FE Mental Health Series | Can insurance help cover mental health treatment costs in India? – Healthcare News

In India, the cost of care and treatment associated with mental illnesses is extremely high. As per the Global Burden of Disease study conducted between 1990 and 2017, one in seven Indians was affected by mental disorders, and the proportional contribution of mental disorders to the total disease burden has almost doubled since 1990.

According to the National Mental Health Survey (NMHS) of India in 2015–2016, there is a significant disparity in mental health services needs and treatment-seeking behaviour.

It has been reported that the existing treatment gap for mental health is as high as 84 percent with nearly 150 million Indians need mental health services and active intervention; however, less than 30 million seek treatment, a 2024 study published in the Sage Journal revealed.

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“Mental health remains a critical healthcare challenge globally, yet insurance coverage often fails to meet the needs of those affected. In India, the Mental Healthcare Act of 2017 was a milestone, mandating insurance coverage for mental health. However, its impact is hindered by systemic gaps and implementation delays,” Parveen Shaikh, President, Mpower told Financial Express.com.

According to a recent study based on 75th National Sample Survey data, only 23 percent of those hospitalized had some health insurance coverage and it was just 3.4 percent among the poorest economic group. This urges strong advocacy for health policies that include physical and mental health illness coverage, the study found.

One in every five individuals worldwide experiences symptoms of mental health illness, according to the World Health Organization (WHO). In India, between 60 to 70 million people are estimated to suffer from common and severe mental health disorders. Statistics released by the World Health Organization say that the average suicide rate in India is 10.9 for every lakh people.

‘Mental health care is expensive’

In India, the landscape for insurance coverage of mental health is still evolving. “While some insurance companies offer mental health coverage, the policies often provide limited coverage, excluding long-term therapy, outpatient consultations, and certain psychiatric conditions. Despite the legal mandate, the practical application of this law has been slow, and many insurers have yet to fully embrace comprehensive mental health coverage,” Dr. Rituparna Ghosh – Consultant Senior Clinical Psychologist, Apollo Hospitals Navi Mumbai told Financial Express.com.

She also revealed that the global scenario is much further ahead in terms of integrating mental health into general health insurance policies, but India is still in the early stages of this transformation.

“The Mental Healthcare Act, 2017 mandates that all insurance companies include mental health conditions, but in practice, policies often cover only inpatient care or hospitalizations for mental health issues, and they may exclude long-term therapies or outpatient care. Major insurance providers have begun offering coverage for mental health issues such as depression, schizophrenia, and anxiety, but these are often limited to short-term coverage or hospitalization,” Dr. Ghosh told Financial Express.com.

Mental health care is expensive, especially for ongoing treatments or therapies, and many individuals cannot afford the costs despite having insurance, she said.

Challenges in India’s Mental Health Insurance Landscape

While mental health hospitalization is covered by insurance the coverage needs hospitalisation for 24 hours, which may not be a case with all mental health concerns. Thus limiting the insurance coverage, Shaikh revealed. This narrow scope leaves many individuals with unmet healthcare needs.

“Insurance policies largely exclude outpatient care, including therapy, counseling, and psychiatric consultations, essential for conditions like anxiety, depression, and stress, which affect millions. These are typically managed without hospitalization. Mental health conditions such as substance abuse and self-harm often require rehabilitation services, which remain largely unrecognized by insurance policies, limiting access to comprehensive care. Without coverage for rehabilitation centers, patients face significant challenges in accessing crucial treatment and support,” he told Financial Express.com.

Dr. Pruthvinath Kancherla, Co-founder, Affordplan told Financial Express.com that expenses associated with mental health treatment typically include lodging, diagnostic tests, outpatient consultations, psychotherapy, medications, rehabilitation, and even ambulance transportation.

Countries like the United States and United Kingdom have made strides in integrating mental health into insurance, including outpatient care. However, developing nations like India still face significant barriers due to limited coverage that often excludes rehabilitation centers, substance abuse treatment, and preventive care.

