Fixed Medical Allowance

The Fixed Medical Allowance (FMA) is a flat payment of Rs. 1,000 a month to a central government pensioner or family pensioner who lives in an area not served by the Central Government Health Scheme (CGHS) and does not take CGHS outpatient care, to meet day-to-day medical expenses that do not require hospitalisation. The governing order is Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 19 July 2017, which raised it from Rs. 500 with effect from 1 July 2017. It is an allowance, not a reimbursement: nothing is billed and nothing is vouched.

The allowance answers a gap in the medical architecture rather than a need for cash. A serving employee in a CGHS city uses the CGHS; a serving employee outside one claims reimbursement under the CS(MA) Rules. A pensioner in a CGHS city uses the CGHS. A pensioner outside one has neither route, because the CS(MA) Rules exclude a retired government servant, and the Fixed Medical Allowance is what the Government put in that space in 1997.

This article states the amount and the orders that set it, the eligibility test and the three places it is commonly misread, the undertaking and option form that carry the claim, the combination with a CGHS card valid for hospitalisation only, the once in a lifetime change of option and its statutory timelines, the date from which the allowance runs, the absence of dearness relief and what that has cost since 2017, the tax position under the Income-tax Act 2025, and the railway and armed forces counterparts that are governed by different orders and a different test.

The amount and the orders that set it

The Fixed Medical Allowance is Rs. 1,000 a month with effect from 1 July 2017, set by Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 19 July 2017. Paragraph 2 of that order conveys the sanction of the President for enhancement from Rs. 500 to Rs. 1,000 following the decision of the Government on the recommendations of the 7th Central Pay Commission on allowances, with modifications. Paragraph 3 fixes the effective date at 1 July 2017. Paragraph 2 also preserves every other condition of the allowance, listing the Office Memoranda of 19 December 1997, 24 August 1998, 30 December 1998, 18 August 1999 and 19 November 2014 as continuing to govern.

The allowance has been revised three times in twenty-nine years.

Two features of that table matter more than the figures. Every revision has been retrospective in the sense that the order followed the effective date, by ten months in 2010 and by nineteen days in 2017, so a pensioner drawing the allowance receives arrears when a revision issues. And the interval has stretched: eleven years to the first revision, six to the second, under three to the third, and nine years and counting since.

The order applies to the Indian Audit and Accounts Department in consultation with the Comptroller and Auditor General of India, whose concurrence was conveyed by UO No. 169-Staff (Rules)/A.R/01-2016 dated 18 July 2017. That is the standard consultation clause on any order touching audit staff, and it does not alter the entitlement.

Who is eligible

Eligibility turns on one test: the pensioner must reside in an area not served by a CGHS dispensary or by the corresponding health scheme of another ministry, and must not take CGHS outpatient care. Office Memorandum No. 45/57/97-P&PW(C) dated 19 December 1997 states the test in those terms and applies it to both a pensioner and a family pensioner. Paragraph 2 of that order limits it to persons who at the time of retirement or death were governed by the CCS (Pension) Rules 1972, or the corresponding rules before them, and who are eligible for medical facilities after retirement.

The clarification of 24 August 1998 closes the reading most often attempted. A pensioner who lives where CGHS facilities are available cannot claim the allowance in lieu of outpatient care, and the fact that the pensioner never opted for a CGHS card at retirement makes no difference. The same order directs that where the allowance has been paid to a pensioner residing in a CGHS area, suitable recoveries be made. Declining CGHS is therefore not a route to the cash; only living outside its reach is.

The area test is finer than a city boundary. Office Memorandum No. 38/99/99-P&PW(C) dated 17 April 2000 deals with a pensioner residing in an area not served by any CGHS dispensary even though the place of residence falls within the limits of a CGHS covered city, and treats that pensioner as eligible. The unit of measurement is the dispensary catchment, not the municipal limit, which is why a pensioner on the outer edge of a listed CGHS city can qualify while a neighbour three kilometres closer to the wellness centre cannot.

A retiree under the National Pension System who is eligible for CGHS but lives outside a CGHS area draws the allowance on the same footing, provided no CGHS facility is availed. A family pension holder draws it in their own right rather than through the deceased employee, which is why Railway Board letter No. PC-V/2011/A/Med./1, circulated as RBE No. 69/2014 dated 7 July 2014, had to clarify the position of a widowed, divorced or unmarried daughter in receipt of family pension on the railway side.

