Employee benefits
What is the full form of ESIC, and how does ESI work with group health insurance?
ESIC stands for Employees’ State Insurance Corporation, the body that runs the ESI scheme. ESI gives medical care and cash benefits to employees earning up to ₹21,000 a month. The employer pays 3.25% of wages and the employee 0.75%. Employees above the ceiling are outside ESI, which is where company group health insurance usually comes in.
In short
- ESIC = Employees’ State Insurance Corporation; ESI is the scheme it runs.
- It covers employees earning up to ₹21,000 a month (₹25,000 for persons with disabilities).
- Contributions: 3.25% employer, 0.75% employee, unchanged since 1 July 2019.
- Employees above the ceiling are outside ESI, so most employers cover them through group health insurance.
What is the full form of ESIC?
ESIC stands for Employees’ State Insurance Corporation. It runs the Employees’ State Insurance scheme, usually called ESI. You will see both: ESIC is the corporation, ESI is the scheme and the cover an employee receives. It now operates under the Code on Social Security, 2020.
Who is covered by ESI?
Employees earning gross wages of up to ₹21,000 a month at establishments the scheme covers, generally those with 10 or more employees. For persons with disabilities the ceiling is ₹25,000. Once an establishment is covered, it stays covered. ESI also extends to the employee’s dependants.
How much do the employer and employee pay?
| Who pays | Rate | On what |
|---|---|---|
| Employer | 3.25% | Gross monthly wages |
| Employee | 0.75% | Gross monthly wages, deducted from salary |
| Total | 4% |
An employee whose average daily wage is ₹176 or less pays nothing; the employer still pays its 3.25%. Contributions are due within 15 days of the end of the month.
What does ESI cover?
Medical care for the employee and their family, and cash benefits for sickness, maternity and injury at work. Treatment is given through ESI dispensaries and hospitals, and hospitals tied up with the scheme.
ESI or group health insurance: which does an employee get?
It depends on salary. Employees up to the ESI ceiling are covered by ESI by law. Employees above it are outside ESI, and that is where a company group health policy usually does the work. Many employers run both side by side, so that everyone in the company has cover.
| ESI | Company group health insurance | |
|---|---|---|
| Who it covers | Employees up to ₹21,000 a month | Employees the employer chooses, often everyone |
| Required by law? | Yes, for covered establishments | No, for most private companies |
| Where treatment happens | ESI dispensaries and hospitals, and tie-ups | Insurer’s network hospitals, cashless or by reimbursement |
| Family | Dependants included | Spouse, children and parents by tier (E, ESC, ESCP) |
What about workers outside ESI, like contract workers above the ceiling?
An employer’s liability for injury at work does not end at the ESI ceiling. Workers outside ESI, such as those above the wage ceiling, are usually covered for workplace injury through a workmen’s compensation policy.
Frequently asked questions
What is the full form of ESIC?
ESIC stands for Employees' State Insurance Corporation. It runs the ESI scheme, which gives medical and cash benefits to employees earning up to ₹21,000 a month.
What is the ESI contribution rate?
3.25% of gross wages from the employer and 0.75% from the employee, a total of 4%. These rates have applied since 1 July 2019.
What is the ESI wage limit?
₹21,000 a month in gross wages, or ₹25,000 for persons with disabilities.
Can employees covered by ESI also get group health insurance?
Many employers cover all employees under a group health policy as well, but it is the employer's choice. Employees above the ESI ceiling are outside ESI, so group health is usually their main cover.
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A note on this page. Everything here is general information, not legal, financial or tax advice, and nothing is an offer. Figures are as published by ESIC and in force at the review date; re-verify on esic.gov.in before relying on them. For advice about your situation, talk to us.