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Reimbursement of Medical Expenses

How a central government employee or pensioner claims medical reimbursement: the CGHS-rate cap, emergency treatment, the MRC forms, the six-month limit, and the tax.

Updated 19 July 2026 · Reviewed by Salary-Calculator.in

Reimbursement of medical expenses is the route by which a central government employee or pensioner recovers the cost of medical treatment taken outside the direct-treatment network of the Central Government Health Scheme , in an emergency, at a hospital that is not empanelled, or in a place with no CGHS facility, and the governing rule is that the reimbursement is capped at CGHS-approved rates or the actual amount, whichever is lower.

Reimbursement is the fallback channel of the scheme, not the main one. The design intends a beneficiary to use the CGHS Wellness Centre and the empanelled hospitals, where treatment is at CGHS rates by arrangement and is usually cashless, and to fall back on paying and claiming only where the network cannot be used. Understanding when reimbursement applies, and the CGHS-rate cap that governs it, is what separates a claim that is paid in full from one that leaves the beneficiary bearing a large shortfall.

This article sets out the whole of it: the core rule and the shortfall it can leave, when reimbursement applies against when the network route should be used, how an emergency is handled, the claim forms and where they are submitted for a serving employee and for a pensioner, the six-month time limit and the condonation of delay, the medical advance for a costly treatment, the parallel reimbursement under the CS(MA) Rules for a serving employee in a non-CGHS city, and the income-tax treatment of medical reimbursement. The general design of CGHS is in the cornerstone article , and the contribution and ward figures are in the contribution and ward entitlement article; this article is the detail on getting money back.

The core rule: CGHS rates or actuals, whichever is lower

The governing rule of medical reimbursement is short and firm: the amount reimbursed is the CGHS-approved rate or the actual amount charged, whichever is lower. Where a CGHS package rate exists for the treatment, the package rate or the actual is reimbursed, whichever is less. Where the treatment was taken in a place with no CGHS facility, the applicable rates are those of the nearest CGHS city.

The consequence is the shortfall. A private hospital that is not empanelled charges its own rates, which are usually above the CGHS rate, and the difference between what the hospital charged and what CGHS reimburses is borne by the beneficiary. So a beneficiary who is billed at open-market rates and reimbursed at CGHS rates recovers only a part of the bill, sometimes a small part. This is not a defect in a claim; it is the design, and it is the reason the scheme steers beneficiaries to the empanelled network, where the CGHS rate is what the hospital charges by agreement, so there is no shortfall.

The cap explains the whole shape of the reimbursement rules. Because the scheme pays its own rate and not the bill, the rules are built to keep treatment inside the network wherever possible, to allow reimbursement only where the network genuinely could not be used, and to require the documentation that lets the CGHS rate be applied to the treatment given. A beneficiary who understands that the scheme pays the CGHS rate, and plans accordingly, avoids the large shortfalls that surprise those who assume the bill will be met.

When reimbursement applies

Reimbursement applies in a defined set of situations, and outside them the network route should be used. The three main cases are a genuine emergency, where there was no time to obtain a referral; treatment at a non-empanelled hospital, where the network did not have the facility or was not reachable; and treatment in a place with no CGHS facility, where there was no Wellness Centre or empanelled hospital to use. In each of these the beneficiary pays the hospital and claims reimbursement afterwards.

Against these stand the situations where reimbursement should not be needed. A planned treatment in a CGHS city, for a condition that is not an emergency, should be taken at an empanelled hospital on a referral from the Wellness Centre, where it is billed to CGHS at the CGHS rate and is usually cashless. A beneficiary who instead chooses a non-empanelled hospital for a planned treatment, without an emergency and without a referral, is the case where reimbursement is refused or cut to the CGHS rate, because the network was available and was not used. The line between a planned admission, which needs a referral in advance, and an emergency, which is regularised afterwards, is the line most reimbursement disputes turn on.

The practical rule that follows is to route treatment through the Wellness Centre and the empanelled network wherever there is time, to obtain the referral or the prior permission before a planned treatment, and to keep reimbursement for the genuine emergencies and the situations where the network could not be used. Most refused or reduced claims arise where the network and the referral system were bypassed for a treatment that was not an emergency.

Emergency treatment

The emergency is the case reimbursement most clearly exists for. In a genuine emergency a beneficiary may go to any hospital, a government hospital, an empanelled private hospital, or a non-empanelled private hospital, without prior permission or a referral, because the whole point of an emergency is that there was no time to obtain one. The beneficiary is treated first and the claim is regularised afterwards.

