ESI Vs Group Medical Insurance

 

Analysis of the Differences between ESI and Group Mediclaim

 

In India, do workers have the option of purchasing both individual and group health insurance?

Health insurance is a standard benefit offered by nearly every company in the modern workplace. In most cases, your best bets will be to go for employer-provided health benefits. When it comes to your health, which option is best i.e. ESI or Group Mediclaim Insurance?

Though most people are familiar with individual Mediclaim policies, few can explain what an ESI or group plan is. Employees at a company are eligible for ESI and group health insurance. As with other types of group insurance, the employer foots the bill for group health insurance premiums so that workers can reap the benefits of this coverage. When an employee participates in ESI, they can receive medical reimbursement in exchange for paying the premium. Unlike with group insurance, the cost of the premium is shared equally between the company and employee. The term "group insurance" is used to describe any type of insurance coverage provided to an organization's staff (and their families) by an outside insurance provider at no additional cost to the staff members themselves. Here we'll compare and contrast these two service perks and show how they serve the same basic needs of the staff while still being distinct. Use it to guide your decision between the two options.

 

Learning about ESI, or Employees' State Insurance

ESI, or Employee State Insurance, is a programme that helps workers in any organization pay for their healthcare costs through their employer. The Employees' State Insurance Corporation (ESIC) is in charge of overseeing the ESI programme. The Ministry of Labor and Employment oversees it; it is a separate government agency that pays its own bills. The most fundamental goal of this plan is to give financial assistance to workers in the event of sickness or death.

 

The ESI Act of 1948: What Is It?

As the first legislation of its sort in independent India, the Employees' State Insurance Act, 1948 (ESI Act) was passed by India's parliament. Workers in businesses, non-profits, and industrial facilities may be eligible to receive health insurance coverage under the terms of this law. During their time of employment, workers are eligible to receive financial assistance with their medical bills. In unfortunate cases of premature death, the dependent family members of the deceased employee will also receive certain benefits from the scheme. This is mandatory for every employed worker for day to day work.

Understanding group health insurance

Employer health insurance or group health insurance is a healthcare policy

The legal document issued to the policyholder that outlines the conditions and terms of the insurance; also called the ‘policy that the employer offers to the employees as a service benefit. The employer purchases the policy. The employees and their dependent family members (spouse, children, parents) enjoy the insurance coverage under the policy. The employees usually do not have to contribute any amount from their salary and, the employer takes complete responsibility.

 

Comparing eligibility norms

There are differences between these two for the offerings and features. Start with the eligibility regulations to understand the key differences.

 

•                    Under ESI, an employee can qualify for the benefits if the monthly salary is less than Rs.21,000. If the employer under whom they are working has registered with ESIC, the employee can get the ESI benefits. The organisation of the factory where they work should have a minimum employee strength of 10 to be eligible for registering.

•                    Under group health insurance policies, any employer having an organisation with seven or more employees can buy the insurance for the employees. The group policy requirement is to form an employee –Employer group. This group has common interests in getting group health insurance.

Eligibility under ESI vs Group Health plans

i.                                          Essential documents in both the cases

The following information is required of any business or organisation applying for ESIC benefits:

·                  Business licences, partnership agreements (if applicable),

·                  Employee information (wages, government-issued IDs, Social Security numbers, etc.),

·                  Time and attendance records for all workers,

·                  A cancelled check from a bank account in the company's name, and

·                  A list of shareholders.

Employers should make contact with an insurance provider and outline any necessary requirements before a policy is purchased or approved for a group of employees. In most cases, the employer determines the policy. Document sent to the policyholder outlining the terms and conditions of the insurance; also known as the "coverage they select after providing information about their employees and their company's GST number. The policy is the legally binding contract between the insurance company and the policyholder that specifies the coverage, deductible, and other aspects of the coverage. Insurer-specific documentation needs can vary widely. Group health insurance purchases, on the other hand, require fewer paperwork.

ii.                                       Check out the contribution rules.

Service benefits include things like employer-provided health insurance and employee savings accounts. However, the patterns of contributions are not the same. Both the employee and the company pay into the insurance system in an ESI scheme. Each party to the ESI agreement is responsible for 3.25% of their respective wages; the employer is responsible for 3.25 percent and the employee is responsible for 0.75%.

When it comes to group insurance, on the other hand, the premium is covered entirely by the company. The employer is responsible for the annual renewal and payment of the premium. However, the donation percentage is set by the organization's policies. Employers typically foot the bill for this sort of insurance. However, at certain companies, workers are expected to put out their own money toward the premium.

Comparing Group Health Insurance and ESI

Having to decide between the two options might be difficult for workers. You might learn more about your options by contrasting the coverage details of the various insurance plans. It helps you see things more clearly, so you can make a choice that fits your needs and tastes. The following text will enlighten you on the most crucial elements to consider when making your choice.

