NPS New Update: Expensive medical treatments and ever-increasing healthcare costs have become a cause for concern for almost every family today. Especially after retirement, when income is limited, the expenses incurred on hospitals and treatment can disrupt the budget. Keeping this problem in mind, the government’s pension regulator, PFRDA, has launched a new initiative called the NPS Health Pension Scheme. Through this scheme, people will now be able to use their pension savings for medical expenses.
However, this scheme has been launched as a pilot project. It has been implemented under a regulatory sandbox so that it can be tested on a limited scale. In the future, based on the experience and results, it may be implemented nationwide.
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What is the NPS Health Pension Scheme?
The NPS Health Pension Scheme has been specifically designed keeping medical needs in mind. The amount deposited under this scheme can be used for expenses such as doctors’ fees, medicines, and hospitalization. In simple terms, pension savings will no longer be limited to income after retirement, but will also provide financial support during illness.
According to PFRDA, this scheme is completely optional. Any individual can choose to participate in it or opt out. It has been introduced as a separate category within the National Pension System.
PFRDA outlines important rules related to the scheme
Any citizen of India can participate in this scheme. Those who do not already have a common NPS account will have to open this account along with the Health Pension Account. All fees related to the scheme will be determined by the respective service provider and will be clearly stated in advance. These charges will also include fees related to the Health Benefit Administrator.
Subscribers can deposit money in this Health Pension Scheme according to their capacity and needs. The invested amount will be invested under defined rules so that it can grow over time. In some cases, subscribers over 40 years of age, excluding government employees and employees of public sector undertakings, can transfer a portion of their accumulated funds from their NPS Common Scheme account to a Health Pension account. This transfer will be limited to 30 percent of the total accumulated amount.
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Withdrawal Facility for Medical Expenses
Subscribers can make partial withdrawals from their Health Pension account for medical expenses. Whether it’s for doctor visits or hospitalization, up to 25 percent of the accumulated amount can be withdrawn at any time. There is no limit on the number of withdrawals, and there is no mandatory waiting period. However, the first withdrawal will only be possible once the account has accumulated at least ₹50,000.
If the treatment of a serious illness requires more than 70 percent of the total accumulated amount in a single instance, the subscriber will be allowed to withdraw the entire amount. This is to ensure that financial constraints do not hinder treatment.
Claim Settlement Process
The amount withdrawn under this scheme will be directly transferred to the hospital or healthcare institution. The payment will be made based on the bills and necessary medical documents. If any amount remains after covering the full cost of treatment, it will be transferred back to the subscriber’s NPS Common Scheme account. Overall, the NPS Health Pension Scheme can prove to be a great relief for those who are concerned about medical expenses after retirement.