What Is Mental Health Coverage in Health Insurance And Why Is It Important?

Mental health has long been overlooked in many parts of the world, including in India, even though a significant percentage of the population is believed to have mental disorders. National Mental Health Programme (NMHP) estimated that around 6-7% of the Indian population suffers from mental disorders. Mental health issues have often been stigmatised, and people with such conditions may have been reluctant to seek help or discuss their problems openly.

However, there has been a positive change in recent times as more people, including celebrities, have become vocal about their mental health issues. This shift in attitude has had a significant impact on how mental health is perceived and treated in society.

One area that has positively changed by this shift is health insurance. Previously, health insurance policies only covered physical ailments, leaving out mental health conditions. However, the introduction of the Mental Healthcare Act of 2017 has brought about a change in this regard. The Act recognises the importance of mental health and makes it mandatory for health insurance policies to cover mental health conditions on par with physical health conditions.

In essence, the Act ensures that mental health is given equal importance as physical health, and the shift in attitude towards mental health issues has played a crucial role in this development. This is a significant step towards improving the accessibility and quality of mental health care in our country.

What is mental illness?

The Mental Healthcare Act of 2017 defines mental illness in a way that all insurers must follow. According to the Act, if a person's mood, thinking, perception, orientation, or memory is significantly disrupted, affecting their behaviour, decision-making, judgment, or ability to carry out everyday activities, it qualifies as mental illness. This definition also encompasses mental disorders associated with substance abuse. However, the Act excludes mental retardation from the definition, as it is typically caused by incomplete or arrested brain development.

What are psychological disorders?

Psychological disorders are mental health conditions that affect an individual's thoughts, feelings, and behaviours. These disorders can cause significant distress, impair a person's ability to function normally, and interfere with their daily life. They can also influence the way one perceives and copes with stress, how one interacts with other people, and how one makes decisions.

The range of psychological disorders is broad, but they are generally classified into different categories. Some common psychological disorders include anxiety disorders, mood disorders, personality disorders, psychotic disorders, and eating disorders.

Anxiety disorders are characterised by excessive worry, fear, and distress that interfere with daily functioning. Mood disorders affect a person's mood and emotions such as depression and bipolar disorder. Personality disorders involve enduring patterns of thought, behaviour, and emotions that impair relationships and daily functioning. Psychotic disorders involve a detachment from reality, and eating disorders are characterised by abnormal eating habits and behaviours.

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Are psychological disorders covered under mental health coverage?

The good news is that mental illnesses, including psychological disorders, are now covered under health insurance in India as per the Mental Healthcare Act 2017. This means that insurance plans now consider mental illnesses equivalent to physical injuries and provide coverage for their treatment expenses. These benefits also include cashless treatment and no claim bonus for mental illnesses.

However, the coverage provided for psychological disorders can vary depending on the insurance plan. While some plans may cover only hospitalisation expenses, others may cover outpatient consultations and therapies.

Generally, health insurance for psychological disorders includes coverage for hospitalisation, outpatient consultations, diagnostic tests, medications, ambulance services, therapies, counselling, room rent, and rehabilitation. The extent of coverage may vary based on the specific policy purchased by the policyholder, and they are advised to read their policy documents carefully to understand the exact coverage available.

Coverage of Mental Health Insurance:

The extent of coverage for different mental illnesses may vary among insurers, and some illnesses, such as schizophrenia, bipolar disorder, psychosis, and depression, may have sub-limits on inpatient hospitalisation coverage amounts depending on the health insurance provider. To ensure access to optimal treatment, it is advised to seek out health insurance plans with high sub-limits. Additionally, sub-limits may also be applicable to outpatient department (OPD) coverage.

Waiting period for mental health coverage:

According to the latest regulations set by the IRDAI, all health insurance plans are required to provide medical coverage for individuals who suffer from mental illnesses, including psychological disorders. However, coverage is not immediately available for mental health conditions under most plans. This is because, similar to pre-existing conditions, mental health insurance also has a waiting period.

Typically, a waiting period of 2 years applies to mental illness coverage under a health insurance policy. This means that a claim for mental health issues cannot be raised until the policyholder has renewed the health insurance policy for two consecutive years.

It is important to note that the waiting period for mental illness coverage may vary from one insurance company to another. Therefore, it is advisable to carefully review the terms and conditions of your health insurance policy for psychological disorders to determine the exact waiting period that applies to your specific policy.

Exclusions under mental health coverage:

Health insurance plans for mental health, like other insurance plans, have specific exclusions that you should be aware of to avoid claim denials. These exclusions are situations or scenarios that the plan does not cover.

Mental retardation and outcomes resulting from drug or alcohol abuse are two clear exclusions when it comes to mental illness. It is worth noting that insurers are still in the early stages of implementing changes to mental health insurance plans, and as such, additional exclusions may be added in the future.

It is possible that waiting periods for certain mental issues, similar to those for physical ailments, may be added, and handling pre-existing mental illnesses will be another important aspect to keep an eye on.

Why mental health insurance should be a part of your family health insurance plan?

It is important to have mental health coverage in your health insurance plan for several reasons. Firstly, mental health conditions are as important as physical health conditions and can have a significant impact on an individual's overall well-being. Mental illnesses such as depression, anxiety, bipolar disorder, and schizophrenia can be debilitating and require ongoing treatment and care.

Secondly, the cost of mental health treatment can be high, and without insurance coverage, it may be difficult for individuals to access the care they need. Health insurance plans that include mental health coverage can help to offset the cost of treatment and make it more affordable for individuals.

Finally, with regulatory changes making it mandatory for health insurance plans to offer mental health coverage, it is now more accessible than ever before. Having mental health coverage in your health insurance plan can provide peace of mind, knowing that you are covered in case you or a loved one requires mental health treatment.

To conclude:

In conclusion, mental health coverage is an essential component of health insurance plans that should not be overlooked. It is crucial to carefully review the terms and conditions of your health insurance policy to understand the extent of coverage provided for mental health conditions, including any exclusions or waiting periods that may apply. While mental health insurance is still in its early stages, recent regulatory changes have made it mandatory for all health insurance plans to offer coverage for mental illnesses, including psychological disorders. With increased awareness and focus on mental health, it is hoped that health insurance plans will continue to evolve to provide comprehensive coverage for mental health conditions, ensuring that policyholders have access to the best possible care and treatment.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.