New Delhi: Industrial workers will be allowed to leave the state-run Employees State Insurance (ESI) benefit scheme for a health insurance approved by the Insurance Regulatory and Development Authority of India (IRDAI). They can return if they wish but can’t opt out again, according to a proposal by the labour ministry.

The Union budget presented in February had made a case for allowing industrial workers to choose between benefits provided by the ESI Corp. (ESIC) and those available from other health cover schemes in the market, raising concerns in the labour ministry that the proposal, if implemented, would set off the process of undermining the 60-year-old institution.

ESIC provides healthcare facilities from outpatient facility to tertiary care services via its own hospitals or empanelled ones, though the quality of its service has been a concern on occasion.

“We are for giving choice to industrial workers who are subscribers of the ESIC. But we believe once they opt out for a health cover, they will realise the shortcoming of these products. With a (private) health cover, you may not be able to always walk into an OPD (outpatient department) for free service," said a government official, who declined to be named.

“The labour ministry is keeping the option open for a worker to come back to ESIC," the official said, adding that the ministry is making provisions for such arrangements in the draft ESI Amendment Bill.

ESIC has more than 19.5 million insured individuals and benefits 76 million people.

There are 36 hospitals under ESIC and 115 hospitals under states helping ESIC in medical service delivery.

Every month, eligible employees contribute 1.75% of their salary and employers contribute 4.75% to the ESI corpus.

The official, however, said that leaving ESI will be a one-time option.

“An empl-oyee to whom this Act applies shall have a one-time option of choosing a health insurance product, recognized by the Insurance Regulatory Development Authority for this purpose, in lieu of all the benefits under this Act," a labour ministry note said.

Mint has seen a copy of the note which was presented before the ESIC board last week.

An industrial worker covered by ESI benefits can opt out of ESIC after “submitting documentary proof of having got himself covered under this product (an IRDAI-approved health cover)", the note said. Once the employee exercises this option, the “employee shall be deemed to have exited from this Act".

Once a worker opts out of ESI, the contributions to ESIC, too, will stop, potentially increasing his take-home salary.

The ministry document said the worker will have a one-time option to return to the ESI scheme if he/she wishes.

For exercising this option, the worker will have to submit an application to the employer and the employer will inform ESIC. “On exercise of this option, the employee shall be treated as a new entrant to avail of the benefits under the Act, and the employer shall be liable under this Act," which means the monthly mandatory contributions will resume.

A second ministry official said the ESIC proposals are similar to plans of the Employees Provident Fund Organisation (EPFO). EPFO has proposed changes to the EPF Act to allow PF subscribers to shift to the National Pension System and return to PF. The official said that a detailed discussion with all stakeholders of ESIC will be carried out soon.

Michael Dias, secretary of the Employers’ Association in Delhi criticised the services provided by ESIC.

The finance ministry has now asked the labour ministry to provide an option to the industrial workers and “they must get the option sooner than later," he said.

“Those who are thinking that industrial workers are not literate about their retirement savings or health needs are only undermining workers. Option and choice are good for both the employees and employers," he added.

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