While Indian law and regulators mandate that mental health be treated on the same basis as physical health, a significant gap remains between legal requirements and the actual experience of policyholders. In practice, most Indians still pay for mental healthcare largely out of pocket, especially for outpatient treatment.
Part 1: The legal framework
The Mental Healthcare Act, 2017 (MHCA) established the principle of parity in India.
Section 21(4): Explicitly states that every insurer must make provision for medical insurance for the treatment of mental illness on the same basis as treatment for physical illness.
IRDAI mandates:
August 2018: Directed immediate compliance with the MHCA.
June 2020: Required insurers to publish their underwriting for mental illness.
October 2022: The IRDAI reiterated that mental illness must be covered and sought compliance confirmation by October 31, 2022.
Part 2: The reality on the ground
Despite the 2022 compliance push, research indicates that many insurers are not in full compliance.
Coverage gap: A 2024 study of 235 policies found that only 37.5% actually covered mental illness, while 51% had no coverage at all.
Non-compliant insurers: As of 2025, several companies—including Kotak Mahindra, Tata AIG, Acko, and Royal Sundaram—offered policies with no mental health coverage.
Vague definitions: Policies often avoid using specific ICD-10 Chapter V codes, allowing insurers to interpret coverage selectively at the time of a claim.
Outpatient access: Only 17% of insured individuals have access to outpatient therapy or counseling through their policies.
Part 3: What your policy covers
The value of your insurance depends heavily on whether you require hospitalization or outpatient care.
1. Inpatient / hospitalization (broadly available)
Most compliant policies cover mental health conditions requiring at least 24 hours of hospitalization.
Covers: Room charges, nursing, doctors' fees, and medication during admission.
Conditions: Acute psychosis, severe depression, bipolar crises, and severe anxiety.
2. Outpatient / OPD (patchy and limited)
Nearly all therapy and psychiatric consultations happen here, yet this area is largely unprotected.
Availability: Only about 36.6% of insurers (11 out of 30) offer any OPD coverage for mental illness.
The cost: Annual out-of-pocket costs for regular therapy can range from ₹72,000 to ₹2.4 lakh.
3. Pre-existing conditions
Insurers can legally impose waiting periods for mental health conditions that existed before the policy was purchased.
Waiting periods: Typically range from 24 to 48 months.
Part 4: Common exclusions
Even "comprehensive" policies frequently exclude the following:
Substance use disorders: Most exclude treatment for alcohol or drug dependence, despite these being recognized mental illnesses under the MHCA.
Self-inflicted harm: Many exclude suicide attempts, which sits uneasily with the MHCA’s treatment-oriented approach to suicide attempts.
Neurodevelopmental conditions: Coverage for ADHD, autism, and learning disorders is almost universally excluded, creating high barriers for diagnostic assessments.
Eating disorders: Inconsistently covered and often explicitly excluded.
Part 5: Plans with meaningful coverage
Note: Always verify directly with the insurer as terms change frequently.
Part 6: How to claim and appeal
If you have an existing policy, follow these steps to maximize your benefits:
Audit Your policy: Look for "mental illness" or "ICD-10 Chapter V" in the schedule of benefits, not the marketing brochure.
Verify facilities: For inpatient claims, ensure the hospital is a recognized Mental Health Establishment (MHE).
The paper trail: For outpatient care, keep all prescriptions on letterhead, invoices, and pharmacy receipts.
The appeal process:
If denied, write a formal appeal letter citing Section 21(4) of the MHCA 2017.
The insurer must resolve the grievance within 15 days.
If the appeal fails, or if there is no reply within 30 days, approach the Insurance Ombudsman at cioins.co.in.
Part 7: Buying new coverage: Key questions
When shopping for a plan, use these specific filters to find real coverage:
"Is outpatient psychiatric consultation explicitly covered, or just inpatient?"
"Are there specific sub-limits for mental health claims?" (Watch for caps that are lower than the total sum insured) .
"Does coverage include clinical psychologists, or only psychiatrists?".
"What is the specific waiting period for mental health?".
