NPS: If you’re putting money into the National Pension System (NPS), this update is super important for you. The Pension Fund Regulatory and Development Authority (PFRDA), which is the biggest pension regulatory body, has made a big move. Subscribers can now get health coverage too. PFRDA mentions that three pension fund managers are on it. These plans will mix pension products with health insurance or healthcare services. This means you’ll get insurance along with your pension.
According to a report from Business Standard, ICICI, Axis, and Tata Pension Funds are developing a new health-related plan. With this plan, people can put money into a health account managed by a pension fund manager of their choice. The money will be invested following the investment guidelines set by the current NPS Multiple Scheme Framework (MSF). This scheme is tailored for those looking to create a secure fund for medical expenses while also saving for retirement.
30% can be set aside separately
Earlier this year, in January, the PFRDA introduced a health platform. Offering health coverage to subscribers is part of this effort. Through this platform, investors can allocate up to 30% of their pension plan corpus for medical needs. This will form a “medical pension” fund, which will be dedicated solely to medical treatment. The goal is to help people be financially prepared for increasing healthcare costs in their later years, which is often one of the biggest challenges of retirement.
What is the NPS Health Pension Scheme?
The NPS Health Pension Scheme is specifically aimed at covering medical needs. Contributions made under this scheme can be used for future doctor visits, medications, and hospital stays. In simple terms, your pension will now be beneficial not just for retirement but also during health issues.
You will get the benefit of health related plans in NPS
Because NPS has many investors, pension funds can negotiate on a large scale. This could lead to cheaper top-up plans from health insurance companies. Hospitals can also get better treatment deals due to the large volume. Furthermore, the hospital will receive payment immediately after treatment. This is different from the Central Government Health Scheme, where payment takes months. ICICI BankAxis, and the Tata Group are working on this. These companies may launch top-up plans. The PFRDA has expressed hope that ICICI will soon launch the final product.
How will the scheme function?
This scheme operates under the Multiple Scheme Framework (MSF). Customers will need to contribute on their own. As per the PFRDA circular, this is a contributory pension scheme. Right now, it’s being trialed as a pilot project. The Pension Fund (PF) will roll out the scheme for a limited time. It’s not restricted to just one or two states at the moment; however, PFRDA has initiated it on a voluntary basis for everyone as a pilot. Since its launch at the start of 2026, it will gradually be fully rolled out in more states.
These facilities will be available
1. You can partially withdraw funds anytime to cover outpatient or inpatient medical costs.
2. There’s no cap on how many times you can make these partial withdrawals.
3. However, you can only withdraw up to 25% of your contribution whenever you need.
4. To qualify for the first partial withdrawal, you must first deposit a minimum of Rs.50,000.
5. For critical inpatient medical care, if the hospital bill exceeds 70% of your total account funds, you can withdraw the full amount to pay for that treatment.
6. It’s crucial to understand that this money will go directly to the Health Benefit Administrator (HBA) or Third Party Administrator (TPA) against valid claims and bills.
7. Any leftover funds after settling medical expenses will be moved to the subscriber’s main NPS account.
Claim Settlement
The amount withdrawn will be sent straight to the hospital or treatment facility (HBA or TPA), which will process the payment based on the bill and treatment documentation. Any leftover funds after the treatment costs are deducted will be credited back to the subscriber’s common scheme account.
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