(Government Healthcare Scheme)
Universal healthcare access, one of the targets set in the Sustainable Development Goals (SDGs), enables people to live more productive and fulfilling lives. At least 50% of the world’s population don’t have access to essential healthcare services. And the number of people being pushed into poverty because of high out of pocket healthcare expenses is only increasing. This is where a government healthcare scheme like ESI (Employees’ State Insurance) Scheme is particularly important. They protect individuals from falling into the traps of poverty and economic turmoil owing to health shocks.
What is the ESI Scheme?
The Employees’ State Insurance (ESI) Scheme is a comprehensive, self-funding, contribution-based social insurance scheme designed for the protection of employees across India. It is specifically crafted for employees with monthly wages up to Rs. 21000 (Rs. 25000 in case of employees with disabilities). It comprehensively provides proper medical care and protection to employees and their families against sickness, maternity, disablement, occupational disease and death due to work injury, among others.
This social insurance scheme is governed by the Employees’ State Insurance Act, 1948. The ESI Scheme applies to factories and establishments in hotels, restaurants, cinemas, newspapers, educational and medical institutions and so on with 10 or more employees.
In some cases, the threshold for coverage is 20 employees or more. Initially, the Act covered only employees who earned upto Rs. 15000. Through the 2017 Amendment, the cap has been increased to Rs. 21000 (Rs. 25000 in case of employees with disabilities).
Any employer, including households, can register their employees and extend the comprehensive benefits offered by ESIC with the TankhaPay app.
ESIC or the Employee State Insurance Corporation is the entity created to ensure social security reaches workers. It is through this corporation that the ESI Act exercises its functions. The Act is notified by the Parliament and the first major legislation extending social security to workers. The Act aims to protect and uphold human dignity during crisis situations, protecting the insured persons and their dependents from social degradation, deprivation and destitution.
As of January 2022 data, the ESIC had 12.39 lakh new registrations in October 2021 and 10.28 lakh new member registrations in November 2021. These numbers offer an insight into the formal sector of India.
Who Is an Insured Person?
An insured person under the ESI Act is any employee, present or former, towards whom contributions are/ were payable. The insured person is the one who is entitled to the benefits provided by the Act. The scheme extends to the dependents/ family of the insured person. All these dependents must also be registered and their Aadhar cards must be linked.
The ESI scheme, though initially implemented only in the industrial centres of Kanpur and Delhi till 1952, now has a larger geographic and demographic coverage. 843 centres across 33 states and Union Territories in India are covered by the Scheme. As of 2019, 2.13 crore insured persons and 8.28 crore total beneficiaries exist under the Scheme.
In terms of demographics, the 2017 Amendment extended maternity benefits under the scheme to adoptive mothers, surrogates, medical termination of pregnancy, miscarriages.
How Does Contribution Work?
The ESI Scheme is self-funded by the employers and employees who must both make contributions. The rate of contribution is fixed and revised from time to time by the government. At present, the contributions are as follows:
Rate of contribution by employees: 0.75% of the wages paid/payable
Rate of contribution by employers: 3.25% of the wages paid/ payable
The Benefits Provided by The ESI Scheme
An insured employee and their family have access to a full range of medical care from day 1 of the insurable employment. Survivors of deceased insured employees (widows/widowers and dependent children) have access to these medical benefits. The spouses of insured persons who are retired or not in employment due to permanent disablement too have access to the full range of medical care.
Under the ESI scheme, the insured person and their family/ dependents are covered with a whole range of cash free healthcare benefits with no upper limit on medical expenses, provided they visit an ESI hospital or dispensary. The medical benefits include preventive and curative treatments, hospitalization, imaging, tests, medications, out-patient care and much more.
The scheme covers paid medical leave for employees who have contributed for 78 days. The insured person is eligible for 70% of daily wage for a maximum period of 91 days. The insured person can avail this for two consecutive periods.
Enhanced sickness benefits are also offered to insured persons undergoing tubectomy (14 days) and vasectomy (7 days), extendable on medical advice. They are offered 100% of their daily wages as benefits.
Extended sickness benefits are offered for a period of 124 days, extendable up to 2 years, for insured persons suffering from 34 listed long-term diseases. They receive 80% of their daily wage as benefits.
Under the ESI scheme, women are entitled to 26 weeks of fully paid maternity leave for their first 2 children. The provisions are also extended to women adopting children, undergoing medical termination of pregnancy, requiring confinement, who had a miscarriage or other complications owing to pregnancy. The provisions for each of these differ.
The ESI scheme offers disability benefits to insured persons in case of both temporary and permanent disablement. In case of temporary disablement, the worker is eligible for 90% of their monthly wage as compensation until recovery. For permanent disablement, the worker is entitled to compensation of 90% of their monthly wage for their entire life.
