NPS Health Pension Scheme Introduced by PFRDA: Key Details & Advantages

The NPS Health Pension Scheme is a pioneering initiative by the Public Sector Undertakings under the Pension Fund Regulatory and Development Authority (PFRDA). Designed to link healthcare expenses directly with pension savings, this scheme aims to provide financial security for medical costs while ensuring a structured savings mechanism for subscribers. Currently, the scheme is being rolled out as a small pilot project, with plans for wider implementation in the future.

How the NPS Health Pension Scheme Works

Under this scheme, subscribers can save funds through the National Pension System (NPS) and later use them to cover hospital bills, doctor fees, and other healthcare costs. The PFRDA has described the scheme as an effort to make healthcare support easy, transparent, and secure. Operating under the Multiple Scheme Framework (MSF), it will offer both outpatient and inpatient coverage as a sector-specific voluntary pension option.

According to the circular issued by the PFRDA on January 27, the scheme will function under Section 20 and Section 12(1)(A) of the PFRDA Act and will be launched by pension funds after regulatory approval.

Eligibility and Contributions

The NPS Health Pension Scheme is open to all Indian citizens. Individuals who do not already have an account will need to open a Common Scheme Account to participate. Subscribers can contribute any amount to the scheme, following existing NPS guidelines for the non-government sector.

For participants over 40 years of age (except those in government or government-owned companies), contributions from the Common Scheme Account can be transferred to the NPS Health Pension Scheme Account. All fees and charges will be transparent and governed by MSF rules, including those payable to the Health Benefit Administrator (HBA).

Withdrawals and Premature Access

The scheme allows partial withdrawals for medical expenses, with subscribers able to access up to 25% of their contributions at a time for outpatient or inpatient care. In cases where medical treatment costs exceed 70% of the subscriber’s available funds, a premature exit is permitted, allowing 100% of the balance to be withdrawn in a lump sum.

Claim settlement is designed to be seamless. Payments for medical expenses are made directly to the respective HBA or Third-Party Administrator (TPA) based on valid claims and invoices. Any remaining surplus is returned to the subscriber’s Common Scheme Account after settling the medical costs.

Benefits of the Scheme

The NPS Health Pension Scheme offers several advantages: it integrates health security with retirement planning, provides flexibility in contributions and withdrawals, and ensures direct settlement of medical bills. For individuals looking for both long-term pension benefits and immediate healthcare coverage, this initiative represents a significant step towards financial and medical security.