Balancing ESI and Health Insurance: How Should Small Teams Handle Employee Benefits?

Dear Seniors,

I want clarification on ESI and health insurance schemes for employees. We are a team of 15 members. We are opening a salary account with the bank. Additionally, I was informed about the health insurance scheme for employees, where the premium has to be paid by the company at once (which is the sum total of premiums on an annual basis for employees). On the other hand, the premium on a monthly basis is deducted from the salaries of employees.

Queries:

1) Will getting a health insurance scheme for employees benefit them? As the premium will be deducted from their salaries, there may be chances of disagreement in the long term by employees due to their certain expenses.

2) If a health insurance scheme is availed, do we have to provide them ESI as well?

3) What is best for employees as their benefit and company benefit go hand in hand and cannot be compromised?

Please enlighten me with your knowledge and guidance.

Please enroll the employees into ESIC as it is mandatory if they come under the wage ceiling limit, which is now Rs. 21,000 per month.

Benefits of Health Insurance
If you provide health insurance for employees, it is beneficial for them. However, the company cannot opt-out of ESIC after providing health insurance.

ESIC Coverage in Ghaziabad
I believe your company is located in Ghaziabad, which falls under ESIC dispensary and hospital coverage. Even if the company is situated in an area without ESIC facilities, you still need to ensure your employees are covered under Workmen Compensation.

Limitations of Health Insurance
Health insurance does not cover life insurance, benefits for partial or permanent disablement, leave with wages, and other similar provisions.

Facilities Offered by ESIC
ESIC offers various facilities such as paid leave, employee insurance, and the benefits mentioned in point no. 3. It is advisable to opt for ESIC, and for those employees earning above Rs. 21,000, ensure they are covered by health insurance.

Kind regards,

Dear Priya Verma, please find the reply to your queries as follows:

Getting a health insurance scheme for employees

1) Getting a health insurance scheme for employees would benefit them. As the premium will be deducted from their salaries, there can be potential disagreements in the long term from employees due to their existing expenses.
Ans: If your company provides health insurance benefits to employees, it is good. However, deducting the premium without employee consent could lead to issues in the future. A suggestion would be to include the amount in their Cost to Company (CTC) and not deduct it from their monthly pay.

Providing ESI along with a health insurance scheme

2) If a health insurance scheme is availed, do we have to provide them with ESI as well? As you mentioned having a team of only 15 employees, you are not required to cover them under ESIC. Registration under ESIC mandates a minimum of 20 employees. Therefore, you have the option for exemption at the moment.

Thank you.

Dear Priya, I would endorse the views expressed here by learned members. However, I may add:

Coverage under ESI and health insurance

First and foremost, there is no way to escape coverage under ESI to the extent of provisions applicable to your employees under the act. Having said that, what is the fate of those who are not to be covered under the ESI act? Here is where the purpose of health insurance comes in. Assuming that there is an emergency and there is no choice but to take the employees/families for medical care quickly to the nearest available hospital, you would find that availing ESI facilities, though they are covered, will not serve the purpose. This is where medical insurance could come in handy. The key point here is that the company remits the premium upfront and recovers it through their salary in convenient installments. Although this would help them for immediate medical care, on the other hand, this arrangement puts the employees into financial strain as they have to contribute both to their ESI membership and health insurance as well. Therefore, you have to consider both the relevant issues and make decisions.