Employees Wage Ceiling for medical/cash benefits may rise from Rs 15,000 to Rs 25,000; here’s how

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Updated: August 23, 2016 7:28:49 AM

Employees’ State Insurance Corporation (ESIC) is considering raising the wage ceiling for mandatory ESIC coverage (medical/cash benefits) to R25,000 per month from R15,000 now, in sync with the rise in minimum wages in the country .

Yes, there is a proposal to raise it to R25,000. It is an agenda item for the corporation’s next meeting early September. Once we get the nod of the ESIC members (comprising representatives of employers, employees and the government), we will issue a notification with the approval of the Centre. (Source: Reuters)Yes, there is a proposal to raise it to R25,000. It is an agenda item for the corporation’s next meeting early September. Once we get the nod of the ESIC members (comprising representatives of employers, employees and the government), we will issue a notification with the approval of the Centre. (Source: Reuters)

Employees’ State Insurance Corporation (ESIC) is considering raising the wage ceiling for mandatory ESIC coverage (medical/cash benefits) to R25,000 per month from R15,000 now, in sync with the rise in minimum wages in the country . Director general (DG) Deepak Kumar speaks to Surya Sarathi Ray, sharing the corporation’s future plans. Excerpts:

With minimum wages being increased, do you plan to raise the current threshold limit of R15,000 per month for ESIC coverage?

Yes, there is a proposal to raise it to R25,000. It is an agenda item for the corporation’s next meeting early September. Once we get the nod of the ESIC members (comprising representatives of employers, employees and the government), we will issue a notification with the approval of the Centre.

With the minimum wage being raised to over R14,000 for unskilled workforce in Delhi and to higher levels for semi-skilled and skilled workforce, how many insured persons (IPs) will go out of the purview of the ESIC in Delhi alone?

At present, we have a little over two crore IPs throughout the country. We haven’t made any estimate on how many people will be out of ESIC due to the Delhi government’s decision, but I’m sure majority of (the IPs in Delhi) will.

Your administrative expenditure is said to be very high and this is believed to inflate the cost of ESIC benefit to the IPs (these expenses increased from 7.5% of the corporation’s total ‘revenue income’ in 2010-11 to 8.9% in 2014-15).

The charges in absolute terms cannot be brought down as we are expanding throughout the country. We don’t get any financial help from the government. We collect 4.75% (of the wages) from the employers and 1.75% from the employees (for each IP). There is no separate administration charges that we levy, unlike in the case of Employees’ Provident Fund Organisation which also uses the proceeds from a 0.85% impost to run the administration.

Is there any plan to bring down the contributions from the employers and employees to the ESIC?

As I told you, we are expanding (ESIC coverage). But in certain areas where we are expanding, healthcare facilities may not be up to the mark. We have taken a decision that in those areas, since we may not be able to provide satisfactory medical care to the beneficiaries, we will be taking reduced contribution from the insured persons and the employers in the range of 1% and 3%, respectively. The relevant rules are being being notified by the labour ministry.

We have 151 hospitals across the country of which 36 are directly run by the corporation and the rest by the states, though the infrastructure in all cases belong to us. We pay an average of R2,150 per IP to the states. Now, if the person needs better medical facility, we allow our hospitals to refer them to super-specialty hospitals and in such cases too, we bear the entire financial burden. Taking this into account, we spend an average of R2,800 per IP per year. We want to raise it to around R5,000. So, reducing contributions is not practical.

However, the expenses we incur differ across states. While in Delhi, it is R7,000, in some other states it is as low as R1,500. This reflects the wide disparity in the standards of medical facilities among states. We will be setting up many more hospitals in the coming years.

You have got a huge reserve of R42,000 crore. What do you plan to do with it?

Our plan is to use this for expansion — creation of new health facilities and upgrading the existing ones.

What are the expansion plans?

As of July last year, when the Prime Minister launched the second phase of the expansion programme, we were operating in 393 districts. Even in those districts, our operations hadn’t reached every nook and corner. So, our first target is to take our facilities to all areas of the districts we are already present in. We have so far managed to do so in 215 such districts. In the second phase, we plan to reach out to the district headquarters of the remaining districts in the country by this September-end and to cover every nook and corner of the country by April next year.

You also run hospitals and medical colleges. Does this reduce the focus on the core activity of providing medical cover for the wage earners?

There were plans to enhance the number of medical colleges from five now, but we have dropped that plan. While we will not be setting up any new medical college, the existing ones will be handed over to the states. Our governing Act provides for setting up of medical colleges, but we have taken a decision last year that our first priority is to provide healthcare facilities.

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