Mental health cover is mandated, but insurers may still refuse to pay for regular therapy sessions

A weekly therapy session in India can cost Rs 2,000 or more. Do that every week and the bill reaches at least Rs 8,000 a month and more than Rs 1 lakh a year, on top of the annual premium already paid for health insurance. The natural assumption is that the policy will help. In practice, it often does not.

The legal footing is clear. Section 21(4) of the Mental Healthcare Act, 2017 requires insurers to provide medical insurance for mental illness on the same basis as for physical illness. IRDAI directed insurers to comply in August 2018 and repeated the instruction in October 2022, saying products must cover mental illness and follow the Act. Saurabh Vijayvergia, Founder and CEO of CoverSure, adds that the regulator has also asked insurers to offer products for people with mental illness, supported by underwriting policies that do not reject an application solely on that ground. In his words, mental illness cannot simply be excluded as a category from medical-expense cover.

But parity, he says, is not an unlimited promise to pay for every form of care. A policy may cover hospitalisation for mental illness and still not reimburse outpatient therapy. Another may offer a fixed number of counselling sessions through an app, but not pay for a therapist the policyholder chooses. A hospitalisation policy does not become an outpatient policy, he notes, and a fixed-benefit policy pays according to its specified triggers rather than reimbursing every bill.

Take someone paying Rs 1,500 per weekly session and wondering whether to submit the bills. The answer depends on the policy. For therapy outside a hospital, Vijayvergia says, the policy needs an outpatient benefit, a psychotherapy or counselling benefit, or a service benefit providing eligible sessions. These may sit in the base policy, come as an optional add-on, or arrive through an employer's benefits package. He also urges checking whether the benefit pays your chosen therapist or only offers sessions through the insurer's own network or app, which he calls materially different. Treatment tied to an admissible hospitalisation may qualify under pre- or post-hospitalisation cover, within a time window, but that does not extend to unrelated ongoing therapy.

Nor are therapy, counselling and psychiatric care a single benefit. Outpatient psychiatric consultations, medicines and psychotherapy depend on the relevant outpatient benefits, while counselling for stress, parenting or relationships may be a separate service with its own eligibility rules. Vijayvergia says a formal diagnosis or a psychiatrist's referral should not be described as a universal requirement for every counselling benefit.

The fine print then decides how much is actually payable. Limits can include an annual allowance, a per-session cap, a maximum number of sessions, co-payments, or a shared outpatient limit. A large hospitalisation sum insured, Vijayvergia says, tells you very little about what is available for regular therapy; a small outpatient allowance can run out after a few sessions. Providers may need to be eligible professionals, on an approved list, booked through an app, or backed by clinical records. Waiting periods matter too: under IRDAI's framework, the wait for disclosed pre-existing conditions is capped at 36 months of continuous cover, though a policy may set a shorter one. Any restriction aimed specifically at mental illness should be checked against the parity requirement, since not everything printed in a policy is necessarily compliant.

For a quick check, Vijayvergia suggests starting with the policy schedule to confirm the plan, variant and optional benefits, then the Customer Information Sheet, which summarises coverage, exclusions and limits. Next, search the full wording for terms such as OPD, outpatient, psychotherapy, psychologist, counselling, psychiatric, mental illness and e-counselling, and read each clause in full. He frames three questions: which service is covered, who can provide it, and how much the policy pays. If the wording is unclear, ask the insurer in writing: will this policy pay for recurring outpatient psychotherapy with my chosen provider, and which clause, limits, waiting period and documents apply?

Claims can still be rejected or trimmed. Vijayvergia lists outpatient bills filed under hospitalisation-only cover, an incomplete waiting period, an exhausted allowance, providers outside the conditions, and missing records. A claim may also be cut because of a benefit limit or co-payment. If refused, ask for the precise contractual reason in writing. A denial because the treatment is for mental illness is very different, he says, from one because the expense falls outside the benefit purchased. Unjustified denials can go to the insurer's grievance process and then the Insurance Ombudsman where appropriate.

There is a data gap. In July 2026, the government told Parliament that IRDAI collects figures on overall claim repudiations but not the reasons for individual denials, so there is no reliable official ranking of why mental health claims fail. For those without cover, the employer's employee assistance programme or mental health service is worth checking, as is asking the insurer whether an outpatient or counselling benefit can be added.