NPS Swasthya

NPS Swasthya Quick Facts

What Is NPS Swasthya?

NPS Swasthya is a contributory pension scheme, governed by the PFRDA Act, 2013, that runs alongside a subscriber's regular NPS account rather than replacing it. A subscriber cannot independently open an NPS Swasthya account. An NPS account is mandatory; if the subscriber does not already have one, it must be opened along with the NPS Swasthya account.

Contributions to the Swasthya account grow with market-linked returns, the same way any other NPS variant does. It allows subscribers to access the accumulated funds for eligible outpatient and inpatient medical expenses without using their remaining retirement savings or taking a separate loan.

How NPS Swasthya Works

The NPS Swasthya scheme is a combination of the NPS system and health insurance. The subscriber contributes towards the NPS Swasthya account as per the necessary requirements, and it is invested in the chosen pension fund. Further, the health insurance benefits are provided by the scheme through an insurance company based on terms and conditions.

The next phase of the scheme has the minimum initial contribution of ₹25,000. Health insurance is compulsory under PoC 2, and the insurance premium for the same is withdrawn partially from the NPS Swasthya account.

The Operational Guidelines of September 2026 contain provisions about contributions, withdrawals, insurance, and exit, and the responsibilities of Pension Funds, Health Benefit Administrators, Insurers, Central Record Keeping Agency (CRAs), and Points of Presence (PoPs). The scheme operates within the Multiple Scheme Framework in NPS.

Eligibility for NPS Swasthya

NPS Swasthya eligibility has changed with the formal guidelines, and the insurance component that was once optional is now a compulsory part of the structure.

• Eligibility: NPS Swasthya is open to any Indian citizen who is eligible to join NPS.
• Age Limits: Under the September 2026 Operational Guidelines, the age of enrolment is 18 to 70 years, and may be renewed to 85 years.
• Dual Account Structure: NPS Swasthya is a mix of Non-profit plans, Swasthya Investment Account and NPS Swasthya Super Top-up health insurance. The insurance element is mandatory for enrollment, but both are operationally and legally separate.
• Mandatory NPS Account: A normal NPS account is compulsory and includes a Swasthya account and none can exist alone.

NPS Swasthya Withdrawal Rules

Current NPS Swasthya withdrawal rules are designed to provide liquidity for healthcare expenses without requiring subscribers to draw on their broader NPS corpus. Under the pilot framework, this was structured through two distinct withdrawal methods. These rules should be compared with the broader NPS Withdrawal provisions before making a decision.

• Partial withdrawal: A subscriber can withdraw up to 25% of their own contributions to the Swasthya account for each claim, to cover outpatient or inpatient expenses. There is no cap on how many times this can be done, provided the account has first built up a minimum corpus, ₹50,000 under the pilot design, before the first withdrawal is permitted.
• Full premature exit: Where a single inpatient treatment costs more than 70% of the total accumulated corpus, the subscriber is permitted a full premature exit, withdrawing 100% of the corpus as a lump sum rather than being limited to the 25% partial cap.

Subscribers above 40 years of age, excluding government-sector and government-owned corporate employees, were also permitted a one-time transfer of up to 30% of their existing Common Scheme NPS contributions into the Swasthya account. This gave subscribers who were already approaching healthcare a way to meet the expense using their existing savings rather than starting from scratch.

NPS Swasthya Investment Strategy and Charges

Money in an NPS Swasthya account is invested rather than held as cash for immediate spending. Like a standard NPS account, the funds are invested in market-linked instruments, but within a relatively conservative allocation suited to an account that may need to be accessed for healthcare expenses. Subscribers can review the available NPS Investment Options before selecting a fund allocation.

• Equity Allocation: Broadly 25% to 50% of the corpus
• Debt Allocation: Broadly 50% to 75%, including corporate bonds and government securities
• Short-Term Instruments: Up to 10% to maintain liquidity
• Risk Classification: Moderately high, reflecting the overall blended asset allocation

Reconciling the Minimum Contribution, ₹1,000 vs ₹25,000

Two different minimum-contribution figures circulate for NPS Swasthya, and both are accurate at different levels.

