Page 97 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes
In April 2010, Schmitt switched Plans for Professionals, which he founded in 1971 because
he needed a “real” job (his first football contract was for US $8,500 a year), to a self-funded
plan. (Self-funding is when individual health claims are paid out-of-pocket instead of the
monthly fixed premium to a health insurance carrier.)
Schmitt chose health plan administrator MagnaCare, which he had heard of through his
trade union clients. Today, he lauds the way MagnaCare’s self-funded plan has helped get
the company’s claims under control without any decrease in benefits to employees. “We’ve
seen a decrease in costs and better management of what we’re paying,” says Schmitt. He
attributes that to understanding claims; MagnaCare staffers come in on a monthly basis to
explain payouts and opportunities to save money.

Despite having to pay out various fees (versus one insurance premium) for plan
administration, stop-loss insurance, and monthly claims, Schmitt says that since switching
to the self-funded plan the company has seen annual health insurance savings between 15
and 20 percent.

“I’m happy. My people are very happy,” he says.
Best of all: Schmitt’s grandson Charlie has been in remission for more than a year.
Question
Analyze and discuss the case.

Source: http://www.inc.com/articles/201106/case-study-paying-employee-health-claims-out-of-
pocket.html

5.5 Summary

 The Government of India through notification in the Official Gazette has amended the
Employees’ State Insurance (Central) Rules, 1950. Accordingly, as per rule 50, the wage
limit for coverage of an employee under Employees’ State Insurance Act has been enhanced
from 10,000 to 15,000 with effect from 1st May 2010.
 ESI Corporation has taken a decision to set up one hospital in each State as Model Hospital.
 The Central Government appoints a chairman, a vice-chairman and other members
representing interests of employers, employees, state governments/union territories and
medical profession. Three members of the Parliament and the Director General of the
Corporation are its ex-officio members.
 Every factory or establishment to which this Act applies has to be registered within the
specified time and the regulations made in this behalf.

 All the employees in factories or establishments to which this Act applies shall be insured
in prescribed manner. Such insured persons shall pay contributions towards Insurance
Fund through their employers who will also pay their own contribution.

 The ESI Act authorises Central Government to establish Employees’ State Insurance
Corporation for administration of the Employees’ State Insurance Scheme. Such Corporation
shall be body corporate having perpetual succession and a common seal and shall sue and
be sued by the said name.
 All contributions paid under this Act and all other moneys received on behalf of the
Corporation shall be paid into a Fund called the Employees’ State Insurance Fund which
shall be held and administered by the Corporation for the purposes of this Act

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