Health insurance companies will soon be able to offer top-up health cover to National Pension System (NPS) subscribers through partnerships with the Pension Fund Regulatory and Development Authority (PFRDA).
PFRDA Chairperson S. Ramann said the insurance regulator is set to roll out NPS Swasthya product in the next 60-70 days, Moneycontrol reported on Tuesday.
The regulator’s board has already approved the product and it will soon issue a circular detailing its standard operating procedure (SOP).
PFRDA plans to expand insurer partnerships
Ramann noted that in the proof of concept, the tie up has been done with Aditya Birla Health Insurance, but the product will be expanded further by tying up with more public and private health insurance companies.
“The pension funds will tie up with the insurance companies for providing top-up health insurance. That is the bundling of ,” Ramann told Moneycontrol during a joint conference on pensions in New Delhi.
The top executive also said it would take anywhere between 60-70 days for the product to be live as pension fund managers in the process of completing tie-ups with insurers and integrating the product with the backend systems of Central Recordkeeping Agencies (CRAs).
The insurance regulator expects to notify the operational framework shortly after issuing the SOP.
How NPS Swasthya will work?
NPS Swasthya will combine a dedicated health savings account with a group top-up health insurance policy arranged by pension fund managers for subscribers. The product is designed to help cover large , particularly those arising from critical or catastrophic illnesses, while reducing insurance costs through group buying.
Under the proposed structure, a part of a NPS subscriber’s contribution will be used to pay the premium for the group top-up health insurance, while the remaining amount will be credited to a dedicated health savings account. In case of hospitalisation, the savings account will first be used to meet the co-payment, after which the top-up insurer will pay the remaining eligible claim.
What is the purpose of NPS Swasthya?
NPS Swasthya is a pension-linked healthcare initiative that enables subscribers to allocate a portion of their NPS savings for medical needs such as hospitalisation and treatment of illness. Introduced as a pilot scheme, it is currently limited to a test model that checks its effectiveness before a wider rollout.
The initiative aims to minimise the financial burden of medical emergencies by allowing controlled access to retirement savings. Contributions to the scheme are managed by pension funds in line with guidelines.
“There is Ayushman Bharat, there are a variety of other schemes at the state government levels, but we do not have a sustainable scheme which need not necessarily depend on government contributions to subsidies. We are calling it NPS Swasthya. It is a Swasthya account within the NPS fold and we are therefore bundling the concept of a top-up insurance with a pension saving account dedicated to your health needs,” he was quoted as saying by the publication.
“The whole aim is to prevent catastrophic illness or critical illness, which is a huge problem in our country. Once that amount is paid from the pension account directly to the hospital, the top-up insurance will then come in and pay out the remaining,” he added.