Switching from ESIC to Corporate Insurance: What Challenges Might We Face?

Respected Seniors,

Currently, we are providing ESIC facilities to our employees. However, we want to take a Corporate Insurance policy. My question is, if an employee switches from ESIC to Corporate insurance, will the company face any trouble? Are there any rules or regulations from the government regarding these issues? I'm looking forward to your valuable comments.

Regards

The ESI Scheme is mandatory. There are, of course, exemption clauses in the Act, but meeting the requirements of these exemption clauses is very difficult as you must have all the benefits available at par with the ESI Scheme or superior to the Scheme. The exemption granted is for one year, and you must apply for the exemption annually. Moreover, the ESI Scheme is one of the best schemes globally, as no other insurance scheme offers as many benefits. It is essential to note that the ESI scheme has no limit on medical treatment, whereas all other schemes have a cap or maximum ceiling clause.

I hope this information is helpful.

Best regards,
Regards

I agree that ESIC has more benefits than other insurance policies. However, there are numerous formalities in ESIC such as slow processing, fewer hospitals, poor behavior of ESIC employees, long queues, and cleanliness issues.

Thank you.

Mr. Dahiya has rightly explained the ESIC scheme. If you decide to take any policy, you will not be exempt from the scheme. Concerning your doubts about poor or inadequate services and excessive paperwork, these aspects are also gradually improving.

Your primary concern appears to be the same queue for both a poor unskilled worker and a white-collar employee, which you must adjust to since there are no separate provisions.

Regards,
P.K. Sharma

I agree with the wise comments made by Mr. Dahiya and Mr. Sharma. Even if you take a corporate insurance policy, you cannot get an exemption from ESIC if your establishment and employees are within the ambit of the Act.

I can tell you from practical experience that we tried this out in one of the companies I worked with way back in the years 1998 to 2004. The company took medical insurance and applied for exemption from ESIC. As expected, ESIC rejected the application. The company contested it. The case took nearly 6 years, and eventually, the company had to pay the ESI dues with interest and penalty. I must say it added up to a 'huge' amount, and the liability reflected in the Balance Sheet. A whole lot of effort was needed to get through the process and eventually close it. The cost, executive time, and legal time we spent on it were not worth a single penny that we spent on this whole exercise.

So, my suggestion is to avoid seeking ESIC exemption in lieu of a Medical Insurance policy.

Options for Consideration

In case you accept the above, you may consider one of the two options below:

Option 1: Continue with only ESIC for your employees.

Option 2: Continue with ESIC but in addition provide extra medical insurance. Employees can choose to use it if they find ESIC facilities not to their satisfaction.

Option 2, of course, is an additional cost. However, if the people are predominantly white-collar and employee satisfaction and retention are key criteria, such as in Product IT / R&D setups, then this additional cost should not be a major constraint considering improved employee satisfaction or reduced attrition.

Those are my views for your consideration.

Thanks.