In case of involuntary loss of employment owing to factory closure, retrenchment or permanent invalidity to due work injury, the insured person is offered 50% coverage of average monthly wages for a period of upto 24 months.
The dependents of the insured person receive financial assistance and pensions in case of illness/ injuries at work. Dependents (children/ spouses/ widows/ parents) get 90% of average daily wages, shared in a fixed proportion among them. Widows/ widowers get benefits upto remarriage while children till the age of 25 years. For dependent parents, the benefits are subject to certain conditions.
Under the ESI scheme, insured persons and their families receive a range of other benefits.
Old age medical care
Skill upgradation training offered under the Rajiv Gandhi Shramik Kalyan Yojana (RGSKY)
How Does ESI Scheme Help Employees and Employers?
Advantages to employees
One of the main advantages of the ESI scheme to employees is that they can minimize their out-of-pocket expenses for healthcare. As per a study by the WHO and World Bank, at least 800 million people spend a minimum of 10% of their household budgets on healthcare expenses for themselves or a dependent. For 100 million people, the out-of-pocket expenses are so high that it pushes them into extreme poverty. In the case of India, roughly 65.06% of people spend out of pocket for medical expenses and fall into a debt trap.
The ESI scheme ensures that employees, especially those with meagre means, get timely access to proper healthcare and that they don’t fall deeper into poverty. Employees can save much more and use it for other important expenses like children’s education, house repairs, skill training, etc.
Employees have a safety cushion in case of medical emergencies, involuntary loss of employment or other socio-economic eventualities.
Advantages to employers
When employees have access to proper, timely healthcare, they will be more productive. Absenteeism and attrition will reduce, and their output will increase. Employers will not have to pay for medical expenses of employees in case of any workplace injury or occupational disease.
The ESI scheme is specifically crafted for employees with monthly wages upto Rs. 21000 (Rs. 25000 in case of employees with disabilities).
All persons employed within the premises including precincts of the establishment/ factory are covered by the scheme. This is irrespective of their wages and includes trainees, casual laborers and contract employees, etc. Directors, proprietors, partners, contractors and consultants are not included under the gambit of the Scheme.
Further, with the TankhaPay app, employers can extend the benefits of the ESI scheme to other workers including domestic workers, gig workers, temporary workers and so on.
Do Only Formal Employees Have Access To ESI?
By definition, yes. Though employers can voluntarily contribute to the scheme even when they are not mandated, informal employees still don’t have access to the ESI benefits. This is where TankhaPay comes into play.
It is only with the TankhaPay app that informal employees can gain access to the comprehensive healthcare, survivorship benefits, disability benefits and everything else the ESI scheme provides. Employers, including households and those employing temporary and gig workers, can make comprehensive healthcare benefits accessible to the most vulnerable sections of the workforce by onboarding the app.
ESI Registration & Compliances
When an organization employs 10 or more workers (20 or more in case of Maharashtra and Chandigarh), ESI registration is compulsory. The employer must register with the ESIC. The registration must be complete within 15 days after the organization becomes eligible.
The registration and compliance processes are complex and challenging. If you have a small office or simply run a household enterprise, keeping up with these processes can seem daunting. If you are a household looking to help your household staff get access to healthcare benefits, you cannot register. With the TankhaPay app, you don’t have to worry about these complex processes; the app takes care of everything for you.
The Pehchan card or the ESI card is the health card given to employees registered under the ESI scheme. This card enables an ESI-registered employee to continue to access the benefits of the scheme even when they switch jobs or face involuntary loss of employment. The insured person and their dependents must carry this card to ESI dispensaries/ hospitals to obtain cash-free, timely medical care.
ESIC Dispensaries and Hospitals
The ESIC is tied up with several hospitals and dispensaries across the country to ensure insured persons and their families get access to timely, cash-free healthcare. Employees and their families can avail medical care only at their designated ESI dispensary or hospital. In case of emergencies, the insured person can visit any ESI hospital or dispensary with their Pehchan card.
To know the complete list of ESI hospitals and dispensaries, visit the ESIC Portal.
The ESI scheme is an important step towards universal access to healthcare. Whether an employer is in the formal or informal sector, voluntarily offering comprehensive healthcare benefits through this scheme is beneficial. The TankhaPay app makes it especially simple and straightforward for employers to offer healthcare benefits to all employees including domestic workers and other informal employees.
With the TankhaPay app, it is super easy for employers, whether they employ domestic workers or several gig or temporary workers, to pay and manage salaries and ESIC payments.
Download the TankhaPay app now.