental health is crucial. It also influences how we deal with stress, communicate with others, and make decisions.

When a person is said to have a mental disease, it refers to his or her inability to think, work, memorise, behave, or even make decisions. It causes cognitive impairment and makes doing daily tasks difficult.

Furthermore, during the ongoing pandemic, everyone's attention has been drawn to people's emotional well-being as well as their physical well-being. Mental health has emerged as a major health concern for Indians.

According to recent research, approximately one out of every twenty Indians suffers from mental health concerns. According to the World Health Organization (WHO), approximately 7.5% of the Indian population had mental illnesses as of October 2020. In 2020, the figures rose considerably.  During these challenging times, people realised the importance of having a health insurance policy.

Mental Health Coverage Under Health Insurance

Psychological disorders are covered under health insurance plans prevalent in India. As more individuals are coming out and talking about mental health difficulties, there is a greater understanding of people's mental well-being. It is now a top priority for nearly all.

According to the National Institute of Mental Health and Neurosciences (NMHS), roughly 11% of India's population suffers from mental illnesses such as depression, anxiety, severe mental disorders, and drug use disorders.

Mental illnesses have long been regarded as a taboo subject that few wish to discuss.  Recently, things have improved in this regard. People are becoming more aware of mental illnesses and disorders. This shift in perspective has also influenced the insurance sector, which has tailored health insurance plans to include coverage for mental illness treatment.

As a result, the IRDAI made coverage of mental diseases under health insurance essential in August 2018. The insurance authority has directed the insurance firms to treat mental health in the same way that physical illnesses are treated and to include it in health insurance policy coverage. The standardised rule allows psychological diseases, mental illness, stress, and neural ailments for coverage under health insurance.

This advancement in health insurance by the IRDAI would represent a significant step forward in the nationwide health insurance environment. Coverage for mental illnesses would benefit people suffering from mental problems by removing the financial load off their shoulders.

Advantages of Psychological Disorder Coverage Under Health Insurance

In a health insurance plan including mental health coverage, the insured can receive the following coverage benefits:

  • The plan covers in-patient hospitalisation expenses such as treatment costs, diagnostic test charges, pharmaceutical costs, ambulance charges, room rent, and so on. 
  • Individuals suffering from a mental disorder that affects their cognitive ability, memory, thinking, mental capacity, behaviour, and decision-making skills are covered by the policy.
  • A few health insurance companies give an OPD benefit that covers the cost of mental disease consultation, therapy, and rehabilitation.
  • The inclusions, exclusions, coverage, and premiums would differ amongst insurers.

Conditions Covered Under Mental Health Insurance

  • Chronic depression
  • Obsessive-compulsive disorder (OCD)
  • Anxiety conditions
  • Bipolar illness
  • Trauma-related stress disorder
  • Schizophrenia
  • Dementia
  • Psychotic illness
  • Hyperactivity or attention deficit disorder
  • Mood disturbance

What Exclusions Apply to Mental Health Insurance?

  • Ambulatory consultations (if specified)
  • Alcohol or drug abuse-related mental illness
  • Recurring mental illnesses due to a lack of discipline in adhering to the recommended course of action and dosage

Who Needs Health Insurance for Psychological Disorders?

  • As a result of the hectic contemporary lifestyle, more and more people are becoming susceptible to mental diseases like depression. 
  • A health insurance plan that covers mental illnesses is also advised for people with a family history of mental illness because they are more vulnerable. 
  • Furthermore, anyone who has been through a traumatic situation such as the death of a loved one or an accident should acquire mental health insurance coverage.


You can perform at your best and carry out your daily tasks without much assistance if you have good mental health. Because of the extreme severity of mental diseases and the high cost of therapy, not everyone can afford the costs of care.

Let's say you want to lessen the financial strain caused by the treatment of mental illnesses. It is then advised to choose an appropriate health insurance policy that offers extensive coverage for common bodily disorders and mental health conditions.

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1. What is covered by a mental health insurance plan?

The insurance plan covers medical expenses incurred while the policy's beneficiary receives treatment for a mental disorder in a hospital. The coverage includes the cost of medical care, prescription drugs, diagnostic tests, road ambulance fees, accommodation rental, etc.

2. Does health insurance cover depression?

Treatment for depression and other conditions connected to mental health, such as anxiety disorders, bipolar disorders, schizophrenia, etc., is covered under health insurance policies.

3. Do mental health insurance plans cover therapy and consultations?

The coverage varies based on the insurer. Not all insurers offer health coverage for mental diseases under the Out-patient Department (OPD) category. Ask the insurance provider if the plan covers mental illness OPD benefits and what is covered under the plan.

4. What is the least time a patient with a mental disease must be hospitalised in order to be covered under mental health insurance?

You must stay admitted to the hospital for a minimum of 24 hours to be eligible for health insurance coverage for the treatment of mental illness. Some insurers offer OPD coverage for the treatment of mental illness. When acquiring the plan, speak with the insurer to determine the scope of the coverage.

5. Does mental health insurance have a waiting period?

Yes. Mental diseases can have a waiting time if they are a pre-existing condition. You should inquire about the waiting period with the relevant insurance. Insurers can also place a waiting period clause for mental illnesses that you can get affected by during the policy term. Check the policy document carefully to avoid confusion regarding the waiting period.

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