1.               Sum assured:

A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy. The employer decides the insured sum as they pay the premium. There is a limitation to bearing the medical expenses in a group insurance Group Insurance refers to any insurance plan under which a group of employees (and their dependents), or members of a policy The legal document issued to the policyholder that outlines the conditions and terms of the insurance; also called the ‘policy. With ESI, there are no such limitations. There is no fixed sum that gets insured for the employee.

A policyholder's health is protected up to a certain limit under a group health insurance plan.

 

In a group health insurance plan, there is a cap on who is responsible for covering medical costs. The term "group insurance" is used to describe any type of insurance coverage provided to a group of people, such as an employer's staff or a union's members and their families. The policy is the legally binding contract between the insurance company and the policyholder that specifies the coverage, deductible, and other aspects of the coverage. Those constraints do not exist with ESI. Employees are not guaranteed a specific amount of insurance coverage.

2.               Insurance Coverage without paying any payment at Hospital:

When an employee has access to "cashless coverage," they can be hospitalized and receive treatment without having to pay anything out of pocket. This only applies to facilities inside the insurance provider's designated network. There are often around 5000 hospitals included in a group health insurance plan's network in India. In contrast, fewer hospitals are covered under the ESI scheme. Both plans cover hospital stays and medical care out of pocket, but ESI has fewer options.

3.               Waiting period and serious illnesses

It is always problematic to think about how long someone could have to wait before their insurance would cover them for things like critical sickness or pre-existing conditions. The waiting period for the Policyholder tenure refers to the time period in which a person has to wait before receiving insurance benefits or renewing their policy.

Depending on the policy, there may be a waiting period before a person is covered by insurance or before their treatment, costs for a critical illness are covered. The waiting period for some insurance policies is 24 months. The time a person must wait until they are eligible for insurance, if they are eligible at all. As far as ESI is concerned, the clock never stops. The worker must have paid into the plan for at least two years before receiving coverage for critical illness treatments.

4.               Maternity Benefits and coverage under both insurances:

When it comes to maternity benefits, ESI provides 26 weeks of compensation during confinement and 6 weeks of salary during miscarriage to women who have been enrolled for 70 days or more during two consecutive contribution terms (April–September and October–March). This is a one-of-a-kind aspect of ESI, but unfortunately, it cannot be applied to group health plans. Pregnancy, labour, delivery, and postpartum care are all covered by a GHI for a woman's employee or the wife of a man's employee.

5.               Effects of Switch a Job:

If you move jobs, you will not have to give up your insurance coverage or your benefits. Although the protocols and customs are different, it is doable. The coverage can be transferred from one group health insurance plan to another. In ESI, changing the name of the employer must be done in a formal manner.

6.               Benefits in case Disability or death of insured person:

No group health insurance policies provide coverage in the event of the insured's death or disability.

The policy is the legally binding contract between the insurance company and the policyholder that specifies the coverage, deductible, and other aspects of the coverage. Group health coverage until you leave your job and the company stops paying the payment, your group health insurance policy will remain in effect. No costs outside from healthcare are covered by this plan. In the event of an accident, the employee covered by ESI may be eligible for a pension of up to 90% of their final wage. An accident is defined as an unforeseen and unplanned occurrence that results in a lifelong handicap throughout the course of one's service. The ESI fund will provide a pension to the surviving family members in the event of the employee's death while in service.

7.               More option of adding Medical Components:

There is more room for benefit customization in group health plans, giving you more options for adding Mediclaim components. Purchase of additional benefits or cover on the existing policy is an option offered by several insurance firms to their subscribers. f. The sum insured and benefits under ESI are fixed and cannot be changed.

8.               Hassles and other facilities required during treatment:-

There are so many hassles, which are faced while taking treatment under ESI scheme as ESI hospitals are very few and people covered under the scheme are much higher in numbers, this leads to more waiting time for getting the treatment from hospitals. If there is requirement of carrying out any major surgeries then waiting period for the same may be even up to years. You may not even get a Hospital bed for treatment and there is a lot of hardship required for getting the medicines from Government medical shops situated in hospital premises. However, in Group insurance, you can get immediate medical attention and get the right treatment at the right time and the hospital staff itself will provide all required medicines.

You have to wait for hours inside hospitals for getting the doctor appointment, which is not the case with group medical insurance.

Apart from above, you will find cleanliness and attention required for patients in case of Group insurance, which will not be possible under ESI.

 

Comparison between ESI vs Group Health Insurance

 

Reasons to choose Group health insurance over ESIC.

• No need of payment in advance against medical expenses:  

Employees receive free healthcare alternatives while their employers cover the cost of the policy's premium. If they want to use the health insurance provided by ESI, they will each have to make a payment. From this perspective, a GHI is the superior option.

• Time for settlement of mediclaims:

Since both ESI hospitals and ESI offices are under the jurisdiction of the Government of India, settling claims and receiving treatment without exchanging cash is quick and painless. In comparison to private insurance firms, the ESI office's efficiency is subpar. You can collect your GHI benefits within 7-30 days after filing a claim with a TPA. You may find that you have significantly more spare time when employed by ESI. As an added bonus, the extensive GHI hospital network benefits more from cashless care than the severely limited ESI hospital options.