PFRDA Introduces "NPS Swasthya Pension Scheme": A New Way to Fund Medical Expenses

The Pension Fund Regulatory and Development Authority (PFRDA) has announced a new initiative called the NPS Swasthya Pension Scheme.

Currently, this scheme is being launched as a "Proof of Concept" (PoC). This means it is a test run to see if the idea works effectively before launching it for everyone permanently.

The goal of this scheme is to combine retirement planning with health benefits, helping subscribers manage medical expenses. Here is a simple breakdown of how it works.

What is the NPS Swasthya Pension Scheme?

This is a new, voluntary pension scheme under the National Pension System (NPS). It is designed specifically to provide financial support for medical expenses.

• Purpose: To help pay for both Out-Patient (OPD) and In-Patient (Hospitalisation) medical bills.
• Eligibility: Any citizen of India can join. However, you must have a regular NPS account (called a "Common Scheme Account") to open this Swasthya account.

Key Features for Subscribers

1. Contributions

You can contribute any amount to this scheme, just like a regular NPS account.

• Transfer Option: If you are above 40 years of age (and not a government employee), you can transfer up to 30% of your contributions from your regular NPS account to this new Swasthya account.

2. Withdrawals for Medical Bills

The main benefit of this scheme is the ability to withdraw money for health needs.

• Partial Withdrawal: You can withdraw money to pay for medical bills as they arise.
• Limit: You can withdraw up to 25% of your own contributions at any time.
• No Waiting Period: Unlike regular NPS, there is no waiting period. You can withdraw as many times as you need.
• Condition: You must have a minimum balance of ₹50,000 in the account to make your first withdrawal.

3. Critical Medical Treatment (Premature Exit)

In case of a major medical emergency where the hospital bill is very high:

• If the bill exceeds 70% of your total account balance, you are allowed to close the account (Premature Exit).
• You can withdraw 100% of the money as a lump sum to pay the hospital.

4. Direct Payment

To ensure the money is used for health, the withdrawn amount will be paid directly to the Health Benefit Administrator (HBA) or Third Party Administrator (TPA) based on valid bills, not to your personal bank account. Any extra money left after paying the bill will be moved back to your regular NPS account.

What Happens if the Scheme Closes?

Since this is a "Proof of Concept" (a test), it is possible that PFRDA might decide not to continue it in the future.

• If the scheme is discontinued, your money is safe.
• The accumulated corpus will simply be transferred back to your regular NPS Common Scheme Account.

Conclusion

The NPS Swasthya Pension Scheme is an innovative attempt to use pension savings for immediate health needs. It offers a way to create a dedicated health fund that grows over time but remains accessible for medical emergencies. Since it is currently in the testing phase, interested subscribers should look out for announcements from Pension Funds regarding its launch.

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