NPS Swasthya

The NPS solves one problem in old age. Health costs are the other one, and the workbook says they can undo the first.

PFRDA's answer is NPS Swasthya. The reason the workbook gives is specific: out-of-pocket expenditure during old age serves as a major outflow of retirement savings.

So the scheme combines the old age income security with healthcare coverage, to ensure that a subscriber is safeguarded against both the issues with a single product.

That is a design choice worth noticing. Ordinarily a retiree has to assemble the two separately — a pension from one place, a health policy from another, and a medical corpus for what the policy will not pay. Swasthya puts them in one wrapper.

The workbook describes it in the list of NPS products as a health-benefit concept. It gives no premium, no sum insured and no eligibility rule.

What the workbook actually commits to. Two sentences and one label. Its statements are:

No figures, deliberately. The workbook gives no sum insured, no premium, no age limit, no waiting period and no contribution rule for NPS Swasthya. Every other NPS product in the same list carries at least one number — NPS Sanchay has an age band of 18 to 85, StAR NPS a Rs 200 onboarding charge, NPS Vatsalya an age of conversion at 18. Swasthya has none, and the word concept is the workbook's own signal for why. It would be wrong to attach a figure to it.

The problem it is built on, which the workbook does quantify elsewhere. Chapter 8 gives the out-of-pocket arithmetic that Swasthya is responding to:

• Health insurance policies in India cover only hospitalisation and related expenses, so medicines, doctors' visits, tests and long-term care fall outside them.
• Employer medical benefits cease on retirement, except for government and related agencies.
• The premium for a Rs 5 lakh cover at age 45 is around Rs 10,000, and more than doubles to Rs 22,000 if taken at 60.
• Many diseases are covered only after a waiting period of 2 to 4 years.
• Health inflation is typically much higher than general consumer inflation.

Chapter 7 makes the same point from the income side: health expenses can be one of the biggest drains on retirement income.

Where it sits among the other PFRDA products. Chapter 4 lists it beside NPS Vatsalya (minors), Multiple Scheme Framework branded schemes, NPS Lite–Swavalamban (legacy, closed to fresh entry except for Gramin Dak Sevaks), NPS Sanchay (simplified, informal sector) and NPS e-Shramik (gig and platform workers). Read as a group, these are PFRDA's coverage-and-adequacy initiatives rather than investment features — and Swasthya is the only one addressing adequacy after the pension starts rather than getting people in.

What it does not replace. Because the workbook gives no terms, it cannot be treated as a substitute for the two things it does prescribe: a health insurance policy taken early with lifelong renewability, and a separate medical corpus holding at least three years of out-of-pocket expenses in liquid assets at retirement.

The workbook gives no terms for NPS Swasthya, so this example shows the problem it is designed against, using the workbook's own Chapter 8 figures.

Mr Thakur retires at 60 with a corpus of Rs 48,00,000, sized to fund twenty years of living expenses. He has a Rs 5,00,000 health policy bought at 58 and no medical corpus.

Years 1 to 3. His policy's waiting period of 2 to 4 years has not expired for the specified illnesses he is most likely to face. His employer's medical benefit ceased on retirement. Out-of-pocket spending on medicines, consultations and tests runs at Rs 90,000 a year.

Three years of out-of-pocket costs = 3 x 90,000 = Rs 2,70,000

Years 4 to 10. Health inflation runs well above general inflation, so the same basket of medicines and consultations grows faster than the rest of his budget. By year 10 it costs him about Rs 1,75,000 a year.

What this does to the plan. None of that spending was in the corpus calculation, and none of it is a hospitalisation his insurer will pay. It comes straight out of the money that was meant to fund his living expenses in years 15 to 20. That is precisely the major outflow of retirement savings the workbook names as the reason for NPS Swasthya.

What the two products would have to do together.

The bundling in the third row is the idea Swasthya represents — both issues with a single product. What the workbook does not tell a candidate is how much cover it provides or what it costs, and until it does, the examinable content is the rationale and the label, not a figure.

Chapter 4, section 4.2, introduces NPS Swasthya with the out-of-pocket rationale, and the list of PFRDA-administered products a few pages later calls it a health-benefit concept. Chapter 8, section 8.1.3, and Chapter 7, section 7.1, supply the health-cost problem it responds to.

Expect a matching question across the NPS product family: which initiative combines old age income security with healthcare coverage (Swasthya), which targets gig and platform workers (e-Shramik), which is the simplified informal-sector variant (Sanchay), which is for minors (Vatsalya), and which is the legacy model closed to fresh entry except for Gramin Dak Sevaks (NPS Lite–Swavalamban). The rationale — out-of-pocket medical expenditure draining retirement savings — is the reasoning question attached to it.

• The workbook gives no premium, sum insured, age limit or waiting period for NPS Swasthya. It calls it a concept. Any option offering a figure for it is offering something the workbook does not state.
• Do not borrow figures from the neighbouring products. The 18 to 85 band is NPS Sanchay's, the Rs 200 onboarding charge is StAR NPS's, and the Rs 5 lakh / Rs 10,000 / Rs 22,000 premium figures belong to the general health-insurance discussion in Chapter 8.
• Swasthya addresses adequacy after retirement, not coverage before it. e-Shramik, Sanchay and Vatsalya are about getting people into the NPS; Swasthya is about what happens to their money once they are old.
• It does not replace a health policy or a medical corpus. The workbook's prescribed answers to health costs remain a policy taken early with lifelong renewability, plus a medical corpus with three years of expenses in liquid assets.
• The rationale is out-of-pocket expenditure, not hospitalisation. Hospitalisation is what an ordinary health policy already covers; out-of-pocket spending is what it does not.
• It is administered by PFRDA, and sits in the NPS family rather than being an insurance product regulated only by IRDAI.