NPS Swasthya 2026 guidelines: how the pension-plus-super-top-up health account works, from 25% withdrawals to deductible slabs
PFRDA's 18 Sep 2026 NPS Swasthya guidelines explained: 25% direct-to-hospital withdrawals, four deductible slabs up to Rs 30 lakh cover, charges, tax and a worked drawdown.
On 18 September 2026 the Pension Fund Regulatory and Development Authority issued Circular No. PFRDA/2026/49/NPS-SWASTHYA/01, the "Operational Guidelines for NPS Swasthya under the National Pension System (NPS), 2026". The circular on pfrda.org.in is issued under Section 14 of the PFRDA Act, read with Regulation 4A of the Exits and Withdrawals Regulations, 2015, which allows specific purpose schemes inside the NPS framework.
The product pairs two things that retirement savers usually buy separately: a pension account that invests like the Central Government scheme pattern, and a mandatory super top-up family floater health policy. This guide walks through the 2026 rules, compares them with an ordinary All Citizen NPS account, and works a 5-year drawdown to show how the 25% withdrawal cap behaves.
The Scheme Explained
Two accounts, one wrapper
Paragraph 4 of the 2026 guidelines sets out the structure. You hold an NPS Swasthya account, and alongside it a separate super top-up family floater health policy is compulsory. The insurer is engaged by the Pension Fund under a master policy, and the guidelines are explicit that insurance matters remain under IRDAI, the insurance regulator at irdai.gov.in. PFRDA governs the pension side; IRDAI governs the policy wording, claims and grievances on the health side.
A super top-up does not pay from the first rupee. It pays once your hospital bills in a policy year cross an annual aggregate deductible. Under para 30, that deductible is not a free choice of any number: you pick one of four fixed slabs, each paired with a sum insured.
| Slab | Annual Aggregate Deductible | Sum Insured | Sum insured as multiple of deductible |
|---|---|---|---|
| 1 | Rs 10,000 | Rs 1 lakh | 10x |
| 2 | Rs 50,000 | Rs 5 lakh | 10x |
| 3 | Rs 1 lakh | Rs 10 lakh | 10x |
| 4 | Rs 3 lakh | Rs 30 lakh | 10x |
Every slab carries the same 10x ratio, so moving up a slab buys more cover only by accepting a larger amount that you must fund before the insurer pays. The NPS Swasthya account is designed to fund that gap.
Contributions and investment
Para 5 fixes the minimum initial contribution as three pieces added together: the first-year premium including taxes, a Rs 200 annual maintenance charge (plus taxes) paid to the Health Benefit Administrator, and Rs 1,000 that is actually invested. After that, the minimum subsequent contribution is Rs 10. Para 6 says the investment follows the Central Government scheme pattern, the same asset allocation that applies to central government employees in NPS, rather than the Active or Auto choice available to an All Citizen subscriber.
Charges
Para 7 stacks the costs. You pay all the charges that apply to an All Citizen NPS account, plus up to 0.08% a year of assets under management, plus the Rs 200 annual maintenance charge. On a Rs 2 lakh balance, the 0.08% layer works out to at most Rs 160 a year, which is smaller than the fixed Rs 200 charge. The fixed charge dominates at small balances.
What the standard policy covers
Para 30 lays out the standard floater policy. It covers the subscriber, the spouse and up to two dependent children. Parents are excluded, which is the biggest single difference from many retail family floaters. Entry age is 18 to 70, and the policy can be renewed up to age 85.
| Feature (para 30) | Standard NPS Swasthya policy |
|---|---|
| Members | Subscriber, spouse, up to 2 dependent children; parents excluded |
| Entry / renewal age | 18-70 entry; renewal up to 85 |
| Room | Single private room |
| Pre / post hospitalisation | 30 days / 60 days |
| Ambulance | Up to Rs 2,500 |
| Co-payment and disease sub-limits | None |
| Initial waiting period | 30 days |
| Pre-existing disease waiting | 12 months |
| Specified diseases waiting | 12 months |
The 12-month waiting period for pre-existing conditions and the absence of co-pay and disease sub-limits are set in para 30 itself. Check the master policy wording with the insurer, since para 4 places these terms under IRDAI rather than PFRDA.
NPS Swasthya vs All Citizen NPS
The search intent behind most queries is a straight comparison: should the money sit in a regular NPS account or in NPS Swasthya? The table sets the two side by side using only figures from the circular and from PFRDA's 19 December 2025 exit amendment.
| Feature | All Citizen NPS (non-government) | NPS Swasthya |
|---|---|---|
| Purpose | Retirement pension | Retirement saving + funding health deductible |
| Investment pattern | Subscriber choice | Central Government scheme pattern (para 6) |
| Extra charges | Standard NPS charges | Plus up to 0.08% of AUM and Rs 200 a year (para 7) |
| Partial withdrawal cap | 25% of own contributions | 25% of subscriber contributions (para 8) |
| Minimum years before partial withdrawal | 3 years | No waiting period (para 8) |
| Number of withdrawals | Up to 4 before 60, 4-year gap | No limit (para 8) |
| Who receives the money | Subscriber | Hospital or provider directly (para 8) |
| Normal exit lump sum | Up to 80% | Per non-government exit rules (para 13) |
The trade-off is clear in the rows on withdrawal. A regular NPS subscriber needs 3 years in the scheme and gets at most 4 partial withdrawals before 60, with a 4-year gap between them. NPS Swasthya removes the waiting period and the count limit, but in exchange the money can only go to a hospital or healthcare provider for eligible expenses.
