'While many policies say that they will cover mental illnesses, the wordings of a few still have mental illness as a permanent exclusion.'
'After the new IRDAI circular, such exclusions should go away.'
The Insurance Regulatory and Development Authority of India (IRDAI) has taken a significant step towards ensuring equitable health insurance coverage for persons with mental illness.
In a circular issued on February 27, 2023, it mandated general and health insurers to provide coverage to individuals with mental illness, disabilities, and HIV/AIDS.
The circular also urged insurers to adopt a board-approved underwriting policy that prevents discrimination against such individuals.
Challenges faced by the industry
One major challenge the industry faces in covering such risks is lack of adequate data.
According to Ashish Yadav, head of products, ManipalCigna Health Insurance, "We need more data on the incidence rate, how the segment behaves, and so on. This will enable the industry to come up with the right products for these segments and price them appropriately."
The second challenge, according to him, which the industry grapples with in covering these segments, is non-disclosure.
What is covered?
The Mental Healthcare Act, 2017, had said that every insurer shall provide medical insurance for the treatment of mental illnesses on the same basis as is available for the treatment of physical illnesses.
In other words, insurers can't discriminate between patients suffering from mental or physical ailments.
"Earlier, people who had mental ailments were straightaway denied coverage at the underwriting stage itself. But now they can buy a policy. If they have a pre-existing condition, they may have to serve a waiting period," says Siddharth Singhal, business head-health insurance, PolicyBazaar.com.
Adds Yadav: "People suffering from mental ailments are currently underwritten. If accepted, they become a part of the normal pool. The normal hospitalisation products available in the market become available to them as well."
Gaps in coverage
One issue with the coverage of mental illnesses is that underwriting standards vary from one insurer to another.
Some insurers today have more stringent standards that lead to the exclusion of people having mental illnesses.
The other issue is that of exclusion.
"While many policies say that they will cover mental illnesses, the wordings of a few still have mental illness as a permanent exclusion. After the new IRDAI circular, such exclusions should go away," says Nayan Goswami, head-sales & service, SANA Insurance Brokers.
Likely impact
The regulator's latest circular will make it more difficult for insurers to deny coverage to those with mental ailments.
The industry may be forced to adopt more uniform standards for accepting customers.
"After this circular, consumers will get greater clarity on the extent and scope of coverage for these conditions, what part will be cashless and what will be reimbursed, and finally, what will be excluded," says Apaar Kasliwal, executive director, PolicyBoss.com.
At present, insurers are extending coverage for these ailments by default across all their policies for those policyholders who don't have a pre-existing condition.
"We expect to see product modifications or new product launches for those with pre-existing conditions," he says.
Insurers not being able to deny coverage to those with mental ailments will have another positive fallout.
"These patients will at least get coverage for many other ailments, which they may also suffer from, besides mental illnesses," says Goswami.
For the mental ailments they already suffer from, they may have to serve a waiting period, though greater clarity is awaited on this (in policy wordings of insurers).
Needed, covers with OPD component
About 80-90 per cent of the people who suffer from a mental illness require only outpatient care.
Says S Prakash, managing director, Star Health and Allied Insurance: "Unless the insurance policy covers outpatient treatment -- it pays for consultation and medicines -- it won't be able to help the community suffering from mental ailments. OPD care needs to be embedded in all routine health insurance covers."
What you should do
A person suffering from a mental ailment should check the policy wordings or the customer information sheet.
"Download the policy wordings and go through the entire section on exclusions to see if mental illnesses are excluded. Also check specifically whether the ailment you suffer from is an exclusion," says Goswami.
Prakash suggests checking out three points: "One, is there a waiting period? Two, is there a cover for OPD consultation and medicines? And three, is admission allowed in all hospitals or only in a mental hospital?"
Singhal suggests opting for a policy whose waiting period is minimal.
Yadav emphasises the importance of making proper disclosures about all pre-existing conditions at the time of purchase.
Finally, go for an insurer that has a high claim settlement ratio and check whether the network hospitals of that insurer includes the ones you are likely to go to.