The document that establishes an emergency is the emergency certificate from the treating doctor or hospital, which certifies that the condition was an emergency requiring immediate treatment. The claim carries this certificate along with the itemised bills, the room and investigation and pharmacy charges set out separately, and the discharge summary. CGHS recognises an emergency by an illustrative set of conditions, such as an acute cardiac event, a stroke, an accident or serious trauma, and an acute abdominal condition, and the certificate is what connects the treatment taken to that recognition.

Even in an emergency the reimbursement is at CGHS rates or actuals, whichever is lower, so the emergency route removes the need for prior permission but not the rate cap. At an empanelled hospital, however, emergency care is required to be given on a cashless or credit basis under the hospital’s agreement with CGHS, so a beneficiary who reaches an empanelled hospital in an emergency is treated without paying, and the rate cap is met by the agreed rate rather than falling on the beneficiary.

The claim forms and where they go

Since the 2014 revision, CGHS uses two beneficiary-specific claim forms. A serving employee uses Form MRC(S), and a pensioner uses Form MRC(P). These replaced the earlier single medical reimbursement claim form, and they are the current forms; the older Medical-2004 form is their antecedent. The form is completed and submitted with the original bills and vouchers, the discharge summary, the prescriptions and the emergency certificate where the treatment was an emergency.

For a pensioner the claim goes to the Chief Medical Officer in charge of the CGHS Wellness Centre where the pensioner is registered. The Wellness Centre verifies the claim against a checklist, issues a dated acknowledgement, and forwards it, online and physically, to the Office of the Additional Director CGHS of the city, which scrutinises the claim, passes the admissible amount at the CGHS rates, and forwards it to the Pay and Accounts Office for payment. A pensioner in a non-CGHS area submits to the Additional Director or Joint Director CGHS of the city where the CGHS facility they are attached to is located.

For a serving employee the claim is routed through the head of office or the department, which processes it under the CGHS rules, or under the CS(MA) Rules where the employee is in a non-CGHS city. The essential point in either case is that the claim is submitted to the authority that holds the beneficiary’s record, the Wellness Centre for a pensioner and the head of office for a serving employee, and that it carries the original documents, because a reimbursement claim is settled on the vouchers.

The time limit

A reimbursement claim is subject to a time limit. The final claim after discharge or the completion of treatment must be submitted within six months. The limit was raised from three months to six months in 2020, so the current position is six months, and the older three-month figure is out of date. A beneficiary should therefore assemble the bills, the discharge summary and the form and submit the claim within six months of discharge.

A claim submitted after six months is not automatically lost, but it needs condonation of the delay by the competent authority, on reasons shown for why it could not be filed in time. The condonation is a discretionary relaxation, not a right, so the safe course is to file within the six months. Where a treatment runs across a long period, the limit runs from the completion of the treatment or the discharge, so a beneficiary should not wait until every follow-up is over if the main treatment concluded with a discharge.

The medical advance

A beneficiary facing a costly hospitalisation does not have to fund the whole of it up front. A medical advance of up to 90 per cent of the approved CGHS package rate is available for indoor hospitalisation, on a certificate from the treating doctor setting out the estimated cost, so that most of the anticipated cost is provided before the treatment rather than reimbursed after it. The advance is later adjusted against the final claim, so the beneficiary settles only the balance.

The advance covers indoor treatment generally, not only a short list of named major illnesses, which was the earlier position, so a beneficiary admitted for a major or prolonged indoor treatment can seek the advance whatever the condition. For outpatient treatment the advance is available where the estimated cost is large. The advance is a real relief for a pensioner or an employee facing a large hospital estimate, because it removes the need to raise the full sum first and wait for reimbursement, and it should be sought for any planned high-cost admission.

Reimbursement under the CS(MA) Rules

A serving employee posted in a city where CGHS does not operate is covered not by CGHS but by the Central Services (Medical Attendance) Rules 1944 , and reimbursement under those rules runs on similar lines. Outpatient treatment in a non-CGHS area is taken through an Authorised Medical Attendant, and indoor treatment at a government hospital or a hospital empanelled under the CS(MA) Rules, with the reimbursement pegged to the CGHS rates of the nearest CGHS city, package rate or actual, whichever is lower, the same cap that governs CGHS reimbursement.