Who is outside this order

Three groups of pensioners draw a medical allowance under orders other than the Department of Pension and Pensioners’ Welfare order of 19 July 2017, and the conditions are not identical. Paragraph 2 of Office Memorandum No. 45/57/97-P&PW(C) dated 19 December 1997 says so expressly: separate orders were to be issued by the respective administrative authorities for members of the Armed Forces, the All India Services and railway pensioners.

Railway pensioners are the important case, because the railway condition is a distance and it is the source of the most persistent confusion about the civil allowance. The undertaking prescribed by Railway Board letter No. PC-V/2011/A/Med./1 dated 7 June 2011 requires a railway pensioner to declare residence beyond 2.5 km from the nearest railway hospital or health unit, named from the list at Annexure III to Railway Board letter No. PC-V/98/I/7/1/1 dated 21 April 1999. The same undertaking bars outpatient treatment at a railway hospital from the day the allowance is claimed, except for the chronic diseases listed in Railway Board letter No. 2006/H/DC/JCM dated 12 October 2006. Grant of the railway allowance was consolidated by Railway Board letter No. PC-V/2010/A/Med./1, circulated as RBE No. 146/2014 dated 19 December 2014.

The 2.5 km rule is a railway rule. It has no application to a CGHS pensioner, whose test is whether the locality is served by a dispensary at all, and a civil pensioner who measures the distance to the nearest wellness centre is applying the wrong order. Armed forces pensioners look to Ministry of Defence orders and to the Ex-Servicemen Contributory Health Scheme rather than to the CGHS order, and an All India Services pensioner looks to the scheme of the state cadre from which the officer retired.

How the claim is made

The claim is made by an undertaking in the prescribed format together with the option form, submitted to the pension disbursing authority, and nothing else. Office Memorandum No. 4/34/2017-P&PW(D) dated 31 January 2018 is the operative instruction. It records that under the earlier instruction of 17 April 2000 a pensioner had to produce both an undertaking and a certificate from the CGHS medical authorities that the area of residence was not served by a dispensary, and that the certificate requirement has been withdrawn in consultation with the Ministry of Health and Family Welfare because of the difficulty pensioners faced in obtaining it. Only the undertaking and the form survive.

The undertaking prescribed by that order is short and its wording is the substance of the claim. The pensioner declares the residential address as it appears in the Pension Payment Order, declares that the area is not covered by CGHS or the corresponding health scheme of the named ministry, and declares that no CGHS card has been obtained and none is wanted for outdoor facilities from any dispensary in an adjoining area. That last clause is what stops a pensioner from drawing the cash and using a wellness centre one town over.

Paragraph 4 of the same order puts the burden on the disbursing side. Every pension disbursing authority is required to obtain the undertaking and the form before sanctioning the allowance, and to make an entry to that effect in the Pension Payment Order. Under paragraph 6 of the 1997 order the payment is made along with the monthly pension or family pension, and under paragraph 7 it is booked under the existing sub-head for pension and other retirement benefits rather than a head of its own. There is no medical certificate, no prescription and no bill at any stage.

The seven routes on the option form

The option form annexed to the Office Memorandum of 31 January 2018 sets out seven mutually exclusive routes, and reading them is the fastest way to see where the Fixed Medical Allowance sits.

Option (ii) is the one that surprises people, and it states the 1998 clarification in a single line: a pensioner living in a CGHS area who takes no CGHS facility at all is still not eligible for the allowance. Options (vi) and (vii) rule out double cover, so a pensioner whose spouse holds a CGHS card or a public sector health card cannot add Rs. 1,000 a month on top of it. The form carries the once in a lifetime declaration at its foot, which is where the change of option is exercised.

Drawing the allowance with a CGHS card for hospitalisation

A pensioner in a non-CGHS area may draw the Rs. 1,000 a month and hold a CGHS card at the same time, provided the card is an IPD only card and the full CGHS subscription is paid. Option (iv) on the 2018 form states the combination, and paragraph B(b) of the CGHS Office Memorandum of 27 June 2024 restates it: the pensioner has the option of availing the Fixed Medical Allowance with a CGHS card, described in that order as an IPD card, on payment of the full subscription.

