The debate between employees’ state insurance (ESI) and group health insurance has become increasingly relevant for employers and employees across India as businesses reassess healthcare benefits in the evolving workplace environment. Both these policies provide health-related protection for workers, but they differ fundamentally. Let’s discuss the difference between ESI and medical insurance in detail.
What is ESI?
Employee state insurance (ESI) is a statutory social security and health insurance scheme in India. It provides medical, cash and other benefits to workers earning up to ₹21,000 per month. However, those with disabilities have a threshold limit of ₹25,000, ensuring protection against sickness, maternity, disability and employment-related injuries.
What is group health insurance?
Group insurance is a type of health insurance policy offered to a defined group of people, typically employees of a company or members of an organisation, under a single master contract. Instead of individuals purchasing separate policies, the insurer covers all eligible members collectively, often at a lower premium due to risk pooling.
ESI insurance: Features and benefits
Here are some of the key features of Employee State Insurance:
- Insured workers receive 70% of their wages as a cash benefit during certified sickness, provided they meet the minimum contribution requirement. The benefit is available for up to 91 days across two consecutive benefit periods.
- For long-term diseases such as tuberculosis, cancer or leprosy, the scheme provides extended sickness benefits at 80% of wages for up to two years.
- Female employees covered under ESI receive maternity benefits equal to full wages for 26 weeks, extendable under specific conditions such as multiple births or medical complications.
- The scheme provides a lump sum of ₹15,000 towards the funeral expenses of the insured person.
- If an insured worker dies from an employment-related injury, their dependents receive monthly pensions.
Note: This is for informational purposes only and details may be outdated.
Group health insurance policy: Features and benefits
Group health insurance offers the following set of benefits:
- Unlike individual health plans, which impose waiting periods for certain conditions like pre-existing conditions, group policies provide coverage from day one.
- Regardless of your age or health status, you don't need to undergo a medical test to get coverage under group health insurance.
- Modern group policies increasingly include mental health consultations, therapy sessions and stress-management support.
- Group plans usually have faster, simplified claim processes due to corporate coordination with insurers.
- Employees can access cashless hospitalisation at any hospital in the insurer’s network.
Which is better: ESI or health insurance?
ESI is a statutory scheme. They offer basic medical and cash benefits to employees earning below a threshold. However, the benefits are defined and limited to ESIC hospitals and defined benefits.
In contrast, group health insurance provides broader coverage, higher limits, cashless access to private hospitals and flexibility to add dependents or riders.
Importance of health insurance for employees
Health insurance for employees offers financial protection against medical crises. It not only reduces out-of-pocket expenses but also offers access to quality healthcare, promotes employee well-being and enhances productivity by minimising absenteeism due to illness.
Conclusion
To sum up, ESI provides mandatory, low-cost protection for employees earning below the wage threshold, but its benefits and hospital network remain limited. Group health insurance offers wider coverage, higher claim limits and access to quality private hospitals, making it a stronger fit for today’s workplaces. The right choice depends on the organisation’s workforce profile, budget and the level of benefits it aims to offer.
FAQs
1. How are contributions made in ESI?
ESI contributions are statutory: employers contribute 3.25% of wages, employees contribute 0.75%.
2. What are the limitations of ESI?
ESI benefits are restricted to employees below the wage threshold and ESIC hospitals.
3. What are the advantages of group health insurance?
Group health insurance provides comprehensive coverage, higher limits, access to private hospitals and flexibility to add dependents or riders.
4. How are ESI and Group Health Insurance funded?
ESI is funded through mandatory employer and employee contributions based on wages. Group health insurance is funded by the employer or both, depending on company policy. Premiums for group policies vary based on sum insured, age profile and additional features chosen.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.