ESI (Employees’ State Insurance)

The Employees’ State Insurance scheme provides medical care and cash benefits — sickness, maternity, disablement, dependants’ benefit — to covered employees and their families. It is administered by the ESIC and applies to establishments in notified areas above a size threshold.

Coverage is decided by a monthly wage threshold: employees earning at or below it are covered, those above are not. An employee who crosses the threshold mid-contribution-period stays covered until the end of that period rather than dropping out immediately, which is a detail payroll runs frequently get wrong.

The employer contributes a larger share than the employee. Contributions are calculated on gross wages rather than on basic, which distinguishes ESI from provident fund and is another common source of error.

Benefits are delivered through ESIC dispensaries and hospitals rather than as reimbursement, so the practical value to an employee depends partly on what facilities exist near them.