Amendments to Employees State Insurance Corporation (ESIC), 2016

Posted By Amritesh
On December 30th, 2016
Comments: 8 responses

Employees State Insurance Corporation (ESI) has witnessed quite a few amendments in the last few months which are aimed at improving the healthcare benefits extended to the employees covered under the Act. The latest amendments to ESI are aimed at bringing more individuals under the scheme which would also include their dependents under the fold. The social security schemes are aimed at improving the standard of living and provide better healthcare facility to the Individuals. Amendment also tries to expand the coverage in terms of reach so that more and more Individuals across the nation are included under the scheme.

Employee State Insurance (ESI)

Salient Features And Benefits Under Employees State Insurance Act (ESI)

Wage Ceiling Hiked

The coverage has been extended to Employees earning upto Rs 21,000/- per month from existing Rs 15,000/- per month. These will bring another 50 lakh employees under the ESI coverage ensuring better healthcare facility to the individuals and their dependents. The Committee had recommended the wage ceiling to be raised to Rs 25,000/- per month but the government decided to weigh in the resistance raised by the corporates.

The move is bound to impact the employers and the employees alike as the contribution rates will reduce the take home salary of the employees. The amendment has been implemented from 1^stJanuary. 2017.

Contribution Rates Lowered

The contribution rates has been lowered for the employers as well as the employees in areas which have been included for the first time under the ESI Act under Rule 51B. The contribution has been capped at 4% which includes Employers share of 3% while the Employees contribution will be 1%, these reduced rates will be applicable for the initial 24 months. Following which the existing rates of 4.75% for employer and 1.75% for employees will be applicable.

Government has issued notification to reduce the contribution rates for the Employers as well as Employees effective from 1^st July, 2019. The revised ESI contribution rate is 3.25% for the Employer and 0.75% for the Employees. In February,’19, Government had issued a draft to reduce the contribution rate for Employer to 4% and 1% for the Employees.

New Initiatives By Labour Ministry

New initiative has been announced from 20^thDec,’16 till 31^st March,2017 for employers to register themselves under the ESI Act who till now had been left out of coverage to ensure that medical benefits are extended to more Individuals.

Workers in the formal sectors will soon have the option to chose Health Insurance from the Open market offered by the Private Insurers in lieu of mandatory scheme run by ESIC.

ESI is also planning to upgrade the existing facilities in order to provide better healthcare services to the subscribers. New healthcare facilities are also expected to come up which would help the subscribers residing in remote locations.

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