Employees' State Insurance Scheme (ESIC)

When it comes to workplace welfare in India, the Employee's State Insurance (ESI) plays a key role in providing health protection to workers and their families. Managed by the Employee State Insurance Corporation (ESIC), this social security scheme offers financial and medical benefits to eligible employees through a structured ESI employee scheme. From sickness benefits to maternity care and accident coverage, ESIC insurance helps reduce the financial burden of healthcare costs. In this blog, we’ll explore how the ESI scheme works, who can benefit from it, and how it compares to choosing the best health plan or health insurance for parents in the private sector.

Let’s take a closer look at the ESIC scheme, its eligibility, and what it has to offer for the beneficiaries. If you are not eligible for this scheme, you may look for other health insurance policies that are rather suitable for you.

What is Employee's State Insurance?

The Employee's State Insurance scheme is governed by the Employees’ State Insurance Act, 1948, a social security law passed to protect workers from medical, financial, and social distress. It ensures that employees and their dependents have access to quality healthcare and income support during tough times.

The scheme is administered by the Employees’ State Insurance Corporation (ESIC), an autonomous body under the Ministry of Labour and Employment, Government of India. Since its launch in 1952, the scheme has expanded to cover over 13 crore beneficiaries across India.

With ESIC insurance, employees receive a bundle of benefits, including cash compensation during illness, maternity, disability, and even support in the event of death due to employment injury. And it’s not just for the worker; insurance employee benefits extend to their families as well.

A Quick History of ESI

The roots of employee state insurance go back to 1943 when Professor B.P. Adarkar submitted a report on social insurance for industrial workers. This laid the foundation for a nationwide system. Under the visionary leadership of Prime Minister Jawaharlal Nehru, the scheme was officially launched in Kanpur and Delhi in 1952.

Over the decades, ESI employee scheme coverage has expanded to 668 districts across 36 states and union territories, offering one of the most comprehensive health and social insurance programs in India.

Who is Eligible for the ESIC Scheme?

Employees or workers falling under categories like factories, hotels, road transport, cinemas, newspapers, educational or medical institutions, and shops, with a monthly wage of up to Rs. 21,000, are eligible for ESIC benefits. As of March 31, 2019, ESIC covers around 3.14 crore employees and 13.32 crore beneficiaries across various states and union territories. It’s important to note that the scheme does not cover individuals earning more than Rs. 21,000 per month.

Key Features of ESIC Insurance

Let’s take a closer look at what makes ESIC insurance a valuable benefit:

1. Medical Benefits

From day one of joining the workforce, the insured and their families can access free medical treatment. This includes doctor consultations, medicines, diagnostics, hospitalisation, and surgery at ESIC and empanelled hospitals.

2. Cash Benefits

The ESI employee scheme also offers cash compensation when employees are unable to work due to sickness, maternity, injury, or disability.

3. Shared Contributions

The cost of employee state insurance is shared:

• Employer: 3.25% of the employee’s gross salary
• Employee: 0.75% of gross salary

State governments also contribute one-eighth of medical expenses, capped at ₹1,500 per insured person per year.

4. Wider Social Coverage

The insurance employee is not alone; spouses, children, and dependent parents also receive medical care under the scheme.

Benefits Under the ESI Scheme

As per Section 48 of the ESI Act, the scheme includes the following six major benefits:

1. Medical Benefits

ESIC provides comprehensive medical coverage from day one of employment. The infrastructure includes 151 hospitals, 42 annexes, 1450 ESI dispensaries, 188 Ayush units, and 954 panel clinics. Workers and their dependents can access affordable healthcare facilities under this scheme. 

There’s no cap on medical expenditure. Even after retirement or permanent disability, continued medical care is available for a nominal annual fee of ₹120.

2. Sickness Benefits

During medical leave, the scheme ensures a steady cash flow, offering 70% of the daily wage for a maximum of 91 days. For long-term diseases (e.g., TB, cancer), this can extend up to two years with an increased benefit of 80%. This financial support helps workers meet their daily needs while recovering from sickness. 

Also Read: Do Health Insurance Plans Provide Coverage To People With Disabilities?

3. Maternity Benefits

Female employees receive full wage benefits for 26 weeks for two pregnancies. In some cases, the leave can be extended by a month based on medical advice. In cases of miscarriage or adoption, specific benefits are provided, emphasising the scheme's commitment to family welfare.

4. Disability Benefits

• Temporary disability: 90% of wages until recovery.
• Permanent disability: Lifetime monthly payment of 90% based on assessed disability level.

5. Dependents’ Benefits

In case of death due to work injury, the family receives 90% of wages as a monthly pension. 

6. Unemployment Benefits

For up to 24 months, workers facing involuntary loss of non-employment or permanent invalidity due to injury can receive a maximum of 50% of the average monthly wage. Unemployment allowance and training under schemes like Rajiv Gandhi Shramik Kalyan Yojana and Atal Beemit Vyakti Kalyan Yojana.

