Less stigma, more support, but mental health insurance has a long way to go in India

Until just a few years ago, if you sought insurance support for therapy or treatment for depression in India, you’d likely hit a dead end. Mental illness was largely uninsurable, treated not as a legitimate medical condition, but as something outside the bounds of healthcare.

“It used to be one of the exclusions,” Siddharth Singhal, Business Head – Health Insurance at Policybazaar, told The Federal. “Like pregnancy used to be. There was a time when you wouldn’t even dream of getting therapy reimbursed.”

The scenario changed in 2021, when the Insurance Regulatory and Development Authority of India (IRDAI) mandated that all health insurers cover mental illness on par with physical illness. Since then, the sector has seen a slow but unmistakable transformation.

Also read | GST Council postpones decision on slashing tax on life, health insurance

According to Singhal, mental health-related claims on the Policybazaar platform have jumped 35 per cent since the regulation came into effect. The bulk of these are for outpatient treatment —therapy sessions, psychiatric consultations, and medications to manage conditions like anxiety, depression, and workplace burnout. A smaller fraction, under 5 per cent, is for more complex disorders like bipolar disorder or schizophrenia.

One of the more encouraging shifts in mental health insurance is being led by women. There has been a 27 per cent increase in women buying health insurance policies with built-in or optional mental health riders.

The shift is also post-pandemic in character. “There’s been a change in how people value mental well-being,” Singhal noted. “When you’re working from home, isolated, you begin to pay attention to things you ignored before. The return to structured office life didn’t automatically erase that stress either. So more people began seeking help and then asking if their insurance could support them.”

Insurers open up, gradually

For insurers like Bajaj Allianz General Insurance, the change has meant recalibrating how they assess and support psychiatric care. “The prevalence of mental health cases has been increasing with a Compound Annual Growth Rate (CAGR) of about 33 per cent from FY 2021-22 to FY 2024-25,” said Bhaskar Nerurkar, Head, Health Administration Team at Bajaj Allianz.

“Additionally, there has been approximately a 23 per cent rise in mental health-related insurance claims compared to the previous year," he told The Federal.

The insurer now covers in-patient hospitalisation expenses for psychiatric conditions in the same way it does for physical ones. These include severe diagnoses such as schizophrenia, bipolar disorder, and borderline personality disorder. “In some products, there is a waiting period of 24 months, which is the industry standard. However, in some offerings, this waiting period has been removed,” Nerurkar confirmed.

Complex disorders

As for the nature of claims, mental health issues like anxiety, depression, and stress-related disorders accounted for approximately 31 per cent of total mental health-related claims last year. More complex disorders, such as schizophrenia and other psychotic conditions, made up about 13 per cent.

Encouragingly, more of these claims are being processed on a cashless basis. “Mood disorders and behavioural syndromes have exhibited a higher CAGR specifically in cashless claims,” Nerurkar noted, though he added that developmental and intellectual disabilities lag behind.

United India Insurance Company has also made significant strides in this space. “Under policies like the Samaveshi Suraksha Health Insurance and Family Medicare Policy, we cover medical expenses related to mental illnesses, including both pre- and post-hospitalisation costs, provided treatment is conducted in a hospital with a dedicated mental health department and administered by qualified psychiatrists or recognised specialists in alternative medicine,” said a United India official.

“Coverage includes inpatient hospitalisation expenses for conditions such as schizophrenia, bipolar affective disorders, depression, obsessive-compulsive disorders, and psychosis. These are covered up to 25 per cent of the sum insured, with a cap of ₹3,00,000 per policy year.” The official added that while there is typically a two-year waiting period for pre-existing conditions, the inclusion of mental health reflects both regulatory alignment and a broader move toward comprehensive, inclusive health coverage in India.

Hospitals see a shift

Yet this new openness on paper hasn’t fully translated to practice. Sonia Sultana, Vice President of Empanelment and Strategy at MIOT Hospitals in Chennai, sees a mixed picture on the ground.

“Yes, we are getting claims cleared for inpatient psychiatric care,” she told The Federal. “In one case, a working woman was admitted for anxiety disorder triggered by burnout, and her cashless claim was paid in full. That’s very encouraging.” But she also pointed out that cash-paying patients still far outnumber insured ones when it comes to outpatient mental health care.

