The NPS Health Pension Scheme is a new initiative introduced by the Pension Fund Regulatory and Development Authority (PFRDA). Under this scheme, a person’s medical expenses can be paid using their pension savings.
At present, the scheme is being tested through a small pilot project. It connects healthcare expenses with the National Pension System (NPS) to provide medical support during times of need.
Purpose of the Scheme
The main objective of the NPS Health Pension Scheme is to allow people to save money regularly and later use those savings to pay for hospital treatment and doctor consultations.
The scheme aims to make healthcare financing easy, secure, and transparent for subscribers.
Official Announcement by PFRDA
PFRDA issued a circular on January 27 regarding this scheme. According to the circular, the NPS Health Scheme will be introduced as a sector-specific scheme under NPS.
It will provide financial support for both outpatient and inpatient medical expenses and will operate under the Multiple Scheme Framework (MSF).
Nature of the Scheme
As per the pension regulator’s circular, the scheme will be a contributory pension scheme and will operate under Section 20 and Section 12(1)(A) of the PFRDA Act.
Participation in the scheme will be voluntary, and it will be launched by pension funds (PFs) after receiving approval from PFRDA.
Key Features of the NPS Health Pension Scheme
Eligibility
Any Indian citizen can join the NPS Health Pension Scheme. If a person does not already have an account, they must open a Common Scheme Account along with the NPS Health Pension Scheme account.
Charges
All fees and charges related to this scheme will be governed by the MSF Rules and will be clearly disclosed. These charges will also include fees payable to the Health Benefit Administrator (HBA).
Contributions
Subscribers can contribute any amount to the NPS Health Pension Scheme. Existing NPS guidelines applicable to the non-government sector will apply to these contributions.
Transfer of Contributions from Common Scheme Account
Subscribers above 40 years of age (except those in the Government Sector and government-owned companies) will be allowed to transfer their own or their employer’s contributions from the Common Scheme Account to the NPS Health Pension Scheme account.
Partial Withdrawals for Medical Expenses
Subscribers can make partial withdrawals from their NPS Health Pension Scheme account to pay for outpatient or inpatient medical expenses.
At any time, a subscriber can withdraw up to 25% of their total contribution made to the scheme.
Premature Exit for Critical Medical Treatment
If the cost of inpatient medical treatment in a single case exceeds 70% of the funds available in the subscriber’s NPS Health Pension Scheme account, the subscriber will be allowed to withdraw 100% of the funds in lump sum before the scheduled maturity.
Claim Settlement Process
The withdrawn amount will be paid directly to the respective HBA or TPA based on a valid claim and supporting bills.
After medical expenses are settled, any remaining surplus amount will be transferred back to the subscriber’s Common Scheme Account.
