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What is Employees State Insurance Corporation (ESI Scheme)?

What is the Employee State Insurance Scheme (ESI)?

Overview of the Employee State Insurance Act

The Parliament of India introduced the Employees State Insurance Act in 1948 and first launched it in 1952 in Delhi and Kanpur, covering approximately 1.20 lakh employees. After this initial implementation, the state governments took up this initiative to include more parts of the country in several phases.

This act defines several terms and conditions related to the scheme’s validity, including insured employees’ eligibility and duties and responsibilities of the Employees’ State Insurance Corporation (ESIC).

It also specifies certain requirements for a family member to become a dependent of the insured individual under the ESI scheme. According to this Act, eligible dependents include:

  • Any parent, including a widowed mother.
  • Sons and daughters, including any adopted or illegitimate offspring.
  • A widowed or unmarried sister.
  • A minor brother
  • A paternal grandparent in case his/her parents are dead.
  • A widowed daughter-in-law.
  • A minor offspring of a predeceased son or a predeceased daughter provided no child parent is alive in the latter case.

The Employees State Insurance Act 1948 also specifies 2 contribution periods and 2 cash benefit periods, which are marked as follows:

Period

Months

Contribution periods

1st April-30th September, 1st October-31st March

Cash benefit periods

1st January-31st June, 1st July-31st December

Depending on an employee’s contributory days during a contribution period, they can avail of compensation in the succeeding cash benefit period accordingly.

What are the Features of The ESI Scheme?

If you are curious to get down to the nitty-gritty of this government-sponsored insurance scheme, here are some key characteristics of the same:

Feature

Description

Coverage

The Employee State Insurance Scheme aims at providing coverage to all workers with a monthly payment of less than or equal to Rs.21000. This scheme ensures financial support for eligible employees in various contingencies.

Healthcare Benefits

Healthcare benefits against specific illnesses can be availed by the insurer as well as their dependent members. This coverage extends to a range of medical conditions for both the insured and their dependents.

Contribution Rates

The current rate of contribution for employers is 3.25%, and for employees, it is 0.75% of the wages payable. The government reduced the total contribution from 6.5% to 4% in 2019. Note that workers with daily average wage of upto Rs. 176 are exempted from paying their share.

Contribution Deadline

Employers must clear any due contribution within 21 days of the month. Timely payment is crucial to maintain compliance with the scheme’s regulations and ensure that workers receive their entitled benefits without delays.

State Government Contribution

State governments must pay 1/8th of the total medical expenses up to Rs.1500 per head under the ESI scheme. This contribution helps cover part of the medical costs and ensures that they receive necessary healthcare services.

Benefits After Retirement

The scheme will continue offering benefits to insured individuals even after opting for premature retirement or those under the VHS scheme. Even an unemployed individual can continue benefiting from the scheme for up to 3 years. However, they need to provide their retrenchment letter and all details regarding their last workplace.

Medical College Development

The scheme encourages opening of more medical colleges to help enhance individuals' quality of healthcare. The initiative aims to improve training and healthcare services by increasing the number of medical institutions.

Accident Coverage

This scheme includes accidents encountered while commuting under occupational hazards. It ensures protection for workers against risks, especially workplace-related incidents.

Maternity Benefits

Women employees can avail of special benefits in case of pregnancy-related problems. They can extend their maternity leave of 26 weeks by up to 1 month without affecting their wage slab.

All these features of this health insurance scheme allow you to avail a number of benefits.

Benefits of the ESI Scheme

What is Not Covered Under the Employee State Insurance Scheme?

Employee State Insurance (ESI) provides comprehensive coverage, but there are specific exclusions and limitations within the scheme. Here’s what is generally not covered under the ESI:

Exclusion

Description

Pre-existing Conditions

Medical conditions that existed before joining the ESIS may not be covered immediately. There may be waiting periods for coverage.

Cosmetic and Elective Procedures

Cosmetic surgeries or elective procedures that are not medically necessary are not covered.

Non-Medical Expenses

Expenses for non-medical services, such as private room charges or luxury amenities during hospitalisation, are not covered.

Certain Chronic Conditions

Some long-term or chronic conditions may have specific exclusions or limited coverage under the scheme.

Out-of-Network Facilities

Treatments received at hospitals or clinics not part of the ESIC network may not be covered, affecting cashless treatment options.

Non-Occupational Injuries

Injuries or illnesses not related to occupational hazards or commuting may not be covered under the scheme.

Self-Inflicted Injuries

Injuries that are self-inflicted or result from self-harm are typically excluded from coverage.

Treatment Abroad

Medical treatments and services received outside India are generally not covered under the ESIC scheme.

Certain Diseases and Treatments

Some specific diseases or treatments may have exclusions or limitations based on the policy terms.

Optional and Additional Services

Services that are optional or considered additional beyond the standard medical coverage may not be included.

Who is Eligible for the ESI Scheme?

The Employee State Insurance (ESI) Act provides social security and health insurance benefits to employees working in various sectors. Here’s an overview of the eligibility criteria:

Eligibility Criteria

Details

Employees in Covered Establishments

Workers in factories, shops, hotels, cinemas, and other establishments with 10-20 or more employees.

Income Criteria

Employees earning up to ₹21,000 per month (or ₹25,000 for persons with disabilities) are eligible.

Employer's Contribution

Employees contribute 0.75% of their wages, and employers contribute 3.25%.

Workers in Government-Supported Sectors

Certain government-supported sectors are covered under ESIC.

Voluntary Coverage

Self-employed people and workers in specific sectors may opt for voluntary coverage if they meet the criteria.

