Are you seeking answers to the question: Should you choose ESI or group health insurance? Which is better, ESI or group health insurance? How do I migrate from ESI to group health insurance?
If you answered Yes to any of those, this blog will answer all of your questions.
What’s on this page?
Employee State Insurance
Employee State Insurance Corporations provides insurance to employees working in any organization in India who meet the eligibility requirements outlined in the ESIC Act. ESI can be availed by only those members whose salary is below ₹ 21k per month (₹ 25k per month in case of persons with permanent disabilities).
The ESI scheme provides coverage against death, disability, illness, diseases arising out of the nature of work performed at the workplace, or an injury resulting in the loss of earning capacity of the employee.
ESI can be availed by Shops, Hotels, Restaurants, Road Motor Transport establishments, Cinemas including Preview Theaters, Newspaper Establishments, Establishments engaged in Insurance Business, Non-Banking Financial Companies, Port Trust, Airport Authorities, Warehousing establishments employing 10 or more persons.
The scheme also provides maternity benefits, dependent benefits’ and funeral expenses for the insured person. Under the scheme, the employee contributes 0.75% of the wages whereas the employer contributes 3.25% of the wages.
Group Health Insurance
Group health insurance can be bought based on the needs and wants of the people who work for a company. The insured can decide on the coverage and other terms and conditions under the group health insurance policy.
There is no limit on the salary of the employees to be enrolled under the group health insurance plan. Policies can be tailored the way the Employer wants. Although there could be some restriction to the participation – Insurance Companies may specify the minimum number of people mandatory to form a Group under Group Health Insurance.
Why Switch from ESI to Group Health Insurance?
- ESI is available only at select hospitals such as government hospitals and a few private hospitals on a cashless basis. If the insured avails treatment in any other hospital apart from the mentioned ones, then the claim settlement would be on a reimbursement basis. For group health insurance the number of network hospitals would be more compared to the ESI.
- If an employee’s wages are more than ₹ 25000 then the employee would not be eligible under the ESI scheme forcing those employees to avail of group health insurance. And then the Employer will need to administer two separate policies – one for employees who have a salary below ₹25000 and one for employees who have a salary above it.
- ESI is available only if there are at least 10 employees in the organization, whereas group health insurance can generally be available even if there are 7 employees.
- Group health insurance offers additional benefits such as wellness benefits, daily cash benefits, no waiting periods, and free medical checkups.
- There is a specified sum assured limit in the group health insurance policy whereas there is no limit on the sum assured in the ESI.
- Group health insurance policy can be customized with add-ons as per the needs and requirements of the insured whereas the ESI cannot be altered to the needs of the insured.
- The employer pays the premium in the group health insurance plan whereas the employee has to contribute in the case of an ESI plan.
How to Switch from ESI to Group Health Insurance?
The process of switching from ESI to group health insurance is very simple and does not require much paperwork or effort. The ESI coverage is available as long as the insured enrolls in the ESIC scheme which is available twice a year.
If the enrollment is not done on time then the coverage cannot be availed under the scheme. So if you opt to shift from ESI to group health insurance you can simply stop paying the premium for the ESI. At the same time, you need to go through the group health insurance purchase process once a year.
It is advisable to go through an insurance broker who can guide you in taking the best group health insurance plan. The minimum requirement of group health insurance is 7 lives which are less than that of the ESI so it is easy for the insured to shift from ESI to group health insurance.
For group health insurance the insured should submit the details of all the employees in a specified format to get the premium payable.
The premium payable can be negotiated with the help of the insurance broker without compromising on the coverage. The group health insurance comes without a waiting period which is beneficial, when employees shift from ESI to Group Health Insurance.
Frequently Asked Questions (FAQs)
- My company has fewer than 20 employees. Does that mean ESI is not an option for us, and we must choose group health insurance?
ESI generally requires 10 or more employees. If you have fewer than 10, you likely won’t be eligible. Group health insurance becomes a more viable option in such cases, and it’s often available even with smaller teams.
- If an employee’s salary increases above the ESI limit (₹25,000), do they automatically lose their ESI coverage?
Yes, once an employee’s salary exceeds the statutory limit, they become ineligible for ESI benefits. This is a common reason why companies consider switching to group health insurance, as it allows them to provide consistent coverage for all employees regardless of salary.
- ESI offers coverage for work-related injuries and illnesses. Does group health insurance also cover these situations?
While group health insurance typically covers a broad range of medical expenses, it may not always provide the same level of coverage for occupational injuries and illnesses as ESI. It’s crucial to review the specific policy details and consult with an insurance broker to understand how work-related incidents are handled under a group health insurance plan. Some policies might offer riders or add-ons to enhance coverage in this area.
- The article mentions that ESI claims can be cumbersome. How does the claims process typically differ between ESI and group health insurance?
Cashless claims under ESI can mostly be made at government hospitals. Applying for reimbursement claims (when made at a non-government hospital) can be a time consuming and lengthy process. Group health insurance, on the other hand, generally offers a wider network of hospitals for cashless treatment, and the claims process is often more streamlined, sometimes even facilitated through a dedicated third-party administrator (TPA).
- Can we offer both ESI and Group Health Insurance simultaneously?
Yes, it’s possible to offer both ESI and group health insurance. This is often done when some employees fall under the ESI salary threshold, and others exceed it. Though the process can turn to be an administrative nightmare.
