ESIC scheme and its benefits: Here is everything you need to know

Updated: Oct 08, 2020 12:16 PM

ESI provides primarily sickness benefits and some other benefits to approximately thirteen crores (130 millions) Indians that include Insured Employees and their dependents.

The aim of the scheme is to protect the basic right of dignity and self respect, during unforeseen circumstances in order, to negate the physical and financial distress under such contingencies.

By Sundeep Arora

The ESIC Scheme: The Employee State Insurance Scheme (ESI) is one of the largest social security schemes, globally under the aegis of Employee’s State Insurance Corporation, a division of the Ministry of Labour and Employment, Government of India. ESI provides primarily sickness benefits and some other benefits to approximately thirteen crores (130 millions) Indians that include Insured Employees and their dependents.

Scheme Journey over the last seven decades: Started in 1952, ESIC scheme has come a long way in its almost seven decades journey. It was a historical move by the Parliament as the Industrialization in India was in its initial phase and only a handful of manufacturing industries required human capital. The legislation came at a time when the country’s economic situation was dwindling, thus, developing a multi-dimensional social security system to safeguard the interests of the working class with statutory provisions is marked in history as an unprecedented and a remarkable move.

Applicability and Extent of coverage: This scheme extends to the whole of India and covers all places of business registered under either in the Factories Act or under the Shops and Establishments Act, where 10 or more employees are working. An employee is mandatorily required to be covered by her/his employer as long as s/he is within the threshold limit of wages i.e. all such employees whose monthly wages are up to and equal to Rs.21,000/ per month, it is the responsibility of the employer to get eligible employees covered under the ESIC scheme.

Monthly Salary limit for coverage under the ESIC scheme for employees with disability is Rs.25000/- p.m. instead of Rs.21,000/ in other cases. The subscriber base is rapidly increasing, every month lacs of new employees join the labour market and become the member of the ESIC Scheme.

Look at the numbers: Compared to 2018-19, where the number of new beneficiaries stood at 61.2 lakh, the list of subscribers rose substantially to 78.58 lakh in 2019-20. The net new enrolment on an average is around 7 lakh every month.

A first time employee becomes member of the Scheme:

In case monthly wages are up to and equal to Rs.21,000/ then within 10 days of joining of a new employee it is the responsibility of the Employer to ensure that such new employee and his family or dependents are covered under the Scheme and an insurance number is allotted to the employee. As soon as the employee is registered under the Scheme, numerous benefits are now available to the insured employee for self and his family members or dependents. Due to ever increasing industrialization and more and more people migrating from villages and smaller towns to urban area have resulted into separation of people from their family members as in most of the cases the work place of an employee is other than his native place. To ensure all eligible people get benefits as and when needed now-a-days, ESIC issues 2 insurance card popularly known as ‘Pehchaan Card” – 01 for the employee and other one which is linked with the insured employee for the family members so that both can enjoy benefits under the scheme at their respective place of living.

Biggest benefit of the Scheme is that no upper limit of medical expenses is Capped also in case, if ESIC hospital does not have required medicines, equipment, facilities or specialist doctors then ESIC refers such patient/employee or affected family member to private hospital having such facilities and reimburse the bills directly to the service provider hospital.

Various benefits available under the Scheme are:

Besides protection against the medical expenses, the scheme provides and protects insured persons and his/her spouse for maternity benefits, hospitalization, surgery, unemployment benefits, disablement, injuries caused during the course of employment. Even in case of death of an insured employee, an amount up to Rs.15,000/- is paid to the kin of the deceased employee.

Medical care is also extended to retired and permanently disabled insured persons and their spouses on payment of an annual premium amount of Rs. 120/- only.

The aim of the scheme is to protect the basic right of dignity and self respect, during unforeseen circumstances in order, to negate the physical and financial
distress under such contingencies. A small percentage of the monthly wages is contributed to the scheme by the Employee and his employer to get insured under the ESIC scheme and to become eligible for numerous benefits stated above.

Yes, all such benefits come to an insured employee and her/his family members by paying a meagre 1% of his monthly wages per month to the scheme and the employer is required to pay 3% of the employee’s wages to the Scheme.

The aim of the scheme is to protect the basic right of dignity and self respect, during unforeseen circumstances in order, to negate the physical and financial distress under such contingencies. Another noteworthy feature of the Scheme is that insurance number once allotted to an Employee remains the same as long as an employee is within the wage limit of ESIC, switching over to a new job will not have any impact on his insurance status and his insurance number shall remain the same.

Even if an insured employee is travelling and needs medical help at any other place than his place of work or residence across the country, he can approach the nearest ESIC hospital, dispensary or an empanelled hospital in case s/he or any dependent needs urgent medical help.

Atal Bimit Vyakti Kalyan Yojana – ESIC Scheme has come as an angel and helping its subscribers during this Pandemic situation like no other: Current pandemic is eating millions of jobs month after month, the ESIC under the Atal Bimit Vyakti Kalyan Yojana (ABVKY), welfare measure under the Section 2(9) of the ESI Act, provides the unemployment allowance, in form of cash compensation. As an exception compensation has been increased from 25% to 50% of monthly wage for three months (applicable from 24th March-31st December, 2020). This benefit can be claimed once in a lifetime.

The benefit under the unemployment scheme is going to be capped at Rs. 31,500/- per beneficiary. To claim unemployment benefit under ABVKY the insurer is required to be in employment for a minimum period of 2 years before unemployment kicks in, and must have contributed for a minimum period of 78 days, then he is eligible for the allowance amount to be paid after 30 days. Earlier the relief was payable after 90 days of unemployment.

The Atal Yojana was launched in 2018 for 2 years, however, given the current situation, the ESIC has extended this yojana for 01 more year till June 30th,
2021.

Futures prospects of the Scheme:

The scheme has been extended to cover shops, hotels, cinema, restaurants, newspaper establishments, road-motor transport undertakings, insurance business, non-banking financial companies, airport authorities and warehousing establishments, educational institutions, private medical institutions, casual and contract employees of Municipal Corporation/ Bodies under Section 1(5) of the ESIC Act.

The scheme is increasingly expanding across India covering 566 Districts (381 fully notified, 185 partially notified) in 34 States and Union Territories with an aim to reach to 700+ districts by 2021. The Scheme covers about 3.49 crores of insured persons and a total of about 13.32 crores beneficiaries, out of which 51.2 lakh are women.

The beneficiaries will also be entitled to avail facilities from the Hospitals, health centres and dispensaries that are empanelled under the Ayushman Bharat Scheme of the Central Government.

The unparalleled features and the data is indicative of the fact that ESIC has been running the best social-security welfare scheme not only in India, but globally and extending its health safety umbrella to millions of new members year after year ever since its inception seven decades ago.

(The author is a Legal and Employment Laws Expert and Principal Consultant at Compliance Hawks Private Limited. Views expressed are personal.)

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