When it comes to employee healthcare benefits in India, both ESIC and mediclaim play significant roles. While ESIC is a statutory requirement for certain employees, mediclaim and individual health insurance offer more flexibility and additional coverage. But can mediclaim truly replace ESIC? Let’s explore more from this blog.
What is ESIC (Employees’ State Insurance Corporation)?
The Employees’ State Insurance Corporation (ESIC) is a statutory organisation responsible for the Employees’ State Insurance (ESI) management and administration. The scheme was introduced in India in 1948 under the Employees’ State Insurance Act to provide social security benefits to employees in the organised sector, such as medical perks that include benefits pertaining to sickness, maternity, disability as well as death.
The ESI is a self-financing social security and health insurance scheme for workers earning a monthly wage of up to Rs 21,000 and Rs 25,000 if a person has a disability. ESI is funded by employers and employees, with the employer contributing 4.75% of the employee’s salary and the employee contributing 1.75%.
The ESIC has a multifaceted role in managing and administering the ESI Scheme. Its responsibilities include collecting contributions, providing medical and cash benefits to employees and their dependents, and managing hospitals, dispensaries, and other medical facilities. Additionally, it serves as a regulatory body to ensure compliance with the ESI Act and other related laws.
What is mediclaim?
Mediclaim is a kind of health insurance policy that reimburses hospitalisation expenses due to illness or accident. Unlike ESIC, which is government-regulated, mediclaim is provided by private or public insurance companies and can be purchased by individuals or even offered by employers as a group health plan.
Types of mediclaim:
- Individual mediclaim: Purchased by an individual for personal coverage
- Family floater plans: Covers multiple family members under one policy
- Group mediclaim: Offered by employers for their staff
Mediclaim policies usually offer cashless hospitalisation in network hospitals and can be customised as per the insured’s needs.
Key differences between ESIC and mediclaim
Here are some of the major differences between ESIC and mediclaim:
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Feature
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ESIC
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Mediclaim
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Provider
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Government
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Private/Public Insurance Companies
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Eligibility
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Salaried employees earning up to ₹21,000/month
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Anyone, regardless of income
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Premium payment
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Shared by employer and employee
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Paid by individual or employer
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Coverage
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Limited to ESIC empanelled hospitals
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Wide network of hospitals depending on insurer
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Benefits
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Includes cash benefits, medical care, disability and maternity support
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Focuses on hospitalisation costs and may include add-ons like OPD cover
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Flexibility
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Fixed as per government rules
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Customisable
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Can employers replace ESIC with mediclaim?
No, employers cannot legally replace ESIC with mediclaim. ESIC is a mandatory statutory benefit for eligible employees under the ESI Act, 1948. If an organisation falls under the scope of this Act, it must register its eligible employees under ESIC and contribute to the scheme. Offering mediclaim or any other health insurance policy in place of ESIC does not fulfil this legal obligation.
Non-compliance with ESIC provisions can lead to penalties, fines and legal consequences for the employer.
Can mediclaim be an additional benefit alongside ESIC?
Yes, mediclaim can be offered in addition to ESIC. While ESIC ensures a basic level of medical and financial support, it has limitations such as restricted hospital networks and fixed benefits. Employers often choose to provide group mediclaim policies to enhance healthcare coverage for their employees.
Similarly, individuals may choose to buy individual health insurance policies to supplement ESIC benefits. This provides them with:
- Broader hospital access (including private hospitals)
- Higher sum insured
- Coverage for treatments not covered by ESIC
- Tax benefits under Section 80D of the Income Tax Act
Adding mediclaim or individual health insurance alongside ESIC ensures better health security and financial peace of mind for employees and their families.
FAQs
- Can an employee opt out of ESIC if they have Mediclaim?
No. If the employee meets the eligibility criteria, ESIC is mandatory. Mediclaim cannot be a substitute.
- What happens if the employee’s salary crosses ₹21,000?
Once the salary crosses ₹21,000, the employee exits ESIC in the next contribution period. Employers can then consider offering mediclaim or individual health insurance.
- Are ESIC benefits available after leaving a job?
ESIC benefits may continue for a short period depending on contribution history, but typically they cease after employment ends.
- Can I have both ESIC and an individual Mediclaim policy?
Yes. There is no restriction on having both. They complement each other and enhance your health coverage.
- Does ESIC cover the employee’s family members?
Yes. ESIC provides medical benefits not only to the insured employee but also to their dependents, including spouse, children and dependent parents.
- Can employers offer Mediclaim in addition to ESIC?
Yes. Employers may offer mediclaim as an additional benefit to enhance healthcare coverage, especially for treatments or hospitals not covered under ESIC.
Conclusion
While mediclaim and individual health insurance offer greater flexibility and enhanced coverage, they cannot replace ESIC for eligible employees. ESIC remains a mandatory scheme for low-income salaried workers in organisations covered by the ESI Act. However, employers and individuals are encouraged to view mediclaim and individual health policies as valuable supplements rather than substitutes. Together, they create a more comprehensive and dependable health safety net.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis, or treatment. Please consult your general physician or another certified medical professional for any questions regarding a medical condition. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.