What the IPD only card buys is bounded, and the boundary is the point. It is valid for cashless indoor treatment at CGHS empanelled private hospitals and at designated government hospitals, with reimbursement for indoor treatment elsewhere only in a medical emergency. It buys no outpatient care at all: no wellness centre consultation, no free monthly medicines, no listed investigations on a wellness centre prescription. Those come with the full card, and a pensioner who wants them surrenders the allowance.

The prohibited combination is narrower than the allowance plus a card. It is the allowance plus CGHS outpatient care, because both answer the same need from opposite ends of the CGHS map: Rs. 1,000 in cash where there is no wellness centre to attend, care in kind where there is. Paragraph B(f)(vi) of the 27 June 2024 order requires proof of availing or not availing the Fixed Medical Allowance with the card application, which is how CGHS enforces the line at the point of issue. The contribution slabs and the ward entitlement that come with the card are in the CGHS for pensioners article.

Changing the option, and the timelines

A pensioner or family pensioner may change between the Fixed Medical Allowance and CGHS outpatient care once in a lifetime, and Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/05/2019-P&PW(D) dated 23 March 2022 fixes the procedure and the working day timelines for each direction.

Moving from the allowance to CGHS outpatient care runs through the bank first. The pensioner applies to the pension disbursing bank for discontinuation of the allowance; the bank stops the payment and issues a certificate to that effect within three working days of receiving the application. The pensioner then applies to the CGHS authorities for a card, paying the required contribution if it has not already been paid, and CGHS issues a provisional card within four working days of the formalities being completed and the contribution deposited, valid until the regular card is issued.

Moving the other way runs through CGHS first, and the date of payment is the detail to hold. A pensioner availing CGHS for both inpatient and outpatient care who wants the allowance instead, whether because of a shift of residence to a non-CGHS area or otherwise, applies to the CGHS authorities to surrender the outpatient facility. CGHS endorses the card and issues a surrender certificate within four working days. The pensioner then applies to the head of office with a copy of that certificate for a revised pension payment authority, which is issued within two months. The allowance is paid from the date of the surrender certificate, not from the date of the revised authority, so the two month administrative window costs the pensioner nothing.

The single change is genuinely single. The declaration on the option form records that it supersedes the earlier option and that no further change is available. A pensioner who expects to move between a CGHS city and a non-CGHS town more than once, which is common where a retiree splits time between a home town and a child’s city, should spend the change on the move likely to be permanent.

The date from which the allowance runs

The Fixed Medical Allowance is paid from 1 December 1997 for a pensioner who opted for it when the scheme was introduced, and from the date of application for a pensioner who came to it later. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/02/2019-P&PW(D)/42694 dated 1 July 2019 settles the question, and the Central Pension Accounting Office circulated it by Office Memorandum dated 5 August 2019.

The reasoning in that order is worth stating because it disposes of a common arrears claim. A pensioner who had already retired when the allowance was introduced, and who opted for it and gave the undertaking at the time, is entitled from 1 December 1997, the effective date fixed by paragraph 8 of the order of 19 December 1997. A pensioner who retired before that date and did not exercise the option then is not entitled from 1997, because several orders and clarifications on the allowance issued after 19 December 1997 and the Department does not accept that the pensioner was unaware of it. Such a pensioner is allowed the allowance from the date of the application, if otherwise admissible.

The practical effect is that a delayed claim buys no back payment. There is no arrears entitlement for the years a pensioner was eligible but did not apply, and the only arrears that arise on this allowance are those created by a revision order taking effect before its date of issue, as the 19 July 2017 order did for the nineteen days between 1 July and 19 July 2017.

When residence changes

The allowance stops from the date a pensioner moves into a CGHS covered area, and the obligation to report the move sits on the pensioner. The undertaking prescribed by the Office Memorandum of 31 January 2018 carries that promise, and the clarification of 24 August 1998 directs recovery where the allowance has been paid to a pensioner residing where CGHS facilities are available. Whether the pensioner actually uses the CGHS after the move is beside the point: the test is the availability of the facility at the new address, and option (ii) on the form makes that explicit.

The move in the opposite direction, from a CGHS city to a town without a dispensary, is not automatic either. It runs through the change of option procedure of 23 March 2022, which means surrendering the CGHS outpatient facility, obtaining the surrender certificate within four working days, and applying to the head of office for a revised pension payment authority. A pensioner who simply stops visiting the wellness centre and asks the bank for Rs. 1,000 a month will be refused, because the bank has no authority to pay without the revised pension payment authority.

