The government is revamping Ayurveda institutes, modernizing hospitals, upgrading research and globalizing traditional systems for medical tourism, as announced in Union Budget 2026.
Morbidity codes for Ayurveda, Siddha and Unani systems have now been incorporated into the World Health Organisation’s International Classification of Diseases, and an index for the International Classification of Health Interventions through traditional medicines has also been agreed upon.
This could, in time, position India as a hub for Ayurvedic and traditional medicine treatments.
But can treatments at AYUSH centres be claimed in a cashless manner like allopathic procedures?
Coverage reality
The answer lies in how insurers currently interpret such treatments.
Health insurance policies state that “inpatient treatments under Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homeopathy are covered.”
For cashless claims, treatments must be taken at network hospitals. Reimbursement claims — where patients pay first and submit bills later — can be more complicated.
Given the early stage of such claims, insurers and third-party administrators (TPAs) are balancing two competing pressures: honouring AYUSH claims as mandated by the government and Insurance Regulatory and Development Authority of India (Irdai), while protecting portfolios from treatments that are not medically mandatory but taken for rest, restoration or wellness — where billing limits may not be clearly defined.
The ecosystem for cashless claims is still evolving. A recent tie-up between the General Insurance Council and the All India Institute of Ayurveda enables AYUSH treatments to be settled via the cashless route.
“We have been receiving claims for AYUSH treatments and the same are being honoured by insurance companies based on the valid line of treatment and other parameters,” said Dr. Krishna Jaiswal, managing director, Ericson Insurance TPA.
Recognised centres
To ensure claims, cashless or reimbursement, are honoured, treatment must be sought at a registered AYUSH medical facility.
“It is important to avoid non-recognized, non-accredited treatment centres, spas, retreats and setups which do not offer proper medical supervision. There are unqualified practitioners, which national medical associations have also flagged as unsafe,” said Sukesh Shetty, chief operating officer, Zurich Kotak General Insurance.
Wellness-led programmes such as detox therapies, rejuvenation packages or preventive health retreats are not covered under regular health insurance.
“These are categorised as lifestyle or well-being choices rather than medical treatments,” explained Shetty.
Only AYUSH treatments for a diagnosed medical condition, prescribed by a qualified and registered AYUSH practitioner, are covered.
Hospitalization rule
Insurance coverage does not extend to all forms of treatment.
Insurers generally permit claims only where 24-hour hospitalization is mandatory.
“Outpatient consultations, wellness therapies, preventive treatments are typically excluded unless specifically covered under the policy,” said Manish Dodeja, chief operating officer, Care Health Insurance.
“As with any form of medical treatment, coverage is subject to medical necessity, admissibility criteria and documentation requirements,” he adds.
This requirement often leads to claim rejections, including at the Ombudsman appeal stage.
“A patient, who initially sought daily Ayurveda treatment, was later hospitalized even though there was no need for hospitalization, as they learnt that only hospitalization claims are accepted under insurance. Insurer rejected this claim stating ‘Prove the need for hospitalisation’. The burden of proof was on the patient,” said a former Insurance Ombudsman who didn’t want to be on record.
Daycare gap
Unlike allopathy, where insurers maintain a defined list of covered day-care procedures, similar clarity is missing for Ayurveda, Siddha and other traditional systems.
“Day care procedure as an exception maybe accepted basis the calculated risk involved in the line of treatment. But it is not a right of the patient to claim insurance money for multiple procedures, which come under the day care treatment,” said the former Insurance Ombudsman.
Given that a large share of treatments in this segment are day-care based, there is a growing need to identify select permissible day-care procedures under Ayurveda, Unani and Homeopathy — aligned with insurer and practitioner consensus.
To facilitate this, well-documented clinical cases demonstrating the effectiveness of AYUSH interventions have been maintained since May 2021.
Policy limits
Coverage also comes with financial caps.
“The extent of coverage, applicable limits and admissibility conditions can vary across insurers and plans. Sub limits in the form of fixed monetary cap or percentage of the overall sum insured may be applicable depending on the policy structure,” said Dodeja.
Standard waiting periods apply as well.
“Claims can be rejected if there are non-disclosures in the policy or the treatment taken is under the waiting period,” says Amit Chhabra, chief business officer - general insurance at Policybazaar.
Pre-intimation
Since most AYUSH treatments are planned hospitalizations, policyholders should pre-intimate their insurer.
“Elective means I have planned a treatment, it doesn’t mean it is by choice. Doctors need to prescribe the procedure and tests need to prove that the procedure was necessary then such a claim can be admissible,” says Abhishek Bondia, co-founder and principal officer at insurance broking firm Secure Now.
This intimation should be “atleast 48 hrs prior to admission for both the insurer and hospital to enable the cashless anywhere option,” said Chhabra.
Policyholders must also disclose any new diagnosis during the policy year.
“Failing to disclose a new diagnosis, can result in claim denial, as per Irdai health regulations. Being upfront at renewal helps avoid unpleasant surprises and ensures the policy continues without complications,” said Shetty.
Documentation checklist
Missing paperwork is a common reason for claim rejection.
Ensure you have:
- Discharge summaries
- Treatment notes
- Itemized bills
- Payment proof
- Bank details
- Filled claim form (Part A and Part B)
- Identity proof
- Investigation and diagnostic reports
- Pharmacy bills with prescriptions from a registered AYUSH practitioner
Before assuming coverage, review policy terms carefully.
“Check whether the policy permits AYUSH treatment under in-patient hospitalization or approved day care norms, confirming that the treatment facility is recognised by the appropriate authorities, and understanding any exclusions, caps or sub limits that may apply. Adequate documentation is essential as claims assessment is based on clinical justification and policy admissibility,” said Dodeja.
Awareness of these conditions in advance helps set realistic expectations and reduces unpleasant surprises at claim settlement.