The Employees' State Insurance Corporation (ESIC) is a statutory body under the Ministry of Labour and Employment, Government of India, that administers the Employees' State Insurance (ESI) scheme. The ESI scheme is a self-financing social security and group health insurance scheme for Indian workers, set up under the Employees' State Insurance Act, 1948. It provides medical care and cash benefits to employees and their dependants during sickness, maternity, disablement, or death due to employment injury.
In short, ESIC is the organisation that runs the scheme; ESI is the scheme itself. It is funded mainly by contributions from employers and employees, with no profit motive. ESIC runs its own network of hospitals, dispensaries and branch offices to deliver medical care and process claims.
Who Does ESIC Cover?
Employees who are of registered factories and establishment who earn a monthly wage upto Rs 21,000 are covered under ESIC. Wage ceiling is higher at Rs 25,000 a month for employees with disability. Once the employee is registered in ESIC they become insured person and their family as well like spouse, child and dependent parent also become eligible for medical coverage. This is especially helpful for lower wage workers since they are not covered under any corporate health insurance policy.
The plan applies to non-seasonal factories employing 10 or more people, and has been extended to other establishments such as shops, hotels, restaurants, cinemas, road transport undertakings, newspaper establishments and private educational and medical institutions. The threshold number of employees for coverage is 10 or 20 depending on the type of establishment and the state.
You must be employed in a covered factory or establishment.
Your gross monthly wage must be Rs 21,000 or less (Rs 25,000 for persons with disability).
Once covered, your dependants get medical benefits too.
How Much Does ESI Cost You And Your Employer?
ESCI plan is funded by a monthly contribution calculated as a percentage of salary. Employer pays 3.25%of the employee salary and the employee pays 0.75% which make total of 4% of salary. Employees those who earn average of Rs 176 or above are excluded from paying their own share; employer still pays it's part.
| Contributor | Rate (% of wages) | On Rs 15,000 wage |
|---|---|---|
| Employer | 3.25% | Rs 487.50 |
| Employee | 0.75% | Rs 112.50 |
| Total | 4.00% | Rs 600.00 |
Worked example
Suppose you earn a gross monthly wage of Rs 15,000. Your own contribution is 0.75% of Rs 15,000, which is Rs 112.50. Your employer adds 3.25%, which is Rs 487.50. The combined amount of Rs 600 is deposited with ESIC each month, and in return you and your dependants get access to medical care and the scheme's cash benefits.
Contribution periods matter
ESI runs on two six-month contribution periods: April to September and October to March. Benefits for a given period depend on contributions paid in the corresponding earlier contribution period, so continuity of contributions affects your eligibility for cash benefits.
What Benefits Does ESI Provide?
It provides both medical care and cash benefits. Full medical treatment is covered under medical care and their dependents as well such as spouse, child and parents. They are covered from day one of employement, with no cap on the cost of treatment. main cash benefits are listed below. ESI provides both medical care and cash benefits. Medical benefit covers full medical treatment for the insured person and their family from day one of employment, with no cap on the cost of treatment. The main cash benefits are listed below.
Benefit | What it covers |
|---|---|
Medical benefit | Full medical care for the insured person and dependants from day one of insurable employment. |
Sickness benefit | Cash payment of 70% of wages during certified sickness, for up to 91 days in a year. |
Maternity benefit | Paid leave at the full average daily wage for 26 weeks, extendable by one month on medical advice. |
Disablement benefit | 90% of wages as monthly payment for temporary or permanent disability caused by employment injury. |
Dependants' benefit | 90% of wages as a monthly pension to dependants if the insured person dies due to employment injury. |
Other benefits | Funeral expenses, confinement expenses, vocational and physical rehabilitation, and unemployment allowance under the Rajiv Gandhi Shramik Kalyan Yojana. |
How Do You Register And Use The ESIC Scheme?
Registration under ESI is the employer's responsibility, but you receive your own identity record. The process typically runs as follows.
Employer registers the establishment
The employer registers with ESIC online within 15 days of the ESI Act becoming applicable to the establishment.