Transfers, renewal, lapse and the sandbox schemes
Para 9 allows a transfer from an existing All Citizen NPS account into NPS Swasthya, but only up to the policy deductible. A subscriber on slab 3 could move at most Rs 1 lakh across; a subscriber on slab 4 at most Rs 3 lakh.
Para 14 requires renewal alerts at 90, 60 and 30 days before the policy renewal date. If the policy lapses, the NPS Swasthya account is closed and the balance merges into the subscriber's All Citizen NPS account. Para 16 provides that the earlier sandbox NPS Swasthya schemes will be discontinued, with a migration option for existing subscribers.
Tax on Withdrawal
The 18 September 2026 circular is an operational document. It does not amend the Income-tax Act, and none of its paragraphs grants a new exemption. Tax therefore falls back on the existing NPS provisions in Section 10 of the Act, which you can read on the Income Tax Department portal or in the bare text on indiacode.nic.in. Three events matter: partial withdrawals, the lump sum at exit, and annuity income, which is taxed as income in the year received.
Partial withdrawals under Section 10(12B)
For regular NPS, Section 10(12B) exempts a partial withdrawal up to 25% of the subscriber's own contributions, and that figure matches PFRDA's own 25% cap. NPS Swasthya also caps partial withdrawals at 25% of subscriber contributions under para 8, so the two numbers line up. What the circular does not say is how the Income Tax Department will treat a withdrawal that is paid straight to a hospital and drawn more often than the 4 times allowed before 60 in regular NPS. Until CBDT clarifies this, confirm the treatment with a tax adviser before relying on it, and keep the hospital invoice.
Lump sum at exit under Section 10(12A)
Para 13 sends a normal exit through the non-government exit rules. Since PFRDA's amendment notified on 19 December 2025, those rules allow up to 80% as a lump sum, with at least 20% used to buy an annuity. If the corpus is Rs 8 lakh or less, the whole amount can be taken as a lump sum. Section 10(12A), however, still exempts the lump sum only up to 60% of the total amount payable, a cap in place since 1 April 2020. The two ceilings are different.
On a Rs 50 lakh corpus, PFRDA permits a Rs 40 lakh lump sum (80%), while Section 10(12A) exempts Rs 30 lakh (60%). The treatment of the remaining Rs 10 lakh has not been aligned in any Finance Act we have found, so do not assume it is tax-free, and do not assume it is taxable either. Confirm it before you exit.
What about the premium?
The circular describes the premium as part of the minimum initial contribution (para 5) but says nothing about Section 80D or Section 80CCD treatment of that amount. Section 80CCD(1B), the additional Rs 50,000 NPS deduction, is available only under the old tax regime. If you are on the new regime, do not count on a deduction for NPS Swasthya contributions without written confirmation. Use our Section 80D calculator to see the health-premium deduction you would claim on a separately purchased policy.
Worked Drawdown
This example uses only the rules in the circular and in rate-config. It deliberately ignores investment returns, because the para 8 cap is measured on subscriber contributions, not on the market value of the account. Returns would raise the balance but not the cap.
The subscriber
Assume a 52-year-old, Meera, opens NPS Swasthya on 1 November 2026 and picks slab 2: a Rs 50,000 annual aggregate deductible and a Rs 5 lakh sum insured. She already has Rs 6 lakh in an All Citizen NPS account. The premium figure is not published in the circular, so the example tracks only the investment side.
- Year 1: Rs 1,000 minimum investment plus a para 9 transfer of Rs 50,000 from All Citizen NPS (the transfer cannot exceed her Rs 50,000 deductible). She then contributes Rs 49,000 more. Total investment-side money in: Rs 1,00,000.
- Years 2 to 5: Rs 1,00,000 a year.
Whether the Rs 50,000 transfer counts as a "subscriber contribution" for the 25% cap is not stated in the briefing notes, so the table below shows both readings.
| End of year | Cumulative contributions incl. transfer | 25% cap incl. transfer | 25% cap excl. transfer |
|---|---|---|---|
| 1 | Rs 1,00,000 | Rs 25,000 | Rs 12,500 |
| 2 | Rs 2,00,000 | Rs 50,000 | Rs 37,500 |
| 3 | Rs 3,00,000 | Rs 75,000 | Rs 62,500 |
| 4 | Rs 4,00,000 | Rs 1,00,000 | Rs 87,500 |
| 5 | Rs 5,00,000 | Rs 1,25,000 | Rs 1,12,500 |
Year-by-year claims
Suppose Meera's family has Rs 20,000 of OPD and IPD bills in year 1, Rs 70,000 in year 3 (an IPD admission), and Rs 4 lakh in year 5 (a major surgery). The deductible resets every policy year at Rs 50,000.
