Not many claim mental healthcare insurance. Here's why

Mint

05-05-2025

Mental health, after years of being overlooked in India's healthcare discourse, is finally beginning to receive the attention it needs. A major milestone in this shift was the introduction of the Mental Healthcare Act (MHCA), 2017, which came into force on 7 July 2018, replacing the outdated Mental Health Act of 1987. This Act redefined the rights of individuals with mental illnesses and made it mandatory for health insurance policies to include mental health coverage.
In individual policies, psychiatric ailments are covered by default as all policies need to be compliant with relevant regulations. However, despite this legislation, a significant gap remains between policy and its implementation. Many employees are still hesitant to use mental health support at work because they are afraid of being judged or looked down upon. While some insurers impose a sub-limit on psychiatric ailments depending on the chosen plan, there are policies that cover these conditions up to the full sum insured.
This contrasts with group policies, which are tailored specifically to the needs of the group. The coverage and sub-limits for group plans are determined by various factors, including budgetary provisions for health insurance, making them more flexible yet potentially less comprehensive than individual plans.
With the usual age of onset of mental ailments being around 18 years, the incidence peaks at around 40 years, thereby affecting the most productive years of human life. In India, the incidence rate of common mental disorders like depressive disorders has been around 2.7 %, with a treatment gap rate of close to 85 %. This highlights the huge burden of the disease and the fact that only a very small percentage of the affected seek medical advice or have access to quality health care.
Interestingly, even though mental illness-related claims for corporate employees account for less than 1% of total claims, there has been a notable 20% increase compared to last year. The most commonly reported mental health conditions include autistic disorder, conversion disorder with seizures or convulsions, unspecified anxiety disorder, phobic anxiety disorders, and depressive episodes are notable conditions. Remarkably, the top three disorders have experienced a 100% increase, which can be attributed to enhanced corporate insurance coverage and a growing willingness among employees to seek help.
Although the Mental Health Act of 2017 has made it compulsory to make provisions for mental illnesses in health insurance policies, several factors continue to limit the benefits. Taboo still surrounds mental illnesses, deterring people from openly discussing or addressing their issues. Lack of awareness about early symptoms further prevents timely intervention. Even when policies do provide coverage, many come with sub-limits as low as
₹
30,000, which makes treatment unaffordable in many cases. Also, several policies do not offer OPD cover—which is mostly the primary mode of treatment for conditions such as stress, anxiety, and depression.
We have seen some progress over the years though. In 2023, the number of organisations covering psychiatric inpatient care (IPD) increased by 5%. However, psychiatric OPD coverage remains limited to just 7% of employers. Industries such as IT/ITES, manufacturing, and BFSI are leading the way, offering up to 50% of the sum insured for inpatient care and up to
₹
25,000 for outpatient care. Another important step has been recognising substance abuse and alcohol addiction as mental health issues, so they get the proper care they need. Also, the new law (Bharatiya Nyaya Sanhita) has now fully put into effect the rule that decriminalises attempted suicide, which is another big move forward.
Given the impact of mental well-being on workplace productivity and employee health, it is crucial that organisations treat mental health as a priority. Employees should be encouraged to talk about their struggles rather than suffer in silence, and access to professional help must be made seamless. Employers can play a pivotal role by organising mental health awareness sessions, investing in comprehensive insurance policies that cover both OPD and hospitalisation, and ensuring the confidentiality of employees seeking support. Expert-led training programmes, webinars, and seminars play a key role in addressing mental health challenges and breaking the stigma of mental illnesses at workplace. Additionally, with internal communication modes at firms to share mental health resources available, awareness drives, and most importantly, employee success stories can help in building a more informed and supportive workplace culture.
Not only corporates, insurance brokers, too, have a significant part to play when it comes to mental health. With their knowledge of industry trends and available options, brokers are positioned in a unique way to help employers design customised and budget-friendly policies that provide sufficient mental health coverage. With their expertise, they can identify and address the disconnect between available solutions and employees' real requirements.
The conversation around mental health in the workplace has begun—but it's time to turn awareness into action. By addressing stigma, increasing access to treatment, and providing better insurance support, Indian workplaces can build a culture where mental health is valued as much as physical health. The road ahead demands collective effort—from employers, policymakers, and employees—to create a supportive ecosystem for mental health at work.
(Surinder Bhagat is head – employee benefits, vice president, large account practice, Prudent Insurance Brokers)