Fixed Medical Allowance

The Fixed Medical Allowance (FMA) is a fixed monthly payment of Rs. 1,000 to a central government pensioner or family pensioner who resides in an area not covered by the Central Government Health Scheme (CGHS) and does not avail the CGHS outpatient facility, to meet day-to-day medical expenses that do not require hospitalisation. It is a flat allowance, not a reimbursement: no bills or vouchers are submitted. It is granted by the Department of Pension and Pensioners’ Welfare .

This article explains the allowance: the current amount and its history, who is eligible and the common confusion with the railway pensioners’ rule, how it is claimed, the choice between the Fixed Medical Allowance and CGHS, the tax position, and the demands to raise it. It is the outpatient counterpart, for a pensioner outside a CGHS area, to the Central Government Health Scheme that covers those inside one.

The amount and its history

The Fixed Medical Allowance is Rs. 1,000 a month, with effect from 1 July 2017. It was raised to that figure from Rs. 500 by the Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 19 July 2017, on the 7th Central Pay Commission recommendations on allowances as modified by the government. It has stayed at Rs. 1,000 since.

The allowance has risen in steps over the years:

One feature matters as much as the amount: the Fixed Medical Allowance does not attract dearness relief . Unlike the pension, which rises every six months with dearness relief, the allowance is a fixed figure that changes only when the government issues a fresh order. So it has been stuck at Rs. 1,000 since 2017, and its real value has fallen with inflation, which is the source of the demands to raise it, discussed below.

Who is eligible

A pensioner or family pensioner qualifies where both conditions hold: they reside in an area not covered by the CGHS, or a corresponding departmental health scheme, and they do not avail the CGHS outpatient facility. The allowance is for outpatient care only; hospitalisation is handled separately.

A common error should be cleared up. The test for a CGHS pensioner is the non-CGHS-area test, not a distance. The rule that a pensioner residing beyond 2.5 km of a hospital or health unit qualifies belongs to the railway pensioners’ health scheme, not to the CGHS Fixed Medical Allowance, and the two should not be mixed up.

Two further points. If a pensioner shifts residence from a non-CGHS area into a CGHS-covered area, the allowance stops from the date of the move, whether or not they actually use CGHS, and the pensioner must tell the bank to discontinue it. And a retiree on the National Pension System who is eligible for CGHS but resides outside a CGHS area is entitled to the allowance too, if they do not avail any CGHS facility.

How to claim it

Because it is a fixed allowance and not a reimbursement, the claim is simple. The pensioner gives a one-time self-declaration, or undertaking, to the pension-disbursing bank. The declaration authorises the bank to credit Rs. 1,000 each month to the pension account, certifies that the pensioner resides in a non-CGHS area and does not avail the CGHS outpatient facility, undertakes to inform the bank at once if the residence changes to a CGHS-covered area, and undertakes to refund any amount credited to which the pensioner was not entitled. The bank endorses the Pension Payment Order accordingly. There is no medical certificate, no bill and no voucher required for the payment; the requirement to produce bills belongs to bill-based medical reimbursement, which the Fixed Medical Allowance replaces for those outside a CGHS area.

The choice between the allowance and CGHS

A pensioner in or near a CGHS area chooses between three routes, and they are mutually exclusive. The procedure and the timelines for changing between them are set by the Department of Pension and Pensioners’ Welfare Office Memorandum of 23 March 2022, which allows only one change of option in the lifetime of a pensioner or family pensioner.

• Full CGHS: join the CGHS for both outpatient and hospitalisation cover by paying the CGHS contribution, and draw no Fixed Medical Allowance.
• The allowance for outpatient care: in a non-CGHS area, draw the Rs. 1,000 allowance for day-to-day outpatient needs and make one’s own arrangements for anything more.
• The allowance plus CGHS for hospitalisation only: surrender the CGHS outpatient facility, have the CGHS authorities certify that the pensioner is availing only the inpatient facility, and then draw the Fixed Medical Allowance for outpatient care alongside CGHS cover for hospitalisation.

The change between the allowance and CGHS outpatient care runs through the bank and the CGHS with prescribed forms and short timelines, and because it is a once-in-a-lifetime change, a pensioner should weigh it carefully. The third option, the allowance for outpatient care with CGHS kept for hospitalisation, is the one many pensioners find most useful, because it covers the small recurring costs in cash and the large hospital costs through CGHS.

The tax position

The tax treatment should be stated carefully, because pensioner websites disagree. No provision of the Income-tax Act specifically exempts the Fixed Medical Allowance. Because it is a fixed monthly payment rather than a reimbursement of actual medical bills, the dominant professional view is that it is taxable as part of the pensioner’s income, in the same way as the pension. The claims that it is fully exempt appear on pensioner-advocacy pages that are in fact requesting the government to grant such an exemption, which itself shows that no statutory exemption exists at present. A pensioner should treat the allowance as taxable and confirm the position for their own facts with the bank and a tax adviser, as the income tax for pensioners article discusses.

The 7th CPC and the demands to raise it

The Fixed Medical Allowance is a case where the government gave more than the pay commission recommended, then held it flat. The 7th Central Pay Commission recommended applying its standard factor of 1.5 to the allowance, which would have taken it from Rs. 500 to Rs. 750. The government modified that and raised it to the round Rs. 1,000 instead. In the same round it revised the constant attendant allowance for the fully disabled by the 1.5 factor, from Rs. 4,500 to Rs. 6,750.

Since 2017 the allowance has not moved, and pensioners’ associations have petitioned to raise it, to Rs. 3,000 a month, and separately to Rs. 5,000 linked to dearness relief with the area restriction removed. None of these has been implemented, so they are demands, not entitlements, and a pensioner should not count on any figure above Rs. 1,000. Whether the allowance is revised again is a matter for the 8th Central Pay Commission when it reports; no revised figure for it can be stated as fact until then.

See also

• Central government pension
• Family pension
• Central Government Health Scheme
• Dearness relief
• PPO and the annual life certificate
• Income tax for pensioners
• Constant attendant allowance
• Disability and invalid pension
• Commutation of pension
• Gratuity for central government employees
• Leave encashment
• Central Government Employees Group Insurance Scheme
• Old Pension Scheme
• National Pension System
• Unified Pension Scheme
• Superannuation
• Qualifying service
• Department of Pension and Pensioners’ Welfare
• Allowances for central government employees
• Dearness allowance
• Basic pay
• 7th Central Pay Commission
• Central government employees in India
• Take-home salary for central government employees
• Central government pension calculation
• Commutation of pension calculator
• Family pension calculator

External references

• Department of Pension and Pensioners’ Welfare
• Central Government Health Scheme
• Central Pension Accounting Office

References

1. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 19 July 2017, “Grant of Fixed Medical Allowance (FMA) to the Central Government Pensioners residing in areas not covered under CGHS” (enhancement to Rs. 1,000 a month with effect from 1 July 2017).
2. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/25/2008-P&PW(D) dated 19 November 2014 (enhancement to Rs. 500 a month).
3. Department of Pension and Pensioners’ Welfare Office Memorandum No. 45/57/97-P&PW(C) dated 19 December 1997 (introduction of the Fixed Medical Allowance at Rs. 100 a month).
4. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/05/2019-P&PW(D) dated 23 March 2022 (procedure and timeline for the change of option between CGHS outpatient care and the Fixed Medical Allowance, and the option to draw the allowance with CGHS for hospitalisation only).
5. Ministry of Finance, Department of Expenditure, Office Memorandum No. 11-1/2016-IC dated 11 July 2017 (concurrence for the 2017 enhancement, on the 7th Central Pay Commission recommendations on allowances as modified).