| Year | Total eligible bills | Paid by insurer (above Rs 50,000) | Family's share | Max from NPS Swasthya (cumulative cap less earlier draws, incl. transfer) | Out of pocket |
|---|---|---|---|---|---|
| 1 | Rs 20,000 | Rs 0 | Rs 20,000 | Rs 20,000 (cap Rs 25,000) | Rs 0 |
| 3 | Rs 70,000 | Rs 20,000 | Rs 50,000 | Rs 50,000 (cap Rs 75,000 less Rs 20,000 = Rs 55,000) | Rs 0 |
| 5 | Rs 4,00,000 | Rs 3,50,000 | Rs 50,000 | Rs 50,000 (cap Rs 1,25,000 less Rs 70,000 = Rs 55,000) | Rs 0 |
Three things stand out. First, in year 1 there is no wait: para 8 sets no waiting period, so the Rs 20,000 can be paid directly to the provider even though the account is months old. In regular NPS, the 3-year minimum would block any withdrawal. Second, the super top-up does the heavy lifting in year 5: the insurer pays Rs 3.5 lakh of the Rs 4 lakh bill, well inside the Rs 5 lakh sum insured. Third, Meera's draws are bounded by the deductible, not by the cap: she never needs more than Rs 50,000 a year from the account because the policy picks up the rest.
If she had chosen slab 1 (Rs 10,000 deductible, Rs 1 lakh sum insured), the year-5 surgery would have left the family Rs 3 lakh to fund: the Rs 10,000 deductible plus Rs 2.9 lakh above the Rs 1 lakh cover. That is the case where para 12 matters: a single IPD expense larger than her partial-withdrawal limit would let her exit prematurely, use the corpus for the bill, and move whatever is left into All Citizen NPS.
At 60 and beyond
By the end of year 5 Meera has put in Rs 5 lakh and drawn Rs 1.2 lakh, leaving Rs 3.8 lakh of contributions (before returns). If she later exits normally under para 13, the non-government rules apply. A corpus of Rs 8 lakh or less can be taken entirely as a lump sum; between Rs 8 lakh and Rs 12 lakh, a Rs 6 lakh lump-sum cap applies; above Rs 12 lakh, at least 20% must buy an annuity. Run your own numbers through the NPS calculator and compare annuity income with a systematic withdrawal using the annuity vs SWP calculator. For the drawdown years after exit, the retirement drawdown calculator models how long a corpus lasts at a chosen SWP rate. To test whether slab 2 or slab 3 is right for your family, try the super top-up calculator.
For more on how PFRDA has been reshaping the pension corpus, see our earlier pieces on borrowing against your NPS corpus and the entry and exit age rising to 85.
FAQ
What is NPS Swasthya under the 2026 guidelines?
It is a specific purpose scheme under Regulation 4A of the PFRDA Exit Regulations 2015, set out in Circular PFRDA/2026/49/NPS-SWASTHYA/01 dated 18 September 2026. It combines an NPS Swasthya pension account with a mandatory super top-up family floater health policy.
How much can I withdraw from NPS Swasthya for medical bills?
Para 8 caps partial withdrawals at 25% of subscriber contributions. There is no limit on the number of withdrawals and no waiting period, but payment goes directly to the hospital or provider for eligible OPD and IPD expenses, never to the subscriber.
Can I move money from my existing NPS account into NPS Swasthya?
Yes, under para 9, but only up to the policy deductible you choose. That means a maximum of Rs 10,000, Rs 50,000, Rs 1 lakh or Rs 3 lakh depending on your slab.
Are my parents covered under the NPS Swasthya health policy?
No. Para 30 limits the standard policy to the subscriber, spouse and up to two dependent children. Entry age is 18 to 70 and renewal is allowed up to 85.
What happens if I miss the policy renewal?
Para 14 requires alerts at 90, 60 and 30 days before renewal. If the policy still lapses, the NPS Swasthya account is closed and the balance merges into your All Citizen NPS account.
Are NPS Swasthya withdrawals tax-free?
The 2026 circular does not change tax law. Section 10(12B) exempts regular NPS partial withdrawals up to 25% of own contributions, and Section 10(12A) exempts up to 60% of the lump sum at exit, even though PFRDA now permits up to 80%. Confirm how direct-to-hospital payments are treated before you file.
What are the charges on NPS Swasthya?
Para 7 applies all All Citizen NPS charges plus up to 0.08% a year of assets under management and a Rs 200 annual maintenance charge (plus taxes) paid to the Health Benefit Administrator.
This article explains PFRDA Circular No. PFRDA/2026/49/NPS-SWASTHYA/01 dated 18 September 2026 and the PFRDA exit amendment notified on 19 December 2025. It is general information, not tax, investment or insurance advice. Policy wording, premiums and claims are governed by IRDAI and the insurer's master policy.