NPS Swasthya, the healthcare-focused scheme, now has its final operating framework. PFRDA has specified how much subscribers can withdraw for medical expenses, what insurance cover will be available and what happens if the balance is insufficient to renew the policy.
Under the final guidelines issued on September 18, subscribers can make healthcare-related partial withdrawals of up to 25% of their contributions to the NPS Swasthya account. The scheme also comes with a mandatory super top-up health insurance policy, with family-floater cover options ranging from ₹1 lakh to ₹30 lakh
What is NPS Swasthya?
NPS Swasthya is a healthcare-focused NPS scheme designed to combine retirement savings with access to healthcare benefits.
Under the final framework, it will have two separate components: an NPS Swasthya investment account and a separate super top-up health insurance policy. The insurance policy is mandatory for enrolment, although the NPS account and insurance policy remain legally and operationally distinct.
Any individual eligible to join NPS can enrol in NPS Swasthya, subject to the guidelines.
How much can you withdraw for medical expenses?
One of the key provisions is the limit on healthcare-related partial withdrawals.
A subscriber can withdraw up to 25% of the contributions made to the NPS Swasthya account for eligible healthcare expenses. These can include specified outpatient and inpatient expenses.
There is no restriction on the number of partial withdrawals, and PFRDA has not prescribed a minimum waiting period for the first or subsequent withdrawal.
However, the money will not be paid directly to the subscriber. It will be settled with the hospital, healthcare provider or other eligible entity towards the permitted healthcare expense.
The final rules also provide for premature exit when eligible inpatient expenditure in a single instance exceeds the amount that can be accessed through a partial withdrawal. In such a case, the accumulated NPS Swasthya corpus can first be used towards the eligible inpatient healthcare expense.
NPS Swasthya: What are the contribution and insurance rules?
The minimum initial contribution is linked to the first-year insurance premium. It also includes ₹200 towards annual maintenance charges, plus applicable taxes, and ₹1,000 towards investment in the NPS Swasthya account.
The minimum subsequent contribution is ₹10.
The pension fund may levy a charge of up to 0.08% a year of the NPS Swasthya corpus, plus applicable taxes, for managing the scheme. An annual maintenance charge of ₹200, plus taxes, may also apply.
The component is structured as a family floater covering the subscriber, spouse and up to two dependent children. Parents are excluded.
There are four annual aggregate deductible and corresponding family-floater sum-insured combinations:
- ₹10,000 deductible — ₹1 lakh cover
- ₹50,000 deductible — ₹5 lakh cover
- ₹1 lakh deductible — ₹10 lakh cover
- ₹3 lakh deductible — ₹30 lakh cover
The subscriber entry age under the standard insurance policy is 18 to 70 years. Renewal can continue up to and including age 85, subject to the policy terms, premium and applicable law.
What happens if there is not enough money to pay the insurance premium?
This is an important provision for subscribers to understand.
If the NPS Swasthya balance may not be sufficient to pay the insurance renewal premium, the pension fund should, where practicable, alert the subscriber 90, 60 and 30 days before renewal.
If the premium remains unpaid after the applicable grace period and the insurance cover lapses, the NPS Swasthya account will be closed.
It will then be merged into an NPS scheme under the All Citizen Model. If the subscriber does not already have such an NPS account, the NPS Swasthya scheme will be converted into one.
The insurance policy also has a 30-day initial waiting period, except for accidents as provided in the final policy wording. The waiting period for pre-existing diseases and specified diseases or procedures is 12 months, subject to the final insurance policy and applicable insurance law.
Can existing NPS money be transferred?
Yes. A subscriber can transfer funds from an existing NPS scheme under the All Citizen Model into the NPS Swasthya account, subject to the amount being limited to meet the applicable insurance deductible.
The NPS Swasthya account will close on normal exit, premature exit, death or if funds are unavailable to renew the insurance. Closing the Swasthya account does not affect any other NPS account held by the subscriber.
The final guidelines therefore make NPS Swasthya more specific than the earlier proof-of-concept framework.