Can Mediclaim Replace ESIC?

Posted on: Aug 31, 2023 | | Written by:

Can Mediclaim Replace ESIC?

Published on August 29, 2023. EST READ TIME: 3 MIN

Keeping the social security of low-income group employees/workers in mind, the ESI or the Employees' State Insurance Act was introduced by the Government of India in 1948. The Act covers different health-related contingencies that employees/workers are susceptible to while working in an industrial setting, such as sickness, injury and disablement. The social security provision in the Act ensures the much-required medical and financial support to employees and their dependents during such contingencies.

The ESI scheme ensures complete medical care to the insured in the form of hospitalisation, medication, and care. It is quite similar to health insurance offered by insurance companies in India. However, when it comes to covering employees/workers against health-related eventualities, a question that comes to mind is - can Mediclaim replace the ESIC scheme? Let's find out!

What is ESIC?

ESIC, or Employees' State Insurance Corporation, is a prominent statutory social security body owned by the Government of India. The corporation is responsible for managing the ESI scheme, which was introduced under the Employees' State Insurance Act in India. The scheme was inaugurated in Kanpur in 1952.

The following are the features and benefits of the ESI scheme:

• ESI scheme ensures financial protection to low-wage employees and workers in the organised sector against sickness, maternity, injury and disablement/death due to injury at the workplace.

• This health insurance and social security scheme is for employees and workers with a maximum monthly salary of INR 21,000 or less. The maximum salary for people with disability is capped at INR 25,000.

• ESI is a self-financing scheme in which both employers and employees make regular monthly contributions. The employer contributes 4.75% of the employee's salary, and the employee contributes 1.75% of it.

• Workers earning daily average wages of INR 137 are exempted from contributing anything to the scheme. The money contributed by the employer to this scheme is paid to the workers.

• Employees covered under the ESI scheme can receive financial assistance to help them manage their medical expenses and other bills, especially if they lose their salary due to sickness or injury.

Difference between ESIC Scheme and Mediclaim

Although both ESIC and Mediclaim offer financial assistance to the insured during medical emergencies, there are some differences between the two.

The following are the differences between ESIC and Mediclaim

Parameter	ESIC Scheme	Mediclaim
Policy Type	The ESIC scheme is a government-run social security scheme and a statutory obligation of employers toward their employees.	Mediclaim is a health insurance policy offered by insurance companies. Employers are not obligated to cover their employees under a Mediclaim policy.
Policyholders	Employees/workers earning less than INR 21,000 per month can be covered under this scheme.	Anyone can purchase a Mediclaim policy to cover his/her medical bills.
Contribution	Both employers and employees contribute a pre-decided percentage of the employee's salary to this scheme.	In Mediclaim, only the policyholder must pay the premiums of his/her healthcare plan to keep it active.
Coverage	The ESI scheme offers financial assistance to employees/workers and their dependents in case of injury or sickness.	This health insurance policy covers the medical expenses of policyholders in the event of an accident or medical emergency. The policy does not offer any financial assistance to the dependents.
Benefits	The ESIC scheme offers the following benefits to workers/employees: • Coverage of medical expenses • Maternity benefits • Financial assistance in case of temporary or permanent disability • Sickness benefit • Unemployment benefit • Financial assistance to dependents • Old-age medical care benefits • Other benefits include coverage of funeral costs, physical rehabilitation costs in case of disability due to injury at work, etc.	The benefits of a Mediclaim policy are: • Coverage of hospitalisation expenses • Coverage of pre- and post-hospitalisation expenses, daycare treatments, home healthcare, AYUSH treatment, ambulance charges, etc. • The policy also covers the cost of surgeries, hospital room rent, cost of prescribed medications, etc. • The availability of different healthcare plans, such as individual health insurance, family floater health plan, critical illness insurance, etc.
Cashless Treatment	Employees/workers covered under the ESI scheme can avail of cashless treatment in any government or ESI hospital or the hospitals with which the ESIC has a tie-up.	Policyholders can avail of cashless treatment at any network hospital of the insurance provider.

What are the Benefits of Mediclaim Over ESIC?

A Mediclaim policy can offer the following benefits over ESIC:

1. Comprehensive coverage

A Mediclaim policy covers a wide range of medical expenses of the policyholders, such as hospital bills, pre- and post-hospitalisation costs, ambulance charges, home healthcare bills, AYUSH treatment expenses, daycare treatments, etc. Hence, Mediclaim offers more comprehensive coverage to policyholders and saves them from financial setbacks during medical emergencies.

2. Coverage flexibility

Mediclaim offers more flexibility when compared to ESIC. You can choose the sum insured, take important add-on covers with your healthcare plan, and customise your policy as per your requirements and pocket.

3. Not dependent on employers

To be covered under ESIC, you must be an employee in the organised sector. On the other hand, anyone who can pay regular premiums can buy a Mediclaim policy to cover their medical expenses.

4. Tax savings

Under Section 80D of the Income Tax Act, 1961, policyholders can claim tax deductions on the premiums paid for their Mediclaim policies. There are no such tax benefits under the ESIC scheme.

Conclusion

To sum up, both ESIC and Mediclaim are important products that can ease your financial burden during medical emergencies. However, can Mediclaim replace ESIC? Well, the answer is — no; Mediclaim cannot replace ESIC. ESI is a compulsory social security scheme that covers low-wage employees/workers in the organised sector against different health-related contingencies. Mediclaim is a good option for employees looking for wider coverage and not covered under the ESI scheme.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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