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The Pension Fund Regulatory and Development Authority (PFRDA) has issued operational guidelines for NPS Swasthya, a framework that combines a dedicated National Pension System (NPS) investment account with a separate super top-up health insurance policy. The guidelines are effective immediately. The scheme is designed to allow subscribers to build a retirement corpus while providing access to health insurance and a mechanism to use part of the corpus for eligible healthcare expenses.
How NPS Swasthya works An NPS Swasthya subscriber will have two distinct components: an NPS investment account and a super top-up health insurance policy. The two remain legally and operationally separate, with the insurance component governed by applicable insurance laws and regulations. The minimum initial contribution has three components — the first-year insurance premium, including applicable taxes; ₹200 plus taxes towards annual maintenance charges payable to the Health Benefit Administrator (HBA); and at least ₹1,000 invested in the NPS Swasthya account.
The minimum subsequent contribution is ₹10. Contributions to the NPS account will be invested according to the investment pattern prescribed for the Central Government Scheme under applicable PFRDA investment guidelines. The NPS Swasthya account will also attract the charges applicable to the NPS All Citizen Model.
In addition, a pension fund may levy up to 0.08% a year of the NPS Swasthya corpus, plus applicable taxes, while the annual HBA maintenance charge is ₹200 plus taxes. These charges have to be disclosed before enrolment and when they change. 25% withdrawal limit for healthcare expenses One of the key features of NPS Swasthya is the provision for partial withdrawals for eligible healthcare expenses, including specified outpatient and inpatient expenses. The amount withdrawn cannot exceed 25% of the subscriber's contributions to the NPS Swasthya account.
There is no limit on the number of such withdrawals and no minimum waiting period for either the first or subsequent withdrawal. The money will not be paid directly to the subscriber. It will be settled with the hospital, healthcare provider or other eligible entity against the healthcare expense.
Subscribers can also transfer money from an existing NPS All Citizen Model account into NPS Swasthya, but only to the extent required to meet the applicable insurance deductible. Health cover and deductible options The standard insurance under NPS Swasthya is a family-floater super top-up policy covering the subscriber, spouse and up to two dependent children. Parents are not covered under the standard policy.
Entry is permitted from age 18 to 70, while renewal can continue up to age 85, subject to the policy terms and applicable law. The guidelines provide four combinations of annual aggregate deductible and family-floater sum insured: Annual aggregate deductible Family-floater sum insured ₹ 10,000 ₹1 lakh ₹ 50,000 ₹5 lakh ₹1 lakh ₹10 lakh ₹3 lakh ₹30 lakh The deductible applies cumulatively to eligible insurance expenses incurred by all covered family members during the policy year, rather than separately to each claim. The policy provides for a single private room for normal hospitalisation, with ICU expenses at actuals subject to the sum insured and final policy wording.
It also covers specified day-care procedures, inpatient and domiciliary hospitalisation, AYUSH treatment, prescribed modern treatments and organ-donor medical expenses. Pre-hospitalisation cover is for 30 days and post-hospitalisation cover for 60 days. Road ambulance expenses are covered up to ₹2,500 per emergency hospitalisation unless a higher uniform limit is specified in the final policy.
Waiting periods The standard initial waiting period is 30 days, except for accidents as provided in the final policy. Pre-existing diseases and specified diseases or procedures have a 12-month waiting period, subject to the final policy and applicable insurance rules. The guidelines also provide for coverage of controlled Type 2 diabetes, hypertension, hyperlipidaemia and asthma after the initial waiting period where these conditions do not trigger enhanced underwriting under the prescribed health declaration.
What happens when the policy is renewed Subscribers can switch from one NPS Swasthya scheme to another at the time of insurance renewal. Such a switch can involve a change in both the pension fund and the associated insurer. Renewal, portability and continuity, including waiting-period credits, will be governed by applicable insurance law and IRDAI directions.
The guidelines require a change of insurer initiated by a pension fund to be undertaken without a break in cover. The insurance policy must begin no later than T+1 working days after successful enrolment and receipt of the minimum initial contribution. Before enrolment, subscribers must be given details including the sum insured, deductible, exclusions, waiting periods, premium, renewal conditions, underwriting requirements, claims process and grievance mechanism.
When can the NPS Swasthya account close? The account can close on normal exit, premature exit, death or if there are insufficient funds to renew the insurance cover. If the corpus is likely to be insufficient for renewal, the pension fund is required, where practicable, to alert the subscriber at least 90, 60 and 30 days before the renewal date.
If the premium remains unpaid after the applicable grace period and the insurance cover lapses, the Swasthya account is to be closed and the balance transferred or converted into the All Citizen Model NPS account as prescribed under the guidelines. The framework also provides for premature exit in specified circumstances where an eligible inpatient healthcare expense in a single instance exceeds the amount available through the partial-withdrawal provision. In such cases, the corpus may first be used towards that expense, with the remaining balance transferred to or converted into the All Citizen Model NPS account, as applicable.
Source: CNBC TV18
