Sections 39-41 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 39 gives Insured Persons, and where extended their families, the right to medical treatment and attendance. Section 40 says who provides it: the State Government, or the Corporation in agreed cases. Section 41 sets general rules on commutation, conduct during treatment, overlapping benefits, death, repayment and recovery.
An Insured Person (and, where extended, his family) whose condition needs treatment is entitled to medical benefit in out-patient, home-visit or in-patient form (s.39(1)-(2)). Retired Insured Persons and their spouses, and persons permanently disabled by an employment injury, can continue on payment of contribution (s.39(3)). The State Government provides treatment unless the Corporation takes it over by agreement (s.40). Under s.41, no one may receive both sickness and maternity benefit, sickness and temporary disablement benefit, or maternity and temporary disablement benefit for the same period, and wrongly received benefits must be repaid (s.41(4), (8)).
Section 39: what medical benefit is
Section 39(1) entitles an Insured Person, or a family member where medical benefit is extended to the family, whose condition requires treatment and attendance. Section 39(2) says it may be out-patient treatment in a hospital, dispensary, clinic or other institution, visits to the home, or in-patient treatment. Scale, period and qualification are prescribed by the Central Government (s.39(3)). For the list of all six benefits see sections 32 and 33.
Who continues to get medical benefit
The provisos to s.39(3) extend cover beyond ordinary employment:
| Person | Continuing medical benefit |
|---|---|
| Person for whom contribution ceases to be payable | For such period and of such nature as the regulations provide |
| Insured Person who has reached the age of superannuation, retired under a Voluntary Retirement Scheme or taken premature retirement, and his spouse | Eligible subject to payment of contribution and other conditions in the regulations |
| Insured Person who ceases to be in insurable employment because of permanent disablement from an employment injury | Continues, subject to payment of contribution and conditions the Central Government prescribes |
| Insured Person during an employment injury | Conditions as specified in the regulations |
Rule 25 of the Central Rules, 2026 adds numbers. A person becoming an Insured Person for the first time is entitled to medical benefit for three months, and beyond that till the start of the corresponding benefit period if employment continues (rule 25(3)). Those with contributions paid for not less than seventy-eight days in a contribution period are entitled till the end of the corresponding benefit period (rule 25(4)). A person permanently disabled by an employment injury who left insurable employment can get medical benefit for himself and spouse on proof, paying fifty rupees per month in a lump sum for one year at a time in advance (rule 25(10)); the same fifty rupees applies to the widow or widower of a person receiving dependants' benefit (rule 25(11)). The family becomes entitled from a date the Corporation notifies (rule 25(7)). An Insured Person cannot claim reimbursement of treatment expenses except as the regulations provide (rule 25(9)).
Rule 25(12) lets an employer use the facility of an annual medical examination without charge of Insured Persons aged forty and above through the Corporation's own dispensaries or hospitals, on the scale in the Occupational Safety, Health and Working Conditions (Central) Rules, 2026.
Section 39(4) to (6) also lets the Corporation set up medical, dental and nursing colleges and training institutes (students may be required to sign a bond to serve the Corporation), run by itself or by Governments and notified bodies, and carry out occupational and epidemiological surveys.
For the same topic from the worker's point of view, our existing post on ESI benefits is a useful companion. If your establishment needs help making sure employees are covered, see our labour law compliance service.