Mental health issues like anxiety, depression, and stress-related disorders accounted for approximately 31 per cent of total mental health-related claims last year.

“People do come in for consultations and counselling, but we haven’t seen many OPD claims being processed as cashless,” she said. Even when insurers say they offer the service, patients often don’t know, or the hospital lacks a formal tie-up for those services. “We’re in discussions with insurers to create more structured mental health packages, but I’d say many private insurers are still hesitant,” she added. “There’s a fear of overuse and of claim ratios going up.”

Also read | Health insurance for 65-plus doesn't address key issue of affordability

Lack of awareness

This fear is reflected in the kinds of tie-ups hospitals are able to negotiate. “For outpatient mental health, we’ve been trying for years,” Sultana said. “Insurers talk about it, but it doesn’t move. Right now, a lot of OPD mental health support is still being driven by third-party aggregators, not directly by insurers.”

Another friction point is awareness. Patients are often unclear on what their policy does and doesn’t cover. “Most are surprised when OPD is excluded or when their room rent cap kicks in,” Sultana noted. “The salespeople who sell insurance rarely explain exclusions or waiting periods clearly.”

There are also hurdles with pre-existing mental health conditions. “Insurance companies ask a lot of questions at the time of claims,” she said. “They’ll try to figure out if the mental illness existed before the policy was purchased. Patients don’t always understand what counts as pre-existing, and that can lead to rejections.”

Women take charge

One of the more encouraging shifts in mental health insurance is being led by women. According to Singhal, there has been a 27 per cent increase in women buying health insurance policies with built-in or optional mental health riders.

“These are not passive buyers. They’re doing their research,” he told The Federal. “They’re asking whether a policy covers OPD counselling or whether antidepressants linked to hormonal changes will be reimbursed. They are often buying not just for tax benefits but for access to mental health care on their own terms.”

Bajaj Allianz has seen this trend too. Its HERizon Care product was designed to address specific women’s health needs, including mental well-being.

“The Vita Shield cover in HERizon Care offers a Holistic Wellness Ecosystem with an Emotional Wellness Program,” Nerurkar said. “It includes teleconsultations with psychiatrists or therapists, peer support networks, and even diet and nutrition consultations to help manage hormonal imbalances through lifestyle interventions.”

Sultana confirmed that women appear more willing to explore therapy. While she doesn’t yet have a gender breakdown of claims, she said, “Many women come in for anxiety or stress-related issues tied to work-life balance or caregiving. They’re often more open to counselling.”

New normal, old stigma

Despite all the progress, stigma still looms large. “We’ve had patients who travel far just to access therapy or psychiatric care discreetly,” Sultana admitted.

At Fortis Hospital, psychiatrist Dr Vasanth offered a short but clear confirmation of the changing landscape. “Insurance is in OPD as well as IP,” he said. “The coverage is there, and people are approaching us for the same.”

Also read | Why mental health insurance in India is in itself anxiety-inducing

Still, sustained care remains a challenge. “People don’t always realise that therapy could take months or even years,” Sultana noted. “That kind of long-term support is hard to finance unless insurers make outpatient mental health truly cashless.”

The road ahead

To meet that need, MIOT is in early-stage talks with insurers to develop dedicated mental health packages—bundling sessions, checkups, and even family counselling. “We want to offer insured, structured mental health care, especially for things like digital addiction or rehab,” said Sultana. “But for that, insurers need to be fully on board. Right now, they’re still evaluating.”

Meanwhile, the sector continues to evolve. Retention bonuses and health check-ups are being offered to customers to stay loyal. Premiums do tend to increase over time—especially for chronic conditions—but portability and competition among insurers are starting to balance things out.

Experts agree that for India’s mental health insurance landscape to truly mature, a more integrated, transparent ecosystem is required—one where mental health is not an add-on, but a core benefit. “We’re moving in the right direction,” Sultana said. “But it needs scale. It needs clarity. And it needs more hospitals and insurers to work hand in hand.”