Dependents

Family members, including spouses, children, and dependent parents of insured employees, are eligible.

List of Long-term Diseases Covered by Employee State Insurance Scheme

Employees facing long-term illnesses struggled when regular sickness benefits ended after 91 days. To help, the Extended Sickness Benefit allows them to receive payments for up to 2 years within a 3-year period if they remain unwell.

The ESI Covers the following long-term diseases:

Category

Conditions

Infectious Diseases

  • Tuberculosis
  • Leprosy
  • Chronic Empyema 
  • AIDS

Neoplasms

  • Malignant Diseases

Endocrine, Nutritional and Metabolic Disorders

  • Diabetes Mellitus with proliferative retinopathy/diabetic foot/nephropathy

Disorders of the Nervous System

  • Monoplegia 
  • Hemiplegia
  • Paraplegia 
  • Hemiparesis 
  • Intracranial Space Occupying Lesion 
  • Spinal Cord Compression
  • Parkinson's disease
  • Myasthenia Gravis/Neuromuscular Dystrophies

Diseases of Eye

  • Immature Cataract with vision 6/60 or less 
  • Detachment of Retina 
  • Glaucoma

Diseases of the Cardiovascular System

  • Coronary Artery Disease: 
    • (a) Unstable Angina
    • (b) Myocardial Infarction with ejection fraction less than 45%
  • Congestive Heart Failure: Left, Right, Cardiac Valvular Diseases with failure/complications 
  • Cardiomyopathies 
  • Heart disease with surgical intervention, along with complications

Chest Diseases

  • Bronchiectasis
  • Interstitial Lung Disease 
  • Chronic Obstructive Lung Disease (COPD) with congestive heart failure (Cor Pulmonale)

Diseases of the Digestive System

  • Cirrhosis of the liver with ascites/chronic active hepatitis

Orthopaedic Diseases

  • Dislocation of vertebra/prolapse of intervertebral disc
  •  Non-union or delayed union of fracture
  • Post-Traumatic Surgical Amputation of lower extremity
  • Compound fracture with chronic osteomyelitis

Psychoses

  • Schizophrenia 
  • Endogenous Depression 
  • Manic Depressive Psychosis (MDP) 
  • Dementia

Others

  • More than 20% burns with infection/complication 
  • Chronic Renal Failure
  • Reynaud's disease/Buerger's disease

How to Register for ESIC Online?

What are the Documents Required for ESIC Registration?

How to Find a Hospital List Under Employees' State Insurance Corporation (ESIC)?

What is an Employee State Insurance Card or Pehchan Card?

How to Download an ESI Card Online?

Medical Packages Under ESIC

The medical packages under the ESI scheme offer comprehensive coverage for scheme beneficiaries. Check the table below for the detailed package list:

Procedure

Number of Packages

Dental 

4

Ear 

20

Nose 

25

Throat 

23

General Surgery 

205

Gynaecology 

31

Endoscopic Procedures

24

Hysteroscopic 

4

Neurosurgery 

49

Ophthalmology 

40

Orthopaedic 

130

Paediatric 

30

Endocrine 

12

Urology 

108

Oncology 

10

Medical (General Ward)

52

Hospitalisation Process Under the Employee State Insurance Scheme

ESI Toll-Free Number and Address

Regular Health Insurance Plan vs Employee State Insurance Scheme

Understanding the differences between regular health insurance plans and the ESI Scheme helps you choose the best option for your healthcare needs. Here's a comparison table between a Regular Health Insurance Plan and the Employee State Insurance Scheme:

Point of Difference

Regular Health Insurance Plan

Employees' State Insurance Scheme (ESI)

Eligibility

Anyone can purchase, subject to the insurer’s criteria

Only for employees earning up to Rs. 21,000 per month

Target Audience

The general public, individuals, families

Low-income employees and their dependents

Premium Payment

Paid by the policyholder

Shared by employee (0.75% of salary) and employer (3.25% of salary)

Coverage

Varies by plan; includes hospitalisation, surgeries, etc.

Comprehensive medical care for insured employees and their dependents

Scope

Can be customised, including health, critical illness, etc.

Standardised benefits across all ESIC members

Coverage Limit

Depending on the chosen plan and sum insured

No fixed limit; coverage as per ESIC regulations

Provider Network

Network hospitals of the insurance company

ESIC network hospitals and dispensaries

Network Hospitals

Extensive list depending on the insurer

Limited to ESIC-empanelled hospitals and dispensaries

Cashless Treatment

Available at network hospitals

Available at ESIC network hospitals

Beneficiary Identification

Policyholder ID card

Pehchan Card

Benefits and Services

Depends on the plan; it can include wellness programs

Includes medical, disability, maternity, and dependents’ benefits

Portability

Available as per IRDAI guidelines

Not applicable

Government Involvement

Regulated by IRDAI, private and public sector involvement

Fully managed and funded by the government

Administration

Managed by private insurers

Managed by ESIC under the Ministry of Labour and Employment

Claim Process

Policyholder needs to file claims

Direct settlement with ESIC hospitals; no need for individual claims

Out-of-Pocket Expenses

Deductibles, co-payments, and exclusions apply

Minimal out-of-pocket expenses for covered services

Even the most basic of medical insurance policies seem to be unaffordable for most of our country’s population - a country with 33% of its population earning less than Rs.143 per day, the international daily wage benchmark.

Well, you can apply for one after you switch jobs and cast off all your worries regarding rising healthcare costs by being a part of the ESI scheme!

FAQs about the ESI Scheme