Section 40: State Government and Corporation
| Sub-section | Point |
|---|---|
| 40(1) | State Government provides reasonable medical, surgical and obstetric treatment for Insured Persons (and families where extended); may arrange treatment at medical practitioners' clinics with the Corporation's approval |
| 40(2) | If sickness benefit incidence in a State exceeds the all-India average, the excess is shared between the Corporation and the State as agreed; the Corporation may waive |
| 40(3)-(4) | Agreement on scale and cost-sharing; if no agreement, an arbitrator appointed by the Central Government in consultation with the State decides |
| 40(5)-(6) | State Government may, with the Central Government's previous approval, set up an organisation for sickness, maternity and employment injury benefits; structure and functions prescribed by the Central Government |
| 40(7)-(9) | Corporation may itself establish hospitals and dispensaries, contract with local authorities, private bodies or individuals, and commission hospitals through third-party participation |
| 40(10)-(11) | Corporation may, in consultation with the State, take over the responsibility for medical benefit, with the State sharing the cost as agreed; references to the State then read as the Corporation |
| 40(12) | In States where the Corporation provides medical benefit, the Central Government is the appropriate Government for establishments there |
Rule 26 of the Central Rules deals with the State organisation in s.40(5): an Employees' State Insurance Society with a Governing Body, Executive Committee, Chief Executive Officer and Secretariat, registered under the State's Societies Registration Act or Public Trust Act. The Governing Body is chaired by the Chief Secretary and meets at least twice a year; the Executive Committee meets at least once every three months.
Section 40(12) is important for employers. It affects which Government's rules apply to your establishment. The Central Rules apply where the Central Government is the appropriate Government; where the State Government is, its own rules apply. Check which applies to your location.
Section 41: general provisions on benefits
| Sub-section | Rule |
|---|---|
| 41(1) | No lump-sum commutation of disablement benefit, save as the regulations provide |
| 41(2) | No sickness benefit or temporary disablement benefit for a day on which the person works, is on leave or a holiday with wages, or is on strike, save as the regulations provide |
| 41(3) | A person receiving sickness or temporary disablement benefit must stay under medical treatment, follow instructions, avoid retarding recovery, not leave the treatment area without permission and allow examination |
| 41(4)-(5) | No two of: sickness and maternity, sickness and temporary disablement, maternity and temporary disablement for the same period; the person chooses which benefit |
| 41(6) | If a person dies during a period for which a cash benefit is due, the amount to the date of death goes to the nominee in writing or, failing that, the heir or legal representative |
| 41(7) | Eligibility for dependants' or disablement benefit bars Employees' Compensation from the employer under Chapter VII; eligibility for ESI maternity benefit bars maternity benefit from the employer under Chapter VI |
| 41(8) | Benefit or payment received when not lawfully entitled must be repaid; on death, from the assets of the deceased devolved on the legal representative |
| 41(9) | Value of non-cash benefits is decided by the authority the regulations specify, and that decision is final |
| 41(10) | Amounts recoverable under the section can be recovered as provided in sections 129 to 132 |
Two points deserve a closer look. First, sub-section (7) prevents a double recovery: a woman entitled to ESI maternity benefit cannot also claim maternity benefit from the employer under Chapter VI, which matters for payroll teams. See our existing post on ESI maternity benefit for 26 weeks. Second, sub-section (8) makes a wrongly received benefit repayable, and a claim by the Corporation to recover it is decided by the Employees' Insurance Court under s.49(1)(i).
Example
An Insured woman is receiving maternity benefit and also becomes sick during the same period. Under s.41(4)-(5) she cannot receive both sickness and maternity benefit for the same period; she chooses. Separately, rule 22(3)(d) allows an additional period for sickness arising out of pregnancy or confinement, so check that provision before deciding.
Need help making sure employees are covered?
Benefits depend on timely registration and contributions, and on knowing whether the State or Central Government is your appropriate Government. If you would like your coverage reviewed, our labour law compliance team can assist.
Key takeaways
- Medical benefit covers out-patient, home-visit and in-patient care; it extends to the family only where the Corporation extends it.
- Retired Insured Persons, their spouses, and persons permanently disabled by an employment injury can continue on payment of contribution.
- The State Government provides treatment unless the Corporation takes responsibility by agreement; s.40(12) makes the Central Government the appropriate Government where the Corporation provides medical benefit.
- No overlapping sickness, maternity and temporary disablement benefit for the same period; the person chooses.
- Wrongly received benefits must be repaid, recoverable under sections 129 to 132.
Read next
- Section 38: Dependants' benefit
- Sections 42 and 43: Corporation's recovery rights against employers
- ESI for construction workers: special provisions
- Sickness benefit under ESI
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.