Mediclaim policy cannot exclude mental illness

Shikha Nischal had obtained a healthcare (mediclaim) policy from National Insurance on May 29, 2016 and had renewed it without break. The policy for May 29, 2020 to May 28, 2021 had a coverage limit of Rs3,95,000.
In June 2020, Shikha was hospitalised for a month after she developed schizoaffective disorder, a type of mental illness. The total cost came to Rs5,54,636.However, the insurer rejected her reimbursement claim on the ground that the policy excluded treatment for psychiatric and psychosomatic disorders and diseases. She approached the insurance ombudsman, contending that the exclusion of mental illness was illegal as it violated the provisions of the Mental Health Act of 2017. The ombudsman concluded the claim had been rightly repudiated.
Shikha challenged the order in a writ petition before Delhi HC. Her advocate, Shahrukh Ejaz, pointed out that section 21 (4) of the Mental Health Act specifically provided that insurance companies would not make any distinction between mental and physical illnesses.
The HC observed the Mental Health Act does not differentiate between mental and physical ailments. It indicted the IRDA for turning a blind eye to legal provisions and allowing insurers to continue excluding mental illnesses even after enactment of the Mental Health Act. By its order of April 19, the HC allowed Shikha's writ petition. It ordered IRDA to circulate the order and ensure policies adhere to provisions of the Mental Health Act. It also directed the insurer to pay Rs25,000 towards costs.
(The author is a consumer activist and has won the Govt. of India's National Youth Award for Consumer Protection. His email is jehangir.gai.columnist@outlook.in)