India's health insurance landscape is evolving beyond its traditional focus on hospitalization, with insurers increasingly embracing Outpatient Department (OPD) coverage to cater to a wider range of healthcare needs. This shift is driven by a growing recognition that a significant portion of healthcare expenditure occurs outside of hospitals, in clinics, pharmacies, and diagnostic labs.

The Rise of OPD Coverage

Traditionally, health insurance in India primarily covered expenses related to hospitalization, such as surgeries and prolonged stays in medical facilities. However, data indicates that a substantial portion of household healthcare spending is allocated to outpatient visits, medications, and diagnostic tests. According to Policybazaar, adoption of OPD coverage has increased 4.5 times in three years. In fiscal year 2023, OPD riders were attached to just 5% of health plans, but that number climbed to 22% in FY26, making them part of one in five policies sold. This gap in coverage has prompted insurers to introduce OPD plans, either as add-ons to existing policies or as standalone products. These plans aim to provide financial protection for medical expenses incurred without requiring hospitalization, including doctor consultations, diagnostic tests, and prescription medications. Some plans also cover dental care, eye care, and physiotherapy.

Benefits of OPD Coverage

OPD coverage offers several advantages for policyholders:

• Covers routine doctor visits: OPD health insurance pays for routine visits to the doctor, right from obtaining treatment for the common cold to dental and maternity check-ups.
• Reduced out-of-pocket expenses: By covering outpatient expenses, OPD plans help reduce the financial burden of routine medical care.
• Early disease diagnosis: By covering the cost of diagnostic tests, OPD cover helps people in early diagnosis of any disease or medical condition and manages them in time.
• Management of existing illnesses: OPD insurance assists individuals in managing pre-existing conditions like diabetes and high blood pressure, which often require frequent doctor visits and ongoing medication.
• Encourages preventive care: Insurers can promote preventive healthcare by covering the cost of regular medical screening, diagnostic tests and dental check-ups obtained on an OPD basis.
• Tax Benefits: Some OPD health insurance policies in India provide tax benefits under Section 80D.

How Insurers are Repositioning

Several major insurance companies in India have started offering OPD add-ons with coverage ranging from ₹25,000 to ₹1 lakh, which can be attached to existing health insurance plans. Some companies are experimenting with subscription-style OPD packages, offering unlimited teleconsultations, cashless pathology tests, and pharmacy discounts through their apps. Other insurers are exploring hybrid plans that combine OPD benefits with wellness programs like gym memberships and preventive health checks. SBI General Insurance recently launched Health Alpha, a customizable health plan offering an industry-first add-on for OPD benefits on gym and sports injuries.

Challenges and the Way Forward

Despite the growing popularity of OPD coverage, several challenges remain:

• Pricing balance: Premiums must remain affordable while covering frequent, small-ticket claims. Poorly priced OPD products could either turn loss-making or unattractive to buyers.
• Fraud risk: OPD claims are easier to inflate, with the potential for fake pharmacy bills or unnecessary tests. Robust digital verification and tie-ups with provider networks will be crucial.
• Awareness: Many Indians still perceive insurance purely as hospitalization cover. Shifting perception to include OPD will require extensive marketing.
• Claims process: Unlike hospitalization, which is often cashless, OPD claims tend to be reimbursement-based.

To address these challenges, the Insurance Regulatory and Development Authority of India (IRDAI) has been encouraging innovation in health products. Recent regulatory changes allow insurers to pilot OPD-linked products for a limited period before full rollout, establish cashless OPD networks, and offer premium discounts for preventive health engagement.

Industry experts anticipate that OPD-linked policies will become a standard feature of retail health insurance in the next 3–5 years. By FY27, OPD is projected to account for 15–20% of incremental premium growth.