NPS Swasthya: PFRDA's rules let NPS savers withdraw up to 25% of contributions for medical bills, with mandatory health insurance

The Pension Fund Regulatory and Development Authority (PFRDA), the pension regulator, has set the rules for NPS Swasthya, a National Pension System (NPS) account linked to health insurance. Anyone eligible to join NPS can enrol. One account holds the pension money, and a separate health insurance policy is mandatory. The account allows withdrawals of up to 25% of the subscriber’s contributions to pay medical expenses, with no waiting period. The rules are in PFRDA circular PFRDA/2026/49/NPS-SWASTHYA/01 dated 18 September 2026. Outlook Money reported that the scheme was launched on 1 October 2026.

What it is

NPS Swasthya has two parts that the circular says stay legally and operationally separate: an NPS Swasthya investment account, and a super top-up health insurance policy. A super top-up policy is extra health cover that starts paying once a person’s total medical costs in a policy year pass a set amount, called the deductible. The circular says the deductible adds up the costs of all covered family members in the year, not each claim on its own.

What it costs to join

Item	Detail in the circular
Minimum first payment	The first-year insurance premium (with taxes), plus a Rs 200 annual maintenance charge (plus taxes), plus Rs 1,000 invested in the account
Annual maintenance charge	Rs 200 plus taxes, paid to the health benefit administrator (HBA), the firm that runs the pension-side servicing and technology, through the pension fund
Later contributions	At least Rs 10 each
Pension fund management charge	Up to 0.08% a year of the assets in the scheme, plus taxes, on top of the charges that apply to NPS under the All Citizen Model
Insurance premium	Set by the insurer under IRDAI (insurance regulator) rules; the circular gives no amount. Quotes are by age band: 18 to 40, above 40 to 60, above 60 to 70

The circular says contributions are invested under the pattern PFRDA prescribes for the Central Government Scheme. It also says renewal premium may be paid from the account corpus if the subscriber has given a mandate.

The insurance cover

• Who is covered: the subscriber, spouse and up to two dependent children, as one family floater. Parents are excluded.
• Age: entry from 18 to 70; renewal allowed up to and including age 85.
• Four standard options:

Annual deductible	Family floater sum insured
Rs 10,000	Rs 1 lakh
Rs 50,000	Rs 5 lakh
Rs 1 lakh	Rs 10 lakh
Rs 3 lakh	Rs 30 lakh

• Included: single private room, ICU charges at actuals, 30 days of costs before and 60 days after hospitalisation, road ambulance up to Rs 2,500 per emergency hospitalisation, and day-care procedures, among others, subject to the final policy wording. The circular says no co-payment or disease-specific sub-limit applies.
• Waiting periods: 30 days initially (accidents are treated as the final policy wording provides), and 12 months for pre-existing diseases and for specified diseases or procedures. Enrolment is ordinarily based on a Good Health Declaration listing medical conditions, and a declaration can lead to a higher premium.

Withdrawing for medical costs

• A subscriber can make partial withdrawals for eligible outpatient and inpatient healthcare expenses, up to 25% of the contributions the subscriber has made to the account.
• The number of withdrawals is not limited and no minimum waiting period applies.
• The money is not paid to the subscriber. It is settled with the hospital or other eligible provider.
• An expense the insurance does not pay may be considered for payment from the account.

Exits and other points

• If a single inpatient bill is above the partial withdrawal limit, the subscriber can exit early. The corpus first goes to that bill, and any balance is merged into an NPS account under the All Citizen Model.
• If the balance cannot fund the insurance renewal and cover lapses after the grace period, the account is closed and merged the same way. The pension fund is to alert the subscriber 90, 60 and 30 days before renewal where practicable.
• Normal exit and death rules are those for non-government NPS subscribers.
• A subscriber can transfer funds from an existing All Citizen Model NPS scheme into the account, limited to the amount needed to meet the deductible.
• The earlier NPS Swasthya schemes run under PFRDA’s regulatory sandbox, a limited trial, are to be discontinued. Their subscribers can move to a scheme under these guidelines or merge into an All Citizen Model NPS scheme.

Basis of these figures

All rules, charges and cover terms are from the text of PFRDA circular PFRDA/2026/49/NPS-SWASTHYA/01 of 18 September 2026, listed on PFRDA’s website. The covering circular says it takes effect immediately, but the guidelines say they apply from a date PFRDA specifies by circular, and no launch date is stated; the 1 October 2026 launch is as reported by Outlook Money. Insurance terms are subject to the final policy wording, and insurance matters remain under IRDAI. Read the circular for the full text. This article reports the rules and does not say whether the scheme suits any saver.