“Insurance policies must include outpatient services, therapy, and rehabilitation for conditions like substance abuse and self-harm, providing holistic care for individuals with underlying mental health issues. Both public and private sectors must ensure the availability of rehabilitation centers and expand access to mental health care across India, especially for marginalized communities,” he said.

He also said that financial barriers need to be reduced by broadening the scope of insurance coverage to include preventive care and rehabilitation services, ensuring that treatment is accessible without burdening patients with out-of-pocket costs.

“We can draw inspiration from successful models in developed countries but must tailor them to address India’s unique cultural and socio-economic challenges. To create a truly inclusive mental health care system, it is crucial to bridge the gap between policy and practice. Expanding insurance coverage to include a broader range of mental health services—including rehabilitation—will ensure that individuals receive the care they need. Only by removing these systemic barriers can we provide accessible, affordable, and comprehensive mental health care,” he explained.

The Insurance Regulatory and Development Authority of India (IRDAI) introduced guidelines in 2019 mandating mental health coverage, which marked a significant step forward for Indian healthcare. However, the amount of coverage depends on what the particular policy purchased by the insured is, Dr. Kancherla revealed.

“Currently, the most common standard insurance policies cover in-patient treatments of mental disorders. Some offer coverage even for OPD services of psychotherapy sessions, consultations, and prescribed drugs. Policies with built-in OPD features provide financial support for diagnostic tests and doctor consultations, whether in person or via telehealth services, offering broader coverage beyond hospitalization,” he told Financial Express.com.

A recent whitepaper by Marsh McLennan India revealed some key findings about the state of mental health insurance in India:

• 43 percent of organisations do not offer mental health benefits in their group insurance plans.
• Claims utilisation for mental health remains below 1% in India, indicating dissatisfaction.
• There is a lack of specialised mental health hospitals and rehabilitation centres.
• Many group insurance plans exclude treatments for substance abuse, self-harm, or suicide.

According to Dr. Kancherla, many companies also offer Employee Assistance Programs (EAPs) or wellbeing initiatives to support mental health. However, these services often go underutilised due to a lack of awareness or stigma.

“Globally, young people have the worst access to youth mental health care within the lifespan and across all the stages of illness (particularly during the early stages) due to disparities in accessibility, with rural areas having fewer clinicians and lower-income neighbourhoods facing limited mental health resources,” he said.

‘Implementation remains inconsistent’

Most health insurance companies in India now cover mental health, though scope varies. According to Dr. Kancherla, some may cover inpatient care, while others may cover outpatient visits, medications, or therapy.

“It is always advisable to go through policy details very carefully and seek clarifications from the insurer for anything related to mental health coverage. Routine consultations and treatments are rarely covered, and substance abuse or repeated cases tend to be declined most often. While IRDAI’s 2019 mandate has indeed improved mental health insurance options, outpatient services, such as therapy, are not yet readily available and, in any case, are capped and excluded for self-harm and substance abuse treatment,” he told Financial Express.com.

Current providers offer some outpatient benefits but affordability and access remain the major concerns, especially for rural populations.

He also highlighted that the biggest challenges in India are related to accessibility and affordability of mental health services because resources are largely concentrated in urban areas.

“Stigma is also a hindrance for seeking mental health services. Additionally, a lack of qualified professionals and low awareness of mental health services add to the problem. All these can only be resolved by extending coverage, raising awareness, and providing equitable access to care,” he pointed out.

The Mental Healthcare Act, 2017 mandates mental health coverage in insurance plans, but its implementation remains inconsistent, with many challenges around affordability and accessibility, Shaikh highlighted.

“Most private insurers include mental health coverage, but it’s typically limited to hospitalization for severe conditions. Outpatient care, which is crucial for managing common mental health issues like anxiety and depression, is rarely covered and often requires additional out-of-pocket expenses. Ayushman Bharat – PM-JAY provides healthcare coverage for underprivileged populations, but, like private insurers, it primarily covers hospitalization, leaving outpatient services uncovered,” she said.

