What is ESI?
ESI stands for Employee State Insurance. ESI is a social security and health insurance scheme in India that is designed to provide financial protection and health benefits to employees during times of sickness, maternity, disability or death due to work-related reasons. Administred by a statutory corporate body called Employees’ State Insurance Corporation (ESIC) and inaugurated in Kanpur on 24th February 1952 (ESIC Day) by Prime Minister Jawahar Lal Nehru, ESI provides socio-economic protection, medical care, cash benefits and other form of assistance to the employees and their families.
ESI was formally introduced through the Employees’ State Insurance Act, 1948 that aimed to provide safety for industrial workers. Acclaimed as the first social security scheme in 1944, ESI scheme is an integrated need-based social insurance scheme that protects the interest of workers in health emergencies that could result in loss of wages and reduced earning capacity. ESI, hence, is crucial for safeguarding the welfare of workers in India by contributing significantly to overall well-being of the worker and their job security.
Wage Limit
- Employees working in factories or establishments with ten or more employees or who earn a monthly salary of up to Rs. 21,000 (and Rs. 25,000 for Persons with Disability) are eligible to receive health benefits and other services benefits under the Employee State Insurance (ESI) scheme.
- However, there is an exception for employees earning daily wages of Rs. 137 or less. They are not required to contribute to the ESI scheme from their own earnings. Rather, their employer will be responsible for making contributions to the ESI fund.
Benefits of ESI
As per Section 46 of the ESI Act, 1948, there are six benefits of ESI:
Medical Benefits
- Full medical care is available to an insured person and their family members starting from the day they begin insurable employment.
- There is no limit on the expenditure for their treatment.
- Retired and permanently disabled insured persons, along with their spouses, can continue to receive medical care by paying a nominal annual premium of ₹120.
Sickness Benefits
- Cash compensation at the rate of 70% of wages is payable during certified sickness for up to 91 days per year. To qualify, an insured person must have contributed for 78 days in 6-month period.
- Extended Sickness Benefit (ESB) offers an increased rate of 80% of wages. It is available for up to 2 years for 34 specific malignant and long-term diseases.
- Enhanced Sickness Benefit provides full wages for up to 7 days for vasectomy and 14 days for tubectomy. It applies to insured persons who are undergoing sterilization for family planning.
Maternity Benefits
- Provides full wages for 26 weeks during confinement or pregnancy.
- Can be extended by an additional month on medical advice.
- To qualify, an insured person must have contributed for 70 days in the two preceding contribution periods.
Disability Benefits
- Temporary Disability Benefit (TDB): It is available from the first day of insurable employment and is applicable in cases of employment-related injury. It provides 90% of the wage for as long as the disability persists.
- Permanent Disablement Benefit (PDB): It is paid at the rate of 90% of the wage in monthly installments. The amount is determined based on the extent of loss of earning capacity, as certified by a Medical Board.
Dependents’ Benefits
- Paid at the rate of 90% of the wage in monthly installments to the dependents of a deceased insured employee.
- Provided when the death results from an employment-related injury or occupational hazards.
In addition to these benefits, some other benefits of ESI include funeral expenses (an amount of Rs 15,000/- is paid to dependents for last rites) and confident expenses, vocational rehabilitation (to a permanently disabled insured person for taking VR training at VRS), and physical rehabilitation.
Read More: A Step-by-Step Process to Make ESIC Payment Online
