Medical allowance is normally given only to those who are not under ESI. This is because those under ESI will receive medical benefits from ESIC, even though they contribute a certain rate of their salary. The employer's part, being spent by the employer, can be considered a cost for such employees, and an amount equal to that may be considered a payout to those who are not under ESI. Normally, for employees who are out of ESI cover, we take separate medical policies, and that will equate the payment by means of ESI. Medical allowance is, therefore, a component in the absence of such policies.