The Operational Guidelines establish a regulatory floor. The minimum initial contribution must cover the applicable first-year insurance premium (with tax), an annual Health Benefit Administrator (HBA) maintenance charge of ₹200 plus tax, and at least ₹1,000 toward the investment account itself. The ₹1,000 figure is only the investment component of that formula, not the total amount a subscriber actually pays at enrolment.

Once the first-year insurance premium is added, based on the subscriber's age band and chosen sum insured between ₹10 lakh and ₹30 lakh, the realistic total comes out considerably higher. Both Tata Pension Fund and Axis Pension Fund currently advertise a minimum initial contribution of around ₹25,000 for their NPS Swasthya products. This reflects the combined total rather than the bare regulatory floor. Subsequent contributions after enrolment can be as low as ₹10.

Ecosystem Partners and the Claims Process

The NPS Swasthya program has an ecosystem approach that involves several stakeholders each having their own roles to play within the process.

• PFRDA: This is the regulatory authority controlling the whole scheme
• Tata Pension Fund & Axis Pension Fund: These are the pension funds that provide the scheme with the mandate of investment management
• CAMS KRA: Takes care of subscriber onboarding and KYC processes
• Medi Assist Healthcare Services: This is the main technology partner and Third Party Administrator of the scheme
• Aditya Birla Health Insurance: They provide the Super Top-up health insurance coverage under a master policy scheme.

Claims and withdrawals run through the MAven App, built by Medi Assist and integrated directly with the CAMS Central Recordkeeping Agency system. A subscriber verifies their identity through a CRA-authenticated OTP, after which eligible healthcare withdrawals and top-up insurance claims can be processed digitally.

Medi Assist's network covers more than 15,500 hospitals across over 1,260 cities, enabling cashless settlement for inpatient treatment. The approved amount is transferred directly to the hospital rather than to the subscriber. Outpatient services such as discounted diagnostics and pharmacy purchases are also accessible through the same platform.

Tax Treatment of NPS Swasthya

The investment portion of an NPS Swasthya account is expected to follow the same tax treatment as a standard NPS Tier I contribution, since it operates under the same NPS legal structure. This includes the personal deduction under Section 123 of the Income Tax Act. It also includes the additional ₹50,000 deduction under Section 124(3), where applicable, both available only under the old tax regime. For a fuller explanation, see NPS Tax Benefits Under Section 80CCD.

The Super Top-up health insurance premium is a legally distinct insurance policy from the investment account. It would ordinarily be expected to qualify for a separate deduction under the provision covering health insurance premiums, subject to its own conditions and limits. Subscribers should confirm the exact tax treatment of both components with a tax adviser before relying on it for financial planning, given how new the formal guidelines are.

Step-by-Step Enrolment Process

Enrolling in NPS Swasthya builds on the standard NPS onboarding process, with additional steps for the insurance component. New subscribers can first review how to Open an NPS Account Online.

1. Check for pre-existing PRAN: If a subscriber has an existing Common Scheme NPS account, he/she can enroll NPS Swasthya into that scheme. If not, the subscriber must open a Common Scheme account prior to enrolling for NPS Swasthya since NPS Swasthya is not available as an independent scheme.
2. Visit a Point of Presence or the website of the selected pension fund: Tata Pension Fund and Axis Pension Fund provide digital enrollment facilities for their own NPS Swasthya products respectively.
3. Perform KYC via CAMS KRA: PAN, Aadhar, photo and banking details of the savings bank account linked to the subscriber will be required here.
4. Choose your health cover and sum insured: The subscriber opts for the deductible level and floater health cover value, maximum up to ₹30 lakhs, thus determining the first-year insurance premium payment amount.
5. Pay the initial contribution: It includes first year insurance premium, the ₹200 HBA fee and the minimum investment amount, constituting the initial contribution amount mentioned above.
6. Receive confirmation documents: Guidelines require the subscriber to receive a copy of the PRAN card along with HBA, insurer, and TPA details, and the insurance policy documents, both at activation and at every renewal.

Tata Pension Fund vs Axis Pension Fund

NPS Swasthya Tata Pension Fund and NPS Swasthya Axis Pension Fund are currently offered the scheme, and both providers operate under the same PFRDA framework, though their specific product packaging differs slightly.

