Lockdown, quarantine, isolation—at the beginning of 2020, who would have thought that these three words will have become such an integral part of our lives and will be directly linked to our health? The importance of quality healthcare has risen multi-fold after the Coronavirus outbreak. How well prepared are we as individuals to handle healthcare issues arising due to COVID-19?

In India, medical and health insurance coverage including benefits to dependants in the event of the insured’s death is mandated by the government under Employees State Insurance Act, 1948. This is offered to a certain section of the working class as part of social security benefit. Whereas a certain other section of the working class is still at the risk of having to manage their medical and health expenses out of their savings or through other insurance coverages, if opted. Let us first understand the coverage provided under the Employees State Insurance. 

Coverage under ESI

As per labour law, medical insurance is mandatory under the Employee State Insurance Act, 1948 (ESI Act) to those organised sector employees whose monthly wage is Rs 21,000 or less. (Note: The Shops and Establishments Act of the States of Andhra Pradesh and Telangana refer to an insurance-cum-savings scheme under which the State Government may, by notification, extend a group medical insurance scheme.) 

Under the ESI Act, the employer and employee contribute a monthly sum to the Employee State Insurance Corporation (ESIC). An employee has to avail ESI benefits from the ESIC. A person insured under the ESIC Act is entitled to various benefits such as sickness benefit, maternity benefit (where applicable), disablement benefit, medical benefit etc. 

A medical benefit is an insurance cover for out-patient treatment and attending physician in a hospital, dispensary, clinic, or in-patient treatment in a hospital or a doctor’s visit to the home of the insured. 

Normally, employees covered under the ESI within an organisation are not covered under the group health insurance policy offered by the employer. The employer generally offers a group health insurance policy to those who earn a salary of more than Rs. 21,000/-. Other than the aforesaid, there is no separate medical insurance mandated under the law. Hence, a group insurance cover is not a statutory obligation like ESI and is typically taken for those not covered under ESI. 

Employer Responsibility

In the wake of the pandemic, for the section of the working class not covered under the ESI, the Government of India, Ministry of Home Affairs, vide order No. 40-3/2020-DM-I (A) dated 15.04.2020 (MHA Order) has made it mandatory for all employers to provide medical insurance to their employees. Consequent to the MHA Order, the Insurance Regulatory and Development Authority of India (IRDAI) issued its guidelines vide a circular. 

The regulator has advised insurers to offer comprehensive health insurance policies to individuals or groups to enable the organisations to comply with the government’s directions. The regulator has also advised the insurers to devise the comprehensive health insurance products with simple wordings and conditions and at an affordable cost to organisations.

With this MHA Order, medical insurance will now be mandatory for those employees who are not covered under ESI. This means that there is a wider net cast and now the lower pay bracket employees will get ESI and those who earn above Rs. 21,000 will get a group medical cover from the employer. The question that arises now is regarding the liability cast on the employer for those who die due to COVID-19. 

Employer liability

Although the medical and health insurance coverage is now made mandatory for all sections of the working class the question that arises is whether death due to COVID-19 would cast any liability on the employer since the group medical cover mandated vide the MHA Order is limited to covering medical and health expenses.

Under the Employee’s Compensation Act, 1923, employers in India have an obligation to pay compensation to employees who are injured (which includes partial or permanent disablement) or die due to accidents or have contracted occupational disease arising out of or in the course of employment. Hence, strictly speaking, unless it can be demonstrated that COVID-19 was contracted during the course of employment and it arose out of employment, there would be no legal obligation to pay compensation to impacted employees. 

It is also relevant to note that the trigger for the obligation to pay compensation depends on various factors, including, the state of employment, the nature of the employee’s work, and the circumstances in which the injury/death was caused. Hence, the requirement to pay compensation to COVID-19 affected-employees would need a case-specific assessment.

Although the above is an overview of both, the medical coverage and compensation in the event of death to an employee under the available Indian statutes, the true test for a liability cast on the employer to pay compensation to an employee not covered under the ESI scheme is a test that the Indian judicial system is yet to experience in India.

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Article source: STOrai Magazine. Article author Nupur Dave Prasad has more than 17 years of experience as a corporate commercial and regulatory lawyer. She has worked as in-house counsel with large corporations. Her areas of practice include Contract and Commercial (Negotiation and Drafting) Labour Laws (legal and compliance), Legal Metrology and Regulatory.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.