Can My Company Switch from ESI to Mediclaim? Seeking Advice from Fellow Professionals

Hello all,

I'm working in a manufacturing company in Chennai. Now, my company wants to convert ESI policy to MEDICLAIM. Is it possible? Please help me.

S. Sarkar

Exemption from ESI Act Requirements

If your establishment is a covered establishment and you want to be exempted from the operation of the ESI Act, you will have to prove to the satisfaction of the ESI Authorities that you provide facilities in the form of medical and other benefits to your employees and their family members better than those provided by the ESI Corporation. This means you have to demonstrate that you have your own hospitals where you can offer super-specialty treatments to your employees and their family members, provide leave and cash benefits to the members, offer pensions to the family members of employees who die after employment injury, and provide similar other benefits. Merely having a mediclaim policy that does not guarantee many of the above may not be sufficient for you to obtain an exemption from ESI.

Regards,
Madhu.T.K

Dear Mr. Syam,

As per Mr. Madhu, if we are able to show that the company can provide better services, then we can seek exemption. However, your email clearly states that it is not possible. Could you please help us clarify whether it is possible or not?

Warm Regards,

Sita Prakash
Human Resources

Dear Mr. Syam,

As per Mr. Madhu, if we are able to show that the company can provide better services, then we can take exemption. However, your mail clearly states that it is not possible. Can you please help us in clarifying whether it is possible or not?

Warm Regards,
Sita Prakash
Human Resources

In the ESI Act, there are certain provisions for exemption from the ESI Act in the following cases:

- Exemption for a certain class of factories/establishments
- Exemption for a certain class of employees
- Exemption for certain provisions of the ESI

The first point that the ESI Exemption committee will consider is whether the employer is providing at par or superior benefits than ESI. However, no company will give equal or more benefits than ESI. Only public sector companies provide benefits at par or superior benefits to ESI. Some of the main benefits given by the ESI are:

i) Sickness Benefit: An insured person is entitled to 91 days leave in one year with approximately 60% of his wages, besides the medical/hospital benefit.

ii) Enhanced Sickness Benefit: In the case of family planning, i.e., Tubectomy/vasectomy, the concerned insured person/women are entitled to a cash benefit more than or equal to their wages besides medical/hospital facilities.

iii) Extended Sickness Benefit: In the case of certain long diseases like TB/Heart diseases, the medical benefit will be extended to 3 years irrespective of his employment position, and cash benefit will be extended up to 2 years if he has 2 years of insurable employment.

iv) Disablement Benefit: If a person is injured or meets with an accident at the workplace or on the way to or from the workplace, he is entitled to Temporary disablement benefit, which is nearly 80% of his wages. If it results in a loss of earning capacity due to the loss of a body part, he will be paid a lifelong pension based on the recommendations of the Medical Board. In case of death due to that employment injury, the pension will be paid to the dependents.

v) Maternity Benefit: If an Insured Woman completes 9 months of service under ESI coverage and works for wages for 70 days in the concerned contribution period, she will be paid 84 days of maternity benefit at a rate more than her wages, besides medical/hospital facilities.

Moreover, besides all these benefits, Insured Persons/women are entitled to funeral expenses, super-specialty treatment, and in cases of job loss due to retrenchment, he will be paid Unemployment allowances with certain terms and conditions, etc. What more...

A main salient feature in ESI is that there is no restriction on pre-existing conditions as in Mediclaims.

Since ESI provides a handful of benefits, no company can afford these things. Hence, obtaining exemption is said to be highly difficult.

Hope I clarified your doubts.

Regards

That is the company's burden, but the only rule is that any period for which the company has paid any amount during that period, cash benefits will not be provided by ESI.

Kind Attn: Mr. Prasad sir,

Please clarify that you have mentioned in the sickness benefit that 60% of wages will be awarded apart from his medical leave. I had read it is 50% of wages; hence, I am bringing this to your kind notice. Please let me know.

Regards,

I would like to add a corollary to what Mr. Prasad has already deliberated.

Limitations of Mediclaim Policies

Under mediclaim, no out-patient treatment is allowed by almost all companies. The claim amount is restricted to the value of the sum-insured. For example, if a person has taken a policy of 1 lakh and undergoes a heart bypass surgery costing around 2.5 lakh, mediclaim allows you around 90,000 or, in an ideal case, 1 lakh. Not more than that. However, ESI has no upper limit on the claim. In cases such as renal transplants, the bill may shoot up to 20 lakhs, and even then, the amount is released.

Benefits of the ESI Scheme

The most important highlight of the ESI scheme is that the above-said benefit is not restricted to the employee alone. The same benefit is payable to his spouse, children, and dependent father and mother without any sub-limit. Whether it is possible for a private/commercial player to give such benefits, then how can the benefits be superior to ESI at the same costs to the company? Hence, the question of getting an exemption would probably not arise.

Best wishes,
Ramesh

Hi, sir,

I have a doubt. If an employee crosses the ESI, whether he is eligible for any medical treatment or wages from the ESI. I hope the validity will be for 6 months from the period he crosses the ESI. Is it correct?

Regards,
Janaki

He is entitled to medical and cash benefits until the completion of the benefit period concerned with the Contribution period during which he resigned. Shortly, until 9 months from the contribution period during which he resigned...

Thank you, sir, for the reply. One more question: As soon as an employee joins, does he get benefits from the ESI? Or does he have to wait for some period (3, 6, or 9 months)?

Hi Sir,

Can medical allowance be included in the pay structure when an employee falls under the ESI slab?

Regards,
Balaji.R

Hi Sir,

Can there be a medical allowance in the pay structure if an employee falls under the ESI slab?

Regards,
Balaji.R

Dear Janaki,

As soon as the employee starts working for wages in a covered Unit/Estt., the employee and his family will receive medical benefits. However, cash benefits will only begin after 9 months, provided the Insured Person fulfills the terms and conditions related to such benefits.