Employee details are submitted
The employer enrols eligible employees and submits their details to generate an insurance number.
You get an Insured Person number and e-Pehchan card
You receive a unique insurance number and a biometric ESI identity (e-Pehchan) card for yourself and your family.
Contributions are deducted monthly
Your 0.75% share is deducted from wages and the employer deposits the full 4% with ESIC each month.
You access care at ESI facilities
You and your dependants use ESIC dispensaries, hospitals or tie-up hospitals; cash benefits are claimed through the local branch office.
How Is ESI Different From Private Health Insurance?
ESI is a government social security scheme tied to employment and wages, while private health insurance is a voluntary policy you buy from an insurer. They differ on cost, coverage and portability.
Feature | ESI scheme | Private health insurance |
|---|---|---|
Who pays | Employer (3.25%) and employee (0.75%) of wages | Policyholder pays the premium |
Eligibility | Wage up to Rs 21,000 a month in covered establishments | Open to most applicants, subject to underwriting |
Cash benefits | Sickness, maternity, disability, dependants' benefits | Usually none; mainly reimburses medical costs |
Treatment network | ESIC hospitals, dispensaries and tie-ups | Insurer's network of hospitals |
Continuity on job change | Linked to employment; stops if you move out of coverage | Continues as long as you pay the premium |
Being covered by ESI does not prevent you from also holding a private health policy. Many people keep a separate policy for coverage that continues when they change jobs or earn above the ESI wage limit.
Key Takeaways
ESIC is the statutory body that runs India's Employees' State Insurance (ESI) scheme under the ESI Act, 1948.
ESI covers employees earning up to Rs 21,000 a month (Rs 25,000 for persons with disability) in registered factories and establishments.
The scheme is funded by a 4% contribution: 3.25% from the employer and 0.75% from the employee.
Employees earning up to Rs 176 average daily wage are exempt from paying their own share.
Benefits include full medical care, sickness benefit (70% of wages), maternity benefit (26 weeks), and disability and dependents' benefits (90% of wages).
Medical benefit starts from day one of insurable employment and extends to the worker's dependents.
ESI runs on two contribution periods a year, and cash benefit eligibility depends on contributions in the corresponding earlier period.
Frequently Asked Questions
ESIC stands for the Employees' State Insurance Corporation. It is the statutory body under the Ministry of Labour and Employment that administers the Employees' State Insurance scheme.
Yes. The employee's share of 0.75% of salary is deducted from their salary each month, while the employer adds 3.25%. Employees who are earning up to Rs 176 average daily salary are excluded from their own share, but the company still contributes to ESI.
If your salary rises above Rs 21,000 during the ESI time period then also you can continue in the policy of ESI until the end of six-month period. If your salary stays above the minimum salary criteria then your coverage may end from next year's time-period.
Yes, if you are covered under ESI then your family(spouse, child and parents) is also covered under ESIC medical policy.
ESIC is mandatory for employers to cover their employees specially those who work in factories and establishments that meet the employee threshold must register under ESI and deposit contributions. It is a statutory obligation, not optional.
Sources and references
- 1.Employees' State Insurance Corporation, Ministry of Labour and EmploymentOfficial ESIC portal: scheme, benefits and contribution details
- 2.The Employees' State Insurance Act, 1948Governing legislation for the ESI scheme
About the authors
Nikita Joshi
Written by · Marketing Specialist - ACKO for BusinessNikita Joshi works on Group Mediclaim at Acko General Insurance, spanning client advisory, growth analytics, and marketing for the SME segment. She combines data-driven insight with content and campaign strategy to build credible, useful health insurance experiences for employers and employees alike.
Nitesh Kapur
Reviewed by · Senior Director – Underwriting & Claims, Group Health Insurance at ACKOWith over 15 years of experience in health insurance underwriting, he has led group health insurance strategy, risk assessment, and policy design. He has held leadership roles at leading insurers, building risk frameworks, evaluating complex health risks, and strengthening underwriting standards.