7. Funeral Costs

ESIC offers a sum of Rs. 15,000 towards funeral costs. This amount is disbursed to the dependents or individuals performing the last rites of the insured, demonstrating the scheme’s commitment to supporting families in times of grief.

8. Confinement Costs

In instances where confinement occurs in a location without access to necessary medical care under the scheme, beneficiaries can avail confinement costs. This provision ensures that maternity-related expenses are adequately covered.

9. Vocational and Physical Rehabilitation

ESIC provides vocational rehabilitation training for permanently disabled individuals, preparing them for re-entry into the workforce. Additionally, physical rehabilitation benefits are extended to those requiring specialised care due to employment-related injuries.

10. Old Age Medical Care

Upon retirement or permanent disability, insured individuals and their spouses receive Rs. 120 per annum for old-age medical care. This provision underscores ESIC’s commitment to the well-being of workers even after the cessation of active employment. 

Who is Covered Under the ESI Employee Scheme?

The ESI employee scheme is applicable to:

• All non-seasonal factories employing 10 or more workers.
• Shops, cinemas, hotels, road transport businesses, newspapers, and educational institutions (with a minimum of 10 or 20 employees, depending on the state).
• Employees earning ₹21,000 or less per month (₹25,000 for persons with disabilities).

Employees earning below ₹137 per day are exempt from contributing to the scheme, but employers still pay their share, ensuring that all eligible employees receive coverage.

Also Read: What are Pre & Post Hospitalization Expenses in Health Insurance?

When is ESIC Registration Required?

Registration is mandatory if:

• A business has 10 or more employees (or 20 in some states like Maharashtra and Chandigarh)
• Employees earn ₹21,000 or less (₹25,000 for disabled employees)

Employers must register on the ESIC portal within 15 days of meeting these conditions. It’s essential for businesses to remain compliant to avoid penalties and ensure their workforce is adequately protected.

How to Register for ESI?

Here’s a simplified guide to the employee state insurance registration process:

Step 1: Sign Up on the ESIC Portal

• Visit www.ESIC.in and click on ‘Employer Login’ → ‘Sign Up’.
• Fill in your company details and submit the form.

Step 2: Fill Employer Registration Form (Form-1)

• Enter PAN, establishment details, business type, number of employees, etc.
• Upload the required documents.

Step 3: Employee Registration

• Add new or existing employees by submitting the Employee Declaration Form.
• Choose the relevant branch office and inspection division.

Step 4: Payment & Final Submission

• Pay initial contributions for 6 months.
• Receive a C-11 certificate with a 17-digit employer code.

Documents Needed for Registration

For Employers:

• Company PAN and incorporation documents
• Address proof and cancelled cheque
• Registration under the Shops and Establishments or Factories Act

For Employees:

• Names, PAN cards, Aadhaar (if available)
• Salary and attendance details
• Date of joining and designation

Knowing About ESI Card (E-Pehchan Card): Your Key to Healthcare

Once registered, employees can generate their ESIC card online through the portal. It includes:

• Photo and personal details
• Family information
• Unique ESI number

Employees can print and use this card along with a valid ID to access benefits at ESIC hospitals.

ESIC Contribution Rates

Here’s a quick breakdown of the contribution as of July 2024:

Example:
For an employee earning ₹20,000/month:

• Employee pays ₹150
• Employer pays ₹650
• Total ESIC contribution = ₹800

This ensures access to both cash and health benefits under ESIC insurance.

How to Claim ESI Benefits?

Medical Benefits

Simply present the E-Pehchan Card at an ESIC hospital. Treatment is cashless for insured individuals and their dependents.

Cash Benefits

Submit relevant claim forms, medical reports, and documents to the ESIC branch office. Upon approval, the payment is directly credited to your bank account.

Track Your Claim

You can track your application status on the UMANG app using your ESI number.

Finding an ESI Hospital

To find your nearest employee state insurance hospital:

• Go to the ESIC website
• Use the ‘Quick Finder’ to locate:

  • ESI Hospitals

  • Dispensaries

  • DCBOs

  • Medical Colleges

This feature helps employees find best health plan support in times of need.

ESI vs. Other Health Insurance: Why Both Matter?

While employees' state insurance offers vital health and social security for the working class, it may not always be enough, especially in critical or non-work-related scenarios.

That’s where private plans from Bajaj Allianz General Insurance Company come in. Whether it’s comprehensive coverage or health insurance for parents, Bajaj Allianz General Insurance Company offers some of the best health plan options to supplement your ESIC benefits.

Combining ESIC insurance with private health coverage ensures peace of mind for you and your family, no matter the circumstance.

Conclusion

The employee's state insurance scheme has transformed the scenario of worker welfare in India. From free medical care to income replacement during maternity, disability, or illness, it empowers millions of working families to lead a secure and dignified life.

