ESI - Employees State Insurance
After independence, India’s industrial sector boomed in the 1950s. The Employees’ State Insurance Act 1948 was passed to protect the growing number of factory employees and provide them with social security. It introduced the Employees’ State Insurance (ESI) scheme, which provides health insurance coverage to employees and their dependents.
Read the following sections to learn who qualifies for the ESI Scheme, whom it covers, what benefits it offers, and how to get the ESIC online card.
What is the employees’ state insurance act of 1948?
The Employees’ State Insurance Act 1948 is a law established to provide social security to employees. In 1943, the government commissioned Professor B.P. Adarkar to research and submit a report on healthcare insurance for industrial workers, which became the foundation for the Act.
The ESI Act functions as a social safety net that protects workers and their immediate families in situations that could affect their ability to earn a living. These include illness, maternity, disability, injury, or even death. The Act aims to protect workers from financial losses and maintain a stable and productive workforce while upholding human dignity during difficult times.
Following the Act’s implementation, the Central Government formed the Employees’ State Insurance Corporation (ESIC) under Section 3 on February 24, 1952. This body manages the program and grants relief to employees in case of medical emergencies.
Employees’ state insurance scheme (ESIS): Overview
The Employees’ State Insurance Scheme (ESIS) is run by the ESIC, a self-governing body under India’s Ministry of Labor and Employment. This government-funded initiative offers financial aid to Indian workers in need.
The Employees’ State Insurance Act and the ESI scheme were established under Prime Minister Jawaharlal Nehru. The ESI Scheme was initially launched in 1952 in Kanpur and Delhi, India's major industrial hubs. As industrialisation expanded across the country, so did the implementation of the scheme. The ESI Scheme currently covers 668 districts across 36 states and union territories in India.
As of March 31st, 2023, the ESI Scheme had 3.42 crore insured persons, including 3.05 crore employees, for a total of 13.30 crore beneficiaries. 67.60 lakh of the insured persons were women. The total number of employers under the scheme was 20.83 lakh.
According to the ESI Act, companies with over ten (or twenty) employees and a wage below or up to ₹21,000 must enrol under ESIC and make regular contributions. This scheme excludes employees earning less than ₹137 per day.
Note: Although both ESI and Employees’ Provident Fund (EPF) registration involve social security contributions for employees, they are separate regulations.
Features of employees’ state insurance scheme
The Employees’ State Insurance Scheme (ESIS) provides financial support through family health insurance for employees within the lower and middle-income brackets. Key features and benefits of the scheme are:
- Eligibility and Coverage
ESIS extends its purview to a broad spectrum of employees, including full-time and contractual workers earning up to ₹21,000 per month. It provides financial security to a substantial workforce, particularly those with limited access to private family health insurance.
- Medical Benefits
A key advantage of ESIS is the extensive medical coverage it provides. Employees and dependents can access hospitalisation at ESI-empaneled facilities. The coverage also includes care for pre-existing conditions, offering peace of mind and protection against unexpected medical costs.
- Cash Benefits During Hardship
In addition to medical treatment, ESIS provides financial support to compensate for the loss of wages during absenteeism. Employees can receive cash allowances for five events, including sickness, disablement, maternity, death due to injury, and other instances. It helps them manage essential expenses while recuperating.
- Shared Responsibility
The ESI Scheme is financed through a tripartite contribution model. Employers contribute 3.25% of the employee’s salary, while employees contribute a smaller portion of 0.75%. State governments contribute one-eighth of medical expenses, subject to a per capita ceiling of ₹1,500 per insured individual annually.
Benefits offered by employees state insurance scheme (ESIS)
The Employees’ State Insurance (ESI) scheme offers medical and cash benefits to employees who have enrolled in the ESIC and make monthly contributions.
Section 48 provides for the following six benefits under the Employees’ State Insurance Act 1948:
- ESIC Medical Benefits
Insured employees and their families receive comprehensive medical coverage from the first day of employment. There is no limit on the amount spent on their treatment. Even after retirement or permanent disability, the insured person and their spouse can continue to receive medical care by paying a small annual fee of ₹120.
- Cash Benefits for Sickness
You can receive a sickness benefit of 70% of your wages if you’re sick for up to 91 days a year. To qualify, you must have worked and contributed for at least 78 days in the previous six months. However, if you have one of the 34 specified serious or long-term illnesses, your sickness benefit can be extended for up to two years and 80% of your wages. If you undergo sterilisation for family planning, you can get your full wages for up to 7 days (vasectomy) or 14 days (tubectomy).
- Maternity Benefit
You are eligible for 26 weeks of maternity benefit for up to two pregnancies. In other words, you will receive your full salary during this leave. It can be extended by an additional month based on medical advice. To qualify, you must have contributed for at least 70 days in the past two contribution periods.
- Support in Case of Disability
ESIS offers financial security in the event of a temporary or permanent disability. You receive 90% of your wages until recovery for temporary disablement due to an employment injury, irrespective of time of employment or contribution. In case of permanent disability, a monthly payment of 90% of your wages is available for life. The exact amount depends on how much your earning capacity has been reduced, as determined by a medical board.