No dearness relief, and what that has cost

The Fixed Medical Allowance carries no dearness relief. It is a flat sum, and unlike the central government pension it does not move on the half-yearly cycle. Nothing in the order of 19 July 2017 or in any of the orders it preserves links the allowance to a price index, and no order has linked one since.

The arithmetic of that design is visible over nine years. Between 1 July 2017 and 1 January 2026 there were seventeen half-yearly revisions of dearness relief, and the rate reached 60% of basic pension by the last of them, which is the measured rise in the AICPI-IW over the same period expressed against the 7th CPC base. The allowance stayed at Rs. 1,000 through every one of them. A pension of Rs. 30,000 in July 2017 draws substantially more today; the Rs. 1,000 draws Rs. 1,000.

This is not an oversight peculiar to this allowance, but it is at the harsh end of a spectrum. Set the three payments a pensioner may receive side by side.

The constant attendant allowance shows that a flat allowance can be protected without being indexed, through an automatic step tied to the dearness allowance rate. The Fixed Medical Allowance was given no such step, so its erosion is permanent until an order corrects it.

Tax treatment

The Fixed Medical Allowance is taxable, and no provision of the Income-tax Act 2025 exempts it. That Act, Act No. 30 of 2025, replaced the Income-tax Act 1961 from 1 April 2026 and relocated the allowance exemptions largely into Schedule III, and the Fixed Medical Allowance appears in none of them. The exemptions that survive on the pension side are the commuted pension exemption, the gallantry award pension exemptions at serials 14 and 15 of the Schedule III Table, and the armed forces family pension exemption at serial 16. A medical allowance is not among them.

For a service pensioner the head is Salaries. Section 15(2) of the Income-tax Act 2025 provides that an employer includes a former employer and Section 16(b) provides that salary includes any pension, so the allowance is added to the pension and taxed with it. The standard deduction under Section 19(1) Table serial 2, Rs. 75,000 in the new regime and Rs. 50,000 in the old, applies to the aggregate, which means that for most pensioners the Rs. 12,000 a year is absorbed without producing any tax at all. A pension up to about Rs. 12,75,000 a year attracts nil tax in the new regime after the rebate in Section 156.

For a family pensioner the head is income from other sources, because there is no employer behind a family pension. The deduction in Section 93(1)(d) is one-third of the family pension or Rs. 25,000, whichever is less, in the new regime, and one-third or Rs. 15,000 in the old. The Rs. 12,000 a year of allowance is added to the family pension before that deduction is applied. The income tax for pensioners article works both computations through.

One point should be stated plainly because pensioner websites disagree on it. Claims that the allowance is fully exempt trace to representations asking the Government to grant an exemption, and a request for an exemption is proof that none exists. There is no notification, no Schedule III entry and no rule under the Income-tax Rules 2026 that exempts the Fixed Medical Allowance, and it is reported as income.

What the 7th CPC recommended, and what the Government did

The 7th Central Pay Commission recommended no increase in the Fixed Medical Allowance, and the Government overruled it upward. The Chapter 8.1 entry for the allowance reads “Retained. Status quo to be maintained,” which would have left it at Rs. 500 a month. Paragraph 8.17.52 of the report gives the reason: the allowance had been raised from Rs. 300 to Rs. 500 with effect from 19 November 2014, shortly before the Commission reported, so no further enhancement was recommended. The staff side had asked for Rs. 2,000.

The Government departed from the recommendation on the rate rather than on the continuation of the allowance, doubling it to Rs. 1,000 by the order of 19 July 2017. The Press Information Bureau put the reach of that change at more than five lakh pensioners not using the CGHS. This is one of the few instances in the 2017 allowances round where the Government paid more than the Commission proposed, and the allowance is accordingly listed by mistake among the allowances the Commission recommended abolishing, which the abolished allowances article corrects.

The comparison with the constant attendant allowance in the same round is instructive on how the two decisions have aged. That allowance was revised by the standard 1.5 factor, from Rs. 4,500 to Rs. 6,750, and given an automatic 25% step at each 50% rise in dearness allowance. The Fixed Medical Allowance was given a larger immediate rise and no step at all. Nine years on, the allowance with the smaller immediate rise is the one that has kept its value.