But for enhanced protection, especially for ageing parents or high-value treatments, it’s wise to explore comprehensive plans from Bajaj Allianz General Insurance Company. With tailor-made offerings, digital convenience, and nationwide access, Bajaj Allianz General Insurance Company ensures that you and your family stay protected beyond just the basics.

FAQs on Employee's State Insurance (ESI)

Q1. What is Employee's State Insurance (ESI) and who manages it?

Employee's State Insurance (ESI) is a government-run social security scheme for employees earning up to ₹21,000 per month. It offers medical, maternity, disability, and death benefits to employees and their dependents. The scheme is managed by the Employees’ State Insurance Corporation (ESIC), which operates under the Ministry of Labour and Employment. Through the ESI employee scheme, insured persons gain access to free healthcare at empanelled hospitals, cash benefits during sickness or maternity, and compensation in case of job-related injuries. Bajaj Allianz General Insurance Company can supplement this with the best health plan options for additional coverage beyond ESI.

Q2. Who is eligible to register under the ESI employee scheme?

All employees working in non-seasonal factories or establishments with 10 or more workers (20 in some states) are eligible, provided their monthly salary is ₹21,000 or less. For employees with disabilities, the wage ceiling is ₹25,000. Even contractual and part-time workers are covered under the Employee State Insurance. Employers must register with ESIC within 15 days of crossing the eligibility threshold. Once registered, the insurance employee and their family can start using ESIC benefits. 

Q3. What are the benefits of the ESI employee scheme?

The ESI employee scheme offers six core benefits: free medical treatment, cash benefits during sickness, maternity leave with pay, disability compensation, dependents’ pension after the worker’s death, and extra support like funeral expenses or unemployment allowance. Medical benefits are available from the first day of employment. In case of temporary or permanent disability due to work, employees receive 90% of their wages. These social protections, offered by the employees' state insurance, ensure that workers don’t fall into financial hardship. 

Q4. How much do employees and employers contribute towards ESIC?

As of July 2024, the employee contributes 0.75% of their gross salary while the employer contributes 3.25%, making the total ESI contribution 4% of the employee’s salary. For example, if an employee earns ₹20,000, they contribute ₹150 while the employer contributes ₹650, resulting in a total monthly ESIC contribution of ₹800. This contribution funds a wide range of benefits under the Employee State Insurance. 

Q5. How can I apply for an ESI Pehchan Card?

To apply for an ESIC (Pehchan) Card, your employer must first register you on the ESIC portal. Once registered, they can log in, go to the ‘Employee’ section, and select ‘e-Pehchan Card.’ After verifying the details, the card can be downloaded and printed. The card includes personal details, the ESIC number, and information about dependents. It must be signed and stamped by the employer or an ESIC official. This card allows insured individuals to avail of cashless services at ESIC hospitals. 

Q6. What medical services are covered under employee state insurance?

Employee state insurance covers a wide array of medical services, including outpatient consultations, diagnostics, hospitalisation, surgery, maternity care, emergency services, and medicines. There’s no financial ceiling for treatment costs under ESIC hospitals. Medical benefits are extended to dependents like spouses, children, and parents. Retired or permanently disabled employees can continue receiving healthcare by paying an annual fee of ₹120. While ESIC covers primary and secondary healthcare efficiently, tertiary or specialised care might require private insurance. In such cases, Bajaj Allianz offers health insurance for parents and advanced care through comprehensive health insurance plans.

Q7. Is maternity benefit included in the ESI employee scheme?

Yes, the employee's state insurance scheme includes maternity benefits for insured women. They receive full wage compensation for up to 26 weeks for their first two pregnancies. In case of complications or additional medical advice, the leave may be extended by one month. This benefit is available if the employee has contributed for at least 70 days in the past two contribution periods. The maternity benefit offers crucial support to working mothers. However, many families still opt for maternity insurance from Bajaj Allianz for broader hospital options and enhanced healthcare support.

Q8. Can dependents of an insured employee avail of ESIC insurance benefits?

Yes, dependents of an insured employee, including spouse, children, and dependent parents, are eligible for full medical coverage under the ESIC insurance scheme. They can avail of treatment at any ESIC hospital or dispensary using the employee’s Pehchan Card. Dependents are also eligible for cash benefits, such as a monthly pension in case of the employee’s death due to a work-related injury. However, if dependents require specialised treatments or access to premium hospitals not empanelled with ESIC, health insurance for parents and family members from Bajaj Allianz General Insurance Company can bridge the gap effectively.

Q9. How is the ESI scheme different from private health insurance plans?

The ESI scheme is a social welfare program offering health protection and income support to low-income employees. Eligible establishments must provide benefits at ESIC-approved hospitals. Private health insurance, like that offered by Bajaj Allianz General Insurance Company, covers a wider network of hospitals, has customisable coverage, and offers cashless treatments across India. While employee state insurance is ideal for basic and essential healthcare, combining it with a private policy ensures enhanced protection. Bajaj Allianz General Insurance Company also offers tailored health insurance for parents, as well as the best health plan options to fill any gaps left by the ESIC scheme.

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