The Employee State Insurance Scheme is a national health insurance scheme. It is governed by Employee State Insurance Corporation under the rules and regulations of the ESI Act, 1948. ESI Scheme aims to provide financial and medical security to the employees and their dependants during mishappenings that may affect their earning capacities (temporarily or permanently).
According to the ESI Act, all establishments with more than 10 employees have to maintain an ESI fund. All factories, shops, restaurants, cinema halls, educational institutions, and other establishments are covered under ESI Act unless otherwise stated in the Act.
The existing wage limit for coverage under the scheme is Rs. 21,000 per month. In simple words, employees drawing wages up to Rs. 21,000 are entitled to the coverage.
Contribution to Employees State Insurance Scheme
The Employees State Insurance Scheme is a contributory fund. Both employer and employee contribute to this fund. The employer will contribute 3.25% of the wages and the employee will contribute 0.75%. Hence, a total of 4% of the wages will be contributed to the fund.
However, if the employee’s daily average wage is less than Rs. 176/- then the employee is exempt from payment of his share of contribution. But the employer contributes his own share in respect of such an employee.
Benefits of Employees State Insurance Scheme
The scheme provides the following benefits:
Full medical facilities for the self (employee) and dependants are admissible from day one of entering insurable employment. Dependents are spouse, parents, and children (adopted children also).
The sickness benefits are payable in three types:
- Sickness Benefits
- Sickness benefit is payable in cash at the rate of 70% of the wages for the period of certified sickness.
- This will be applicable only when the insured has paid a contribution for at least 78 days in a contribution period of 6 months.
- The benefit is payable for a maximum of 91 days in a year.
- Extended Sickness Benefit
- This cash benefit is payable at an enhanced rate of 80% of wages for the period of certified sickness in case of specified, 34 long-term diseases that need long-term treatment and the insured cannot work during the treatment.
- The benefit is payable only when the insured has been in insurable employment for at least 2 years.
- Enhanced Sickness Benefit
- An amount equal to full wage is payable to the insured person undergoing sterilization operation- either vasectomy or tubectomy.
- For tubectomy, the benefit is payable for 14 days
- For vasectomy, the benefit is payable for 7 days.
Maternity benefit is payable to insured women in case of confinement/ pregnancy for twenty-six weeks, which can be extended up to a month on medical grounds. For claiming this, the insured women should be paid for at least 70 days in two consecutive contribution periods.
If an insured employee gets disabled (permanently or temporarily) during the job, they get a monthly salary from ESIC.
- Temporary Disablement: In case of employment injury, 90% of the wages are payable in cash till the temporary disablement lasts.
- Permanent Disablement: The cash benefit is payable for life. The amount payable is decided on the basis of earning capacity determined by a medical board.
Due to employment injury or occupational disease, if the insured employee dies, then the dependants (spouse, parents, and children) of the deceased, will get a family pension (dependent benefit). The rate of payment is about 70% of the wages which will be shared among the dependants in a fixed ratio.
Funeral expenses are payable in case of death, subject to a maximum of Rs. 15,000.
Note: Benefits Cannot be Combined
An employee shall not be entitled to receive the following combined benefits for the same period:
- Both maternity benefit and sickness benefit
- Both maternity benefit and temporary disablement benefit
- Both sickness benefit and temporary benefit
The employee has the option to choose any one of the above-stated benefits.
ESI is a mandatory scheme for establishments with more than 10 employees. So, if your establishment is covered under the Act, you must register your establishment under the scheme and start contributing to the fund. Also, ensure that the employees avail the benefits.
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