NPS Swasthya vs Health Insurance

Standalone health insurance is designed to cover medical emergencies. It pools risk among policyholders and covers eligible claims up to the policy's sum insured. NPS Swasthya is not designed to perform this function. Its primary purpose remains consistent with any other NPS account: building a market-linked retirement corpus over the course of a subscriber's working years.

NPS Swasthya's additional value lies in serving as a supplementary provision for the years closer to and during retirement. If the health insurance cover is exhausted or does not cover the full medical expense, NPS Swasthya can help cover the remaining cost. A subscriber may draw on their own accumulated retirement savings toward the remaining cost. This functions as a secondary layer positioned behind health insurance, not as a substitute for it.

Each such withdrawal reduces the subscriber's own retirement corpus, rather than drawing on a pooled risk fund in the manner of an insurance claim. The two are intended to be maintained together.

NPS Swasthya vs NPS Vatsalya vs the Common Scheme

These three NPS variants are aimed at entirely different needs, and confusing them is easy given how similar the names sound.

NPS Vatsalya converts into a standard NPS account once the minor turns 18, while NPS Swasthya exists specifically to add healthcare liquidity to an adult subscriber's own retirement account.

Who Should Consider NPS Swasthya

NPS Swasthya suits a fairly specific profile rather than every NPS subscriber.

• Good fit: Subscribers who already max out their standard health insurance cover and want an additional, self-funded buffer for large medical bills, and those comfortable committing a higher minimum contribution than a standard NPS account requires.
• Weaker fit: Those subscribers who have sufficient individual health insurance coverage and do not wish to tie up their full retirement fund in investments, or those who will not agree to take the mandatory premium charge with the product.
• Trade-off to consider: Any partial withdrawal from the fund comes out of the individual subscriber's own retirement fund and does not share the risk associated with insurance, hence NPS Swasthya is better used as an add-on to standard health insurance.

Grievance Redressal Under NPS Swasthya

Subscribers can raise a complaint via Pension Sahayak, which is an AI-based grievance redressal portal of the PFRDA. The portal takes grievances against any party involved in the NPS Swasthya value chain, such as the Pension Fund, CRA, PoP, Health Benefit Administrator, or Insurance Company. It provides subscribers with a single window process for their complaints related to both the investment and insurance aspects of the scheme. This complements the standard NPS Grievance Registration process.

Insurance Waiting Periods and Exclusions on the Super Top-up

The Super Top-up policy under NPS Swasthya is underwritten by a licensed insurer. It remains subject to standard IRDAI health insurance norms, including initial waiting periods and waiting periods for pre-existing conditions. PFRDA's guidelines require that if a subscriber switches Pension Fund or insurer at renewal, the outgoing and incoming insurers must handle portability, waiting periods, moratorium, and continuity credits in line with applicable insurance law.

Continuous coverage is therefore not lost purely because of a provider switch. The outgoing insurer also remains responsible for any claim arising during its own policy period, even after a switch. Exact waiting periods and exclusions vary by insurer and policy version. Reviewing the specific policy document from Aditya Birla Health Insurance, or whichever insurer is engaged at the time, before enrolling is worth doing.

What Happens to the Account at Retirement or Exit

An NPS Swasthya account closes on normal exit, premature exit, or the subscriber's death, similar to a standard NPS account. On premature exit specifically, the accumulated corpus is first applied toward the eligible inpatient healthcare expense that triggered the exit. Any amount left over does not simply disappear. The NPS Swasthya scheme is closed and merged into the subscriber's existing NPS account under the All Citizens Model, or converted into one if the subscriber does not already hold one.

Any insurance policy already in force at the time of premature exit continues for its remaining term under its own conditions, regardless of what happens to the investment account. At normal retirement age, the investment portion is expected to follow standard NPS exit rules for lump sum and annuity treatment. This follows from the underlying corpus falling under the same regulatory structure as any other NPS account.

Conclusion

NPS Swasthya seeks to bring two financial needs that are typically planned separately: healthcare expenses and retirement savings within a single NPS account. The scheme progressed in 2026 from a limited pilot in January to a formal PFRDA operational framework by September. Subscribers evaluating it today should confirm the current terms with their chosen Pension Fund rather than relying on pilot-era figures. Speak with a PensionBazaar retirement planning experts to see whether NPS Swasthya fits alongside your existing NPS account and health insurance coverage.