- Dependants’ Benefit
This benefit works as family health insurance to protect your dependents in case of your unfortunate demise due to a work-related injury. Your dependents will receive a monthly payment of 90% of your wages.
- Other Benefits
There are additional ESIC benefits for employees, including:
- Funeral expenses of ₹15,000 to dependents from the first day of insurable employment
- Confinement expenses for an insured woman or wife of an insured person if giving birth outside an ESI medical facility
- Vocational rehabilitation for permanently disabled workers
- Physical rehabilitation for those with physical disability due to a work injury
- Unemployment allowance, medical care, and vocational training for up to two years in case of job loss or permanent disability under the Rajiv Gandhi Shramik Kalyan Yojana
- A one-time relief payment of 50% of wages for up to 90 days to unemployed workers who meet eligibility criteria under the Atal Beemit Vyakti Kalyan Yojana
What Is covered under employees state insurance scheme?
Let’s explore the coverage of the Employees’ State Insurance Scheme (ESIS):
Covered
- Industry
All non-seasonal factories employing ten or more workers are subject to the ESIS.
- Beyond Factories
The scheme extends to various establishments besides factories. It includes shops, restaurants, hotels, cinemas, newspaper houses, educational institutions (private medical and educational institutions with over ten employees), road motor transport undertakings, and more. The minimum employee count of 10 or 20 for coverage varies by the state.
- Wage Limit
As of January 1, 2017, there’s a monthly wage limit for coverage. Employees earning ₹21,000 or less (₹25,000 for persons with disabilities) qualify for ESIS.
Not Covered
- High Earners
Employees whose monthly income exceeds the specified wage limit (₹21,000 or ₹25,000 for people with disabilities) are not covered under ESIS.
- Special Cases
Employees with a daily average wage of up to ₹50 are exempt from contributing to the ESIC insurance. However, the employer’s contribution still applies to these workers.
When is ESIS registration required?
Under the Employee State Insurance Act 1948, employee state insurance registration is a statutory requirement determined by the number of employees and their respective wages.
- Number of Employees
The primary trigger for registration is the number of employees. In most Indian states and union territories, factories and establishments covered under the Employee Insurance Act 1948 must register if they employ ten or more workers. However, some states, like Maharashtra and Chandigarh, have a higher threshold of 20 or more employees for ESI registration.
- Employee Wage Limit
ESI registration applies to employees earning up to ₹21,000 per month. This limit increases to ₹25,000 per month for employees with disabilities.
Employers must register with the ESIC if they employ ten or more (or twenty, as applicable) workers earning less than the prescribed wage limit. The registration process must be initiated within fifteen days of fulfilling these criteria.
Procedure for ESIS registration
The Employee State Insurance Registration or ESI registration procedure can now be efficiently completed online through the ESIC portal. The following steps outline the ESIC registration process:
Initial Sign-Up and User Creation for ESI Registration
- Visit the title="ESIC portal">ESIC portal.
- Click ‘Employer Login’ and then ‘Sign Up.’
- Enter your company details, like name, state, region, email address (which becomes your username), and phone number.
- Submit the completed form.
After successful submission, a confirmation email containing login credentials for both employer and employee registration will be sent to the designated email address.
Employer registration in ESIC
- Log in to the ESIC portal using the provided credentials.
- Click ‘New Employer Registration’ and select your unit type.
- Complete the ESI registration form for employers—Employer Registration Form-1—by entering details about the unit, including:
1. Name
2. Address
3. PAN
4. The jurisdiction of the local police station
5. Whether the premises are owned or rented
6. Nature of your business
7. Date of establishment’s commencement
8. List of owners with designations
9. Licence details (if applicable)
- Enter the total number of employees in the establishment, the number of those who earn less than ₹21,000, and the date of hiring.
- . Register your employees by completing the ESIC employee registration form, called the Employee Declaration Form. Existing registered employees can be selected, or new employees can be added by providing the necessary details.
- . Select the relevant ESIC branch office and inspection division.
Thoroughly review all entered information before submitting the registration.
Payment and confirmation for ESI registration
- . Click ‘Pay Initial Contribution’ and generate a challan number for reference.
- . Choose a payment gateway and complete the payment process.
- . Upon successful payment of the initial 6-month contribution, a system-generated ESIC Registration Letter (C-11) will be sent to the registered email address.
This document is the official ESIC registration certificate and includes a 17-digit registration number confirming employee state insurance registration with ESIC.
Documents required for ESIS registration
To complete the ESIC registration process, the following documents are required:
Establishment Details:
- A certificate of registration issued under the Factories Act or the Shops and Establishment Act
- Certificate of Incorporation, Articles of Association (AOA), and Memorandum of Association (MOA) for companies
- Partnership Deed for partnership firms
- PAN Card of the business
- Cancelled cheque with company bank account details
- Address proof of the establishment
Employee Information:
- List of all employees with their names, salaries, attendance, and dates of joining
- List of the company’s directors and shareholders
- PAN Card information of each employee
- Employee Aadhaar card numbers (if available)
Forms:
- The Employer Registration Form (Form No. 1) for ESI registration for employers must be downloaded online, filled out with the above details, and uploaded to the ESIC website for registration completion.
