Can We Switch from ESI to Group Mediclaim for Our Employees? Seeking Legal Insights

Dear Seniors, We are a manufacturing company and currently, we have the facility of ESI. Is there any possibility where we can skip the ESI and get insured under the group mediclaim policy? Please guide me as many of the employees are exempted from ESI. Is there any provision in the labor law?

If any employee is receiving wages within the coverable limit (presently Rs. 15,000 per month), then he/she is definitely coverable under the ESI Act, 1948, and there is no way for a waiver. However, there are some provisions in the said Act in Chapter VIII from Sections 87 to 91A under which, upon fulfillment of certain conditions, the appropriate government can grant exemption. In practice, it is difficult and not possible to satisfy the conditions of such exemptions as laid down in the said provisions of the Act as mentioned above.

Further, the facilities under any mediclaim policy of a commercial insurance company are very limited in scope and are no match for the benefits available under the above Act.

According to the ESI Scheme, employee coverage will be for individuals earning Rs. 15,000 and below; they cannot be excluded from ESI. However, any employee earning above Rs. 15,000 will not be covered under ESI. In such cases, you can opt-out of ESI coverage.

As per Section 2(1), it is the obligation of the employer to cover its employees under the provisions of the ESI Act - 1948 Rules whose wages are less than Rs. 15,000 per month. You cannot take any sort of exemption under the provisions for ESI Coverage. You have to exempt only those employees whose wages are above Rs. 15,000 per month.

Hope it is clear.

Thanks & Regards,

V R RAO PULIPAKA

As told by other members, under the provisions of the ESIC Act, there are certain conditions under which exemption may be granted by ESIC authorities. Mediclaim policies have specific limits, and there are terms and conditions for reimbursement of claims. However, in ESIC, employees are insured and receive benefits that are not provided by any mediclaim policy. For example, there is no limit on claims in ESIC, which can be utilized by workers in cases of prolonged and serious illnesses. Large organizations with their own hospitals can seek exemption based on the availability of facilities that are superior to those provided by ESIC.

Regards

Only the ESI Act is in force, and there are no other laws that cover mediclaim as part of it. There are many public and private sectors offering mediclaim services for corporates where the premium is very low and all diseases and ailments are covered. You can check with your management and get one for those who have crossed the ESI limit.

Exemption Requirements

As part of the exemption, one requirement is to have a full-fledged hospital, and the second one is that there are a few areas/locations not covered under the purview of ESI.

Exemption from ESI Coverage: Key Considerations

Having one's own hospital is not the sole parameter for granting exemption from coverage of ESI for the establishment. If that were so, private hospitals would not come under the purview of the ESI Act. To obtain an exemption from ESI coverage, the employer must establish that their employees are receiving facilities and benefits better than those offered by ESIC (just offered by ESIC and not necessarily given by ESIC is enough!!) in terms of medical, sickness, maternity, old age benefits, dependents' benefits, etc.

In many cases, leave on the grounds of prolonged illness, extension of medical facilities after retirement, dependent benefits, etc., are areas where private organizations, including hospitals, fail to meet the requirements. On the other hand, there are many public sector companies that provide these benefits and have obtained exemptions from ESI.

Limitations of MediClaim Policies

MediClaim policies do not guarantee any benefits but do work with a lot of hidden parameters for admitting claims. I believe only ESI will provide free medical assistance (cashless) to an employee, his family members, and dependents from his date of joining without reviewing the history of illness and the age of the member or dependents. MediClaim policies will not cover existing diseases and your parents of a certain age, but for ESI, there is no such restriction. You cannot have a cashless surgery under MediClaim if you have not paid premiums for a certain period unless it is a tailor-made one costing a significant amount through premium.

However, you should not expect the same level of care and hospitality from the ESI Corporation as highlighted on their website or in publicity posters, perhaps due to administrative inefficiencies.

Regards,
Madhu.T.K