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Insurance law and mental health- Need for revamping the current Insurance Policies

Updated: Sep 1, 2022


Sakshi Shairwal

Twishi Amoria

There were times in India when mental health or mental disabilities were not covered under health insurance. When it comes to health, all the importance was given to physical health and mental health was always ignored. Even health insurance companies never included mental health under their insurance policies.

During this ongoing corona pandemic, the most concerned topic is the mental health of people. Many Bollywood celebrities like Anushka Sharma, Deepika Padukone, etc opened about mental health and its impact on daily life. Why go far, we all are aware of the death of Sushant Singh Rajput. Earlier people suffering from any sort of mental illness did not wish to talk about it and were ashamed about it but now with increased awareness, thinking of the people is changing positively. According to a recent study, in India, one out of every 20 people including children as well suffers from mental illness.

In this modern era, can we imagine any health insurance not covering cancer, high blood pressure, heart diseases, etc? The answer would definitely be a big ‘NO’, but mental illness was never included in such a list. With all this attention mental health has gained, it has become vitally important for the Insurance Regulatory and Development Authority of India to cover mental health or illness under the scope of health insurance. This initiative clears the line of difference between physical and mental health.

The Mental Health Care Act, 2017, made it mandatory for all the insurance companies to cover medical insurance for the treatment of mental health or mental illness of people suffering, in the same way as physical illness is covered. Now, with increased awareness and knowledge in people, they are opening up about mental illness. Hence, the Insurance Regulatory and Development Authority of India (IRDAI), found it important to cover mental health and illness under health insurance.

As per the regulations of IRDAI, psychological disorders, mental illness, stress, and neural illness are covered under health insurance. This step by IRDAI will definitely ensure a progressive life and overall development of the people suffering from mental illness and hence reducing the financial burden of the families and promoting the maximum benefits for the customers and access to better health facilities.

Here it is important to note that this law is not applicable to all people suffering from mental illness. In order to determine the mental illness, the act states to bind by the medical standards accepted nationally and internationally. The fundamental benefits of covering mental illness under health insurance are ensuring the cashless treatment of any person suffering from the mental illness and also covering all the pre and post-hospitalization costs resulting in the reduction of the financial burden from the families.

We know that there are always certain exclusions in general health insurance, in the same way, there is some exclusion in mental health insurance. The definition of the term mental illness as per the Mental Health Care Act, 2017 does not mention the inclusion of mental retardation of any kind and any consequences arising out of the influence of alcohol or drugs. It is extremely important for the person taking the insurance to be aware of all such exclusions to avoid claim rejection in the future by the company.

In the case of Gaurav Kumar Bansal V Union of India and Ors, the court observed that no actions were taken by the Insurance Regulatory and Development Authority of India (IRDAI) for the implementation of its own circulars, and also no insurance company followed any such circulars by IRDAI. Thus the court issued a notice to the concerned authorities, directing them to look carefully into the matter and take required actions in favor of persons suffering from mental illness.

Mental illness was considered as something to be ashamed about, for years. People were never ready to talk about their mental health. People always emphasized physical illness over mental illness. Thus, this initiative by IRDAI and the Mental Health Care Act ensures a better life for the suffered person as well as to the family members by covering all the hospitalization costs and providing access to advanced health care facilities. But the need of the hour is, to take strict actions for the implementation of the act and the circulars by IRDAI.

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