Context:

Mental health insurance coverage in India remains critically inadequate despite rising awareness of mental health issues. According to the RiseUP for a Better Tomorrow: Mental Health Report 2025, mental health accounts for less than 1% of total health insurance claims, reflecting a glaring disparity in healthcare priorities. This neglect persists despite a robust legal and regulatory framework aimed at promoting mental health coverage.

The Mental Healthcare Act, 2017 legally mandates that mental health be treated on par with physical health in insurance policies. In line with this, the Insurance Regulatory and Development Authority of India (IRDAI) issued guidelines in 2019 requiring insurers to include mental health illnesses in coverage plans. However, implementation remains patchy, especially in group insurance policies. Many plans continue to exclude essential mental health services, undermining legislative intent.

Current insurance offerings are heavily skewed towards hospitalization for severe mental illnesses, with minimal coverage for outpatient care—counselling, therapy, and medication—which forms the backbone of mental healthcare. Only 17% of insured individuals have access to outpatient mental health services. Additionally, schemes like Ayushman Bharat offer limited support for mental health, and common exclusions such as substance abuse and self-inflicted injuries reduce the scope of coverage.

On the demand side, awareness is a significant barrier. Around 42% of people are unaware of their mental health coverage, while 83% of organizations report low utilization of mental health insurance. Out-of-pocket expenses still account for 60–70% of mental healthcare costs (NMHS 2015–16), adding to the economic burden. A staggering 70–90% of individuals with mental disorders remain untreated, largely due to poor insurance access.

From the supply perspective, policy design is often modeled on physical health, failing to account for the chronic and outpatient nature of many mental health conditions. Nearly 50% of respondents in the RiseUP report cited high treatment costs as a deterrent to seeking care, a concern aggravated by restrictive policies and long claim settlement periods. Furthermore, the limited empanelment of mental health professionals constrains access for insured individuals.

Social stigma continues to be a pervasive barrier. Nearly half of the surveyed individuals fear discrimination if their mental health needs are revealed. This stigma leads to underreporting and delays in seeking care, further deepening the treatment gap.

Government initiatives like the National Mental Health Programme (NMHP) and Tele-MANAS are promising steps but require integration with insurance mechanisms to be effective. Seamless coordination between public services and insurance schemes is crucial.

Way Forward:

There is a pressing need to redesign insurance policies to comprehensively include outpatient mental health care, increase awareness through targeted campaigns, reduce stigma through public health messaging, streamline claims processing, and expand provider networks. Regulatory bodies like IRDAI must ensure compliance through audits and penalties, while employers should be incentivized to offer robust mental health coverage.

Conclusion:
Expanding mental health insurance is vital for a healthier, more inclusive, and productive society. Achieving this calls for a multi-stakeholder approach involving legal enforcement, policy reform, public education, and systemic coordination between government and private actors.