Do health policies really protect your mental health needs?

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For a long time, mental health wasn’t even part of Indian health insurance policies. That changed after the IRDAI directed insurers in 2020 to treat mental illness on par with physical illness. Since then, most health policies advertise “mental health coverage.” On the surface, this looks like a big win for policyholders, especially as stress, depression, and anxiety have become more common. But the real question is: how much does this cover actually help?

What insurers usually cover

Most policies cover inpatient treatment—meaning if you’re hospitalized for a mental health condition, the expenses are reimbursed like any other illness. That includes psychiatric evaluation, medications, and therapy during the stay. However, outpatient treatments, like regular counselling sessions or ongoing therapy visits, are often excluded. Since most mental health care in India is outpatient rather than inpatient, this limits the usefulness of such cover.

The practical gaps you should know

Many policies cap the sum insured for mental health at a much lower amount than for physical illnesses. For example, a ₹10 lakh cover may only allow ₹50,000-₹1 lakh for mental health expenses. Some policies also exclude conditions linked to substance abuse or self-harm. The result is that while mental health is technically included, the support often feels more like a compliance checkbox than meaningful protection.

When it can still be valuable

Even with these gaps, mental health cover can be useful in specific situations. If a severe condition requires hospitalization—say, due to bipolar disorder or schizophrenia—the expenses can be significant, and insurance can ease the financial burden. For families already struggling with medical bills, this is a lifeline. Also, awareness is slowly growing, and insurers are beginning to expand outpatient coverage under premium plans or through add-ons.

What to look for before relying on it

When evaluating health insurance, check whether the policy includes outpatient consultations, the sub-limits on mental health, and whether pre-existing psychiatric conditions are covered. If you or a family member are already receiving therapy, make sure the policy matches those needs. If it doesn’t, it’s best to budget separately for therapy while treating insurance as a backup for hospitalization-related costs.

FAQs

1. Does every health insurance policy cover mental health now?

Yes, as per IRDAI’s mandate, all policies must cover it. But the depth of coverage varies widely between insurers.

2. Are therapy or counselling sessions usually reimbursed?

Not under most basic policies. Some comprehensive or premium plans include limited outpatient cover, but you’ll need to check the fine print.

3. Should I rely on insurance to pay for mental health treatment?

Not entirely. Use it as support for major expenses like hospitalization, but for routine therapy, it’s better to plan separate out-of-pocket spending.