The case for revision and the 8th Central Pay Commission

No order raises the Fixed Medical Allowance above Rs. 1,000 a month, and no figure above that can be relied on. Pensioners’ associations have petitioned for Rs. 3,000 a month, and separately for a figure linked to dearness relief with the non-CGHS area restriction removed altogether. None has been accepted, so these are representations rather than entitlements, and a pensioner planning around them is planning around nothing.

The case the associations make rests on three documented points rather than on the size of the figure. The allowance has been unrevised since 1 July 2017 while dearness relief has been revised seventeen times. It carries no indexation of any kind, unlike the constant attendant allowance revised in the same round. And it is confined to pensioners outside CGHS areas, which excludes a pensioner inside a CGHS city who takes no CGHS facility, a restriction settled by the clarification of 24 August 1998 and unchanged since.

Whether the allowance is revised now rests with the 8th Central Pay Commission. Its report has not issued, and no recommendation on this allowance exists to report. Until the Commission reports and the Government issues an order on its recommendations, the amount payable is Rs. 1,000 a month, and the eligibility, the claim procedure and the change of option operate exactly as the orders of 19 July 2017, 31 January 2018 and 23 March 2022 set them out.

Related Articles

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• Dearness relief
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• Income tax for pensioners
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External references

• Department of Pension and Pensioners’ Welfare
• Central Government Health Scheme
• Central Pension Accounting Office
• Office Memorandum dated 19 July 2017, DoPT circulars repository
• Office Memorandum dated 19 December 1997, DoPT circulars repository
• Clarification dated 24 August 1998, DoPT circulars repository
• Compendium of pension orders 2017 to 2018, Pensioners’ Portal
• Ministry of Railways, medical allowance circulars

References

1. Department of Pension and Pensioners’ Welfare Office Memorandum No. 45/57/97-P&PW(C) dated 19 December 1997, granting the fixed medical allowance at Rs. 100 a month with effect from 1 December 1997 on the 5th Central Pay Commission decision in Resolution No. 54/86/97-P&PW(A) dated 30 September 1997.
2. Department of Pension and Pensioners’ Welfare Office Memorandum No. 45/57/97-P&PW(C) dated 24 August 1998, clarifying that a pensioner residing where CGHS facilities are available cannot claim the allowance and directing recovery where it has been paid.
3. Department of Pension and Pensioners’ Welfare Office Memorandum No. 38/99/99-P&PW(C) dated 17 April 2000, on a pensioner residing in an area not served by a dispensary within the limits of a CGHS covered city.
4. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/25/2008-P&PW(D) dated 26 May 2010, enhancing the allowance to Rs. 300 a month.
5. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/25/2008-P&PW(D) dated 19 November 2014, enhancing the allowance to Rs. 500 a month with effect from 19 November 2014.
6. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 19 July 2017, enhancing the allowance to Rs. 1,000 a month with effect from 1 July 2017.
7. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 31 January 2018, withdrawing the CGHS certificate requirement and prescribing the undertaking and the option form.
8. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/02/2019-P&PW(D)/42694 dated 1 July 2019, on the date from which the allowance is payable, circulated by Central Pension Accounting Office Office Memorandum dated 5 August 2019.
9. Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/05/2019-P&PW(D) dated 23 March 2022, prescribing the procedure and the timelines for a change of option between CGHS outpatient care and the Fixed Medical Allowance.
10. Ministry of Health and Family Welfare, CGHS Office Memorandum dated 27 June 2024, paragraph B(b) and paragraph B(f)(vi), on the IPD only card drawn alongside the Fixed Medical Allowance on payment of the full subscription.
11. Railway Board letter No. PC-V/98/I/7/1/1 dated 21 April 1999 and letter No. PC-V/2011/A/Med./1 dated 7 June 2011, on the railway fixed medical allowance and the 2.5 km residence test.
12. Report of the 7th Central Pay Commission, Chapter 8.1 (Fixed Medical Allowance, “Retained. Status quo to be maintained”) and paragraph 8.17.52.
13. Income-tax Act, 2025 (Act No. 30 of 2025), Sections 15(2), 16(b), 19(1) Table serial 2, 93(1)(d) and 156, and Schedule III Table.