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5 Things You Should Know About Mental Health Insurance

Team AckoJan 21, 2025

For far too long, mental health issues have been stigmatised and dismissed, often pushed under the shadows as mere phases rather than legitimate health concerns. However, a significant shift is underway, catalysed by organisations like the World Health Organization (WHO) and amplified by the voices of influential figures in society, including celebrities who have bravely shared their own struggles.

This increased awareness has empowered individuals to confront their mental health challenges openly and seek the support they need. It's becoming increasingly recognised that mental health is just as important as physical health, and societal attitudes are evolving accordingly. People realise the importance of listening to and supporting those facing mental health issues, demonstrating solidarity and empathy rather than judgement and ignorance.

In this scenario, health insurance for mental health issues emerges as a vital tool. By providing coverage for mental health services and treatments, such insurance plans not only alleviate the financial burden on individuals but also signal a broader societal acknowledgement of the significance of mental health care. They empower individuals to prioritise their mental well-being without fear of financial repercussions, promoting a culture of proactive self-care and support. Read ahead to inform yourself about 5 key things related to mental health insurance.

Contents

History
Mental Illness Definition
Common Mental Health Disorders
Change
Cover
Exclusions in Mental Health Insurance Coverage
Streamlining
Mental Healthcare Infrastructure
- Informed Choice
Frequently Asked Questions (FAQs):
Protect Your Future with Life Insurance

History

Indian insurance companies did not provide an insurance cover for mental health care. Often, mental health care was included as one of the exclusions in the health insurance policy document. The policy document clearly stated that mental illness, stress-induced mental issue, psychological disorder, etc. will not be covered by the insurance company. However, with changing times, the health insurance industry is also changing and has felt the need to provide a mental health care cover.

Mental Illness Definition

The Mental Healthcare Act of 2017 describes mental illness as a condition characterised by significant disturbances in mood, cognition, perception, orientation, or memory, which impede typical behavioural patterns, decision-making processes, judgement, or the ability to carry out routine daily activities. This definition emphasises the broad spectrum of impairments that can manifest within mental health disorders. Notably, the Act excludes mental illness from this definition, attributing it primarily to arrested or incomplete brain development.

By setting these parameters, the Act aims to ensure clarity and consistency in identifying and addressing mental health issues, thereby facilitating access to appropriate healthcare services and support systems for individuals struggling with such challenges.

This comprehensive understanding of mental illness helps us understand the multifaceted nature of mental health conditions and also explains the importance of tailored interventions for effective management and recovery.

Common Mental Health Disorders

Mental health disorders encompass a range of conditions that affect thoughts, emotions, and behaviour. Common examples include bipolar disorder, acute depression, anxiety disorders, schizophrenia, mood disorders, psychotic disorders, post-traumatic stress disorder (PTSD), obsessive-compulsive disorders (OCD), and attention-deficit/hyperactivity disorder (ADHD).

These conditions vary in severity and symptoms but can significantly impact an individual's daily life and functioning. Seeking professional help and support is crucial for managing these illnesses and improving overall well-being.

Change

In 2018, Insurance Regulatory and Development Authority of India (IRDAI) sent out a circular to Indian insurance companies. The apex insurance body directed the companies to cover mental illness. Such inclusion needs to be made as per Mental Health Care Act, 2017. Now, the insurance companies need not distinguish between physical and mental illness. This is a welcome change considering around 15% of Indian adults need help regarding mental issues as per a survey conducted in financial year 2016 by the National Institute of Mental Health and Neuro Sciences.

Cover

While the IRDAI through its circular has made it compulsory for health insurance providers in India to have an inclusive outlook towards mental health care, the insurance companies will need to work on inclusions and exclusions of the policy. Most inclusions and exclusions and the general process surrounding purchasing a policy and raising a claim shall remain the same. For instance, a mental health insurance policy might insure the patient in case of hospitalization. However, the patient shall not be insured for consultation. This is in line with the currently prevalent health insurance approach.

Exclusions in Mental Health Insurance Coverage

Mental health insurance in India typically excludes mental illness and disorders stemming from substance abuse. It often covers only hospitalisation expenses, excluding outpatient treatments like consultations.

Specific exclusions and waiting periods may apply, including clauses regarding pre-existing mental disorders. It's essential to review policy documents thoroughly to understand exclusions, terms, and conditions before purchasing mental health insurance.

Streamlining

Mental health insurance is still in its nascent stage. It needs more streamlining. Just as motor insurance has evolved into a well-defined product over the years, the mental health insurance policy will also get better with time. Insurance companies will look at ways to gather data surrounding mental ailments and underwrite policies accordingly. Currently, a mental health insurance policy might offer limited coverage. However, as and when there is more development in the mental healthcare infrastructure, the insurance companies will make the cover more extensive.

Mental Healthcare Infrastructure

All stakeholders associated with mental health need to build a progressive infrastructure to take this industry forward. Growing awareness and acceptance of mental issues among the patients and their near and dear ones will lead to a demand of a good mental health insurance policy. The stakeholders will have to ensure that such patients are backed by insurance in order to meet the expenses arising out of treating mental illnesses.

Also, read: Health Insurance for COVID-19

Informed Choice

The need for making an informed choice in case of health insurance is paramount. A policy with wrong inclusions can be worthless. Therefore, one should make an informed choice by getting all doubts cleared with the insurance company.

Frequently Asked Questions (FAQs):

Here are a few commonly asked questions and answers related to mental health insurance

Do standard health insurance policies cover mental health?

Historically, mental health coverage was often excluded from health insurance policies. However, with evolving regulations and societal awareness, many insurance companies now offer coverage for mental health issues.

What changes have occurred regarding mental health coverage in insurance policies?

In 2018, the Insurance Regulatory and Development Authority of India (IRDAI) directed insurance companies to cover mental illness, aligning with the Mental Health Care Act of 2017. This means insurance providers are now required to include mental health care in their policies.

What does mental health insurance typically cover?

Mental health insurance coverage may vary, but it often includes hospitalisation for mental health conditions. However, coverage for consultations or outpatient treatments might not be included in all policies.

How can I ensure I have the right mental health insurance policy?

To ensure you have the right coverage, it's essential to thoroughly understand the inclusions and exclusions of your policy. You should also communicate with your insurance provider to clarify any doubts or concerns you may have.

Is mental health insurance still in its early stages of development?

Yes, mental health insurance is considered to be in its nascent stage. However, as awareness and infrastructure for mental health care improve, insurance policies are expected to become more comprehensive over time.

Will insurance companies adapt their mental health coverage as the industry evolves?

Yes, insurance companies are likely to adapt their mental health coverage over time as the industry evolves. They may gather more data on mental health ailments to better underwrite policies and offer more extensive coverage.

Why is it important to have mental health insurance?

Mental health insurance provides financial support for the treatment of mental illnesses, which can be costly. Having insurance coverage ensures that individuals can access necessary treatments without facing excessive financial burdens.

How can individuals make informed choices about mental health insurance?

Individuals should thoroughly research different insurance policies, understand their coverage options, and clarify any doubts with insurance providers before making a decision. Making an informed choice ensures that you select a policy that meets your specific needs and requirements.

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