Please note that these documents for ESIC registration may vary slightly based on the nature of the business entity.
ESIC contribution rates
According to the Employees’ State Insurance Act, both employers and employees are obligated to contribute towards a fund that provides social security benefits to employees.
Current Rates (as of July 2024)
Particulars
|
Rate
|
Employee ESIC Contribution
|
0.75%
|
Employer ESIC Contribution
|
3.25%
|
Total
|
4.00%
|
Example for calculation:
Consider an employee, Sachin, with a gross monthly salary of ₹20,000. The ESIC contribution for Sachin is calculated as follows:
- Employee Contribution: ₹20,000 x 0.75% = ₹150
- Employer Contribution: ₹20,000 x 3.25% = ₹650
- Total ESI Contribution: Employee contribution of ₹150 + Employer contribution of ₹650 = ₹800
Therefore, the total ESI contribution for Sachin is ₹800 per month. His salary reflects a deduction of ₹150, while her employer contributes the remaining ₹650.
Note: An employer can have both ESI and EPF registrations. These contributions are in addition to their contribution to EPF.
How to apply for an ESI card (Pehchan Card)?
The ESI Card, or the Pehchan Card, is an identification document that allows insured individuals to access medical benefits under the ESI scheme at designated hospitals and dispensaries. The ESIC online card includes pertinent information about the insured person, including name, father’s name, address, unique ESI insurance number, photograph, and details of dependents.
Here’s how employers can apply for an ESIC card online:
- Step 1
Visit the ESIC portal and log in using your username and password.
- Step 2
On the main page, navigate to the ‘Employee’ section and click ‘e-Pehchan Card’ to apply for an ESIC card online.
- Step 3
Select the unit details and click ‘View.’
- Step 4
Identify the desired employee and click ‘View Counter Foil’ beside their name. This counterfoil is the Employees’ State Insurance Corporation E-Pehchan Card.
- Step 5
Click ‘Print’ to save the Employee State Insurance E-Pehchan Card as a PDF document.
- Step 6
Print the ESI Card, affix your signature, and include photographs and dependents (if any) in the designated spaces.
Employees can now use this signed and attested ESI card and valid ID proof to receive benefits at ESI hospitals and dispensaries.
Note: To validate the Employee State Insurance E-Pehchan Card, the employer’s signature and stamp OR the signature and stamp of an ESIC official must be on the printout.
Employees state insurance scheme hospital list
The Employees’ State Insurance Corporation (ESIC) operates a network of hospitals and tie-ups with various private healthcare facilities to provide medical care to insured individuals and their dependents.
The ESIC portal offers a convenient method for locating nearby healthcare facilities:
- Step 1: Visit the ESIC official website.
- Step 2: Navigate to the ‘Quick Finder.’
- Step 3: Employ the dropdown menu to select the desired facility type and search by state –
- ESIC Hospitals
- ESIS Hospitals
- Medical Colleges
- Dispensary
- Dispensary cum Branch Office (DCBO)
How to claim ESI benefits?
The Employees’ State Insurance (ESI) scheme in India provides both medical and cash benefits to insured employees and their dependents. The ESIC claim process for each is as follows –
- Medical Benefits
Insured persons and their eligible dependents can avail of cashless medical care at any employee state insurance hospital (ESI-empanelled) by presenting the Employee State Insurance e-Pehchan Card (ESI Card). The scheme covers the costs of consultations, medications, and hospitalisation within the prescribed limits.
- Cash Benefits
Insured workers can claim cash or compensation benefits in various situations, such as sickness, maternity, temporary or permanent disability, or unemployment due to the establishment’s closure. In the event of the insured person’s death, a dependent can claim compensation and reimbursement for funeral expenses as well.
To claim these benefits of the ESI scheme, individuals must visit the designated ESI branch office. The required documents will vary depending on the claimed benefit but generally include a completed claim form, medical bills, and other supporting documents.
The ESIC reimbursement claim process will be initiated and processed. If approved, the benefit amount will be credited to your bank account.
When to claim?
The ESI claim process for benefits is a post-event entitlement. Claims may be initiated following a qualifying incident, such as illness, injury, maternity, disability, or demise. Insured persons must keep their ESI online card for convenient reference.
How to check the claim status?
The status of an ESI claim application can be monitored electronically through the UMANG App. Here’s how:
- Download the UMANG App from the app store on your smartphone and open it.
- Enter your employee state insurance details—IP or ESIC Insurance Number—and click ‘Get OTP.’
- Enter the OTP sent to your registered mobile number and click ‘Submit.’
- From the service menu, choose ‘Claim Status.’
- You can view their status if you have filed any claims. You can also use the advanced search option to find specific details.