It is noteworthy that the cost of outpatient care remains a barrier, especially for low-income and rural communities. “Many insurers fail to provide mental health coverage, undermining the effectiveness of the Mental Healthcare Act. Mental health remains stigmatized, which discourages people from seeking treatment or insurance coverage,” she added.

Meanwhile, Dr. Ghosh revealed that while the availability of insurance coverage has increased, mental health professionals are scarce, with India having only one psychiatrist for every 100,000 people—far below the global standard. This shortage limits access to care, especially in rural areas.

“In India, 60-70% of mental health care is paid for out-of-pocket, placing a huge financial burden on families. According to the National Mental Health Survey (2016), 70-90% of people with mental health disorders in India do not receive any treatment, largely due to cost, stigma, and limited access to mental health professionals. While insurance schemes are helping, the high cost of care and limited access to providers, especially in rural regions, continue to be significant barriers,” she told Financial Express.com.

The Way Forward

Insurance should include outpatient services, therapy, and medication management. According to Shaikh, the government should provide financial support for underserved populations.

“Regulatory bodies must ensure insurers comply with the Mental Healthcare Act, ensuring equitable coverage. Telehealth services should be included in insurance policies to improve accessibility,” she added.

While a multitude of challenges exist across the Mental Health ecosystem, there are select challenges that impact certain aspects of the patient pathway in addition to more systemic challenges that impact the overall mental health ecosystem, Dr. Kancherla revealed.

“The therapy sessions take a long time, and the patient gets tired and disillusioned. Most people who fear judgment often end up not seeking professional help. A serious shortage of good mental health professionals has made some people doubt whether mental health treatment will ever work, thus making one uncertain if therapy will work,” he said.

Some of the factors that can done to improve these are:

• A streamlined awareness, diagnosis, policy implementation, measurement, funding and treatment should be there for a holistic approach to care delivery
• Waiting period of schemes before claims for mental health treatments should starts within 1 month.
• Caps on the number of therapy or counselling sessions, should be relaxed and increased to allow more than 25 sessions per year.
• Pre-existing mental health conditions might not be subject to waiting periods

“Mental health care is about more than just covering costs—it’s about changing how we think about and provide care. The stigma, access, and rigid policies have to be broken by the insurance providers. Smoother coverage for outpatient care, therapy, and rehabilitation will help individuals and their families. Indian insurers and new age health-fintechs are among the front-runners, providing coverage for mental health treatments-inpatient care, therapy, and telemedicine services. Increased penetration can include better collaborations and improved distribution of services to underserved segments of the population,” Dr. Kancherla told Financial Express.com.

A more compassionate, patient-first approach, where the companies work closely with health professionals to simplify claims and diminish waiting times, builds trust in care and makes carebetter accessible, he said.

Meanwhile, Dr Nimesh G. Desai, Independent Consultant in Psychiatry and Public Mental Health, former director, IHBAS Delhi told Financial Express.com that insurers should expand their offerings to include outpatient treatments like therapy, counselling, and telehealth services, as these are often the most needed.

“Addressing exclusions for pre-existing conditions is also crucial, as many patients with chronic mental health issues are denied coverage. Affordability can be improved through government support or specialized insurance schemes for mental health, ensuring that even low-income families can access care. Employers should also be encouraged to include mental health benefits in group insurance plans. By integrating mental health services into primary care and leveraging technology like telehealth, we can make mental health care more accessible and affordable for all,” Dr. Desai said.

DISCLAIMER: If you or someone you know is struggling with their mental health or in distress contact the Vandrevala Foundation’s helpline (+91-9999666555) which is available in 11 languages including English and can be accessed via telephone or WhatsApp 24×7. You can also contact Fortis Hospital’s National Helpline number 91-8376804102 which is available 24×7. You can also contact the Government Mental Health Rehabilitation Helpline ‘KIRAN’ at 18005990019 which is available 24×7.