The CS(MA) claim is routed through the head of office, and a delay beyond the time limit needs a time-bar sanction by the competent authority, in the same way as a CGHS claim. The boundary to hold in mind is that the CS(MA) Rules cover serving employees only. A retired government servant is excluded from the CS(MA) Rules by the rules themselves, so a pensioner in a non-CGHS area does not claim under CS(MA); the pensioner instead draws the Fixed Medical Allowance for outpatient care and, where they hold a CGHS card, uses the nearest CGHS city’s empanelled hospitals for indoor treatment. The contribution and ward entitlement that govern a CGHS hospitalisation apply to that indoor treatment.

Serving employee and pensioner: the two routes

It helps to hold the two routes side by side. A serving employee in a CGHS city claims CGHS reimbursement on Form MRC(S) through the head of office; a serving employee in a non-CGHS city claims under the CS(MA) Rules, also through the head of office, at the nearest CGHS city’s rates. A pensioner in a CGHS city claims CGHS reimbursement on Form MRC(P) through the Wellness Centre and the Additional Director CGHS; a pensioner in a non-CGHS area draws the Fixed Medical Allowance for outpatient care and claims CGHS reimbursement for indoor treatment through the CGHS city they are attached to. In every one of these routes the rate cap is the same: CGHS rates or actuals, whichever is lower.

The common thread is that reimbursement is a claim on vouchers, settled at the CGHS rate, submitted to the authority that holds the beneficiary’s record, within six months. The differences are in which set of rules applies, CGHS or CS(MA), which form is used, and which office receives the claim, and those follow from whether the beneficiary is serving or retired and whether they are in a CGHS city.

The documents a claim needs

A reimbursement claim is settled on its documents, so a claim that is complete is paid and one that is short is returned. The core set is the claim form, Form MRC(S) for a serving employee or Form MRC(P) for a pensioner; the original bills and vouchers, itemised so that the room, the investigations, the pharmacy and the procedure charges are shown separately; the discharge summary; the prescriptions and the investigation reports that support the treatment; and, where the treatment was an emergency, the emergency certificate from the treating doctor. The bills must be in original, because a reimbursement is a claim on vouchers, and photocopies are not accepted for the primary claim.

Beyond the medical documents, the claim carries the beneficiary’s identification: the CGHS card details and beneficiary identification number, and, for a pensioner, the pension payment order reference and the bank details for the payment. A checklist is applied at the Wellness Centre when a pensioner submits, and the dated acknowledgement issued against a complete claim is worth keeping, because it fixes the date of submission for the time limit. Assembling the full set before submitting, rather than filing a partial claim and supplying the rest later, is the single practical step that most speeds up settlement.

Why claims are reduced or rejected

Claims are reduced or rejected for a small number of recurring reasons, and knowing them is the best defence. The commonest reduction is the rate cap itself: a claim from a non-empanelled hospital that billed above the CGHS rate is settled at the CGHS rate, leaving the beneficiary with the shortfall, which is not a rejection but the rule at work. The commonest outright rejection is a planned treatment taken at a non-empanelled hospital without a referral and without an emergency, where the network was available and was not used; such a claim can be refused, because the referral system was bypassed.

Other reasons are procedural and avoidable. A claim filed after the six-month limit without condonation is held up until the delay is condoned. A claim missing the emergency certificate, where the treatment was claimed as an emergency, cannot establish the emergency and is questioned. A claim for a treatment or an investigation that is not on the CGHS-approved list, or that needed a prior permission that was not obtained, is reduced to what is admissible. And a claim with incomplete or non-itemised bills is returned for the missing detail. The way to avoid all of these is the same discipline the scheme’s orders repeat: use the empanelled network on a referral where there is time, obtain the emergency certificate where the treatment was an emergency, file within six months, and submit a complete, itemised, original set of documents.

Income tax on medical reimbursement

The income-tax treatment of medical reimbursement has two parts that must not be confused. The first is the reimbursement of the actual cost of treatment in a government hospital, a CGHS Wellness Centre or empanelled hospital, or another hospital approved by the government for its employees. Under the proviso to Section 17(2) of the Income-tax Act this is not a taxable perquisite, so a government employee or pensioner reimbursed for treatment at such a hospital is not taxed on the reimbursement. This exclusion is a perquisite-valuation rule, not a Chapter VI-A deduction, so it operates under both the old tax regime and the new tax regime .

The second part is the earlier general exemption for medical reimbursement, which no longer exists as a separate item. Up to the financial year 2017-18 an employee could receive up to Rs. 15,000 a year of general medical reimbursement free of tax under the proviso to Section 17(2). The Finance Act 2018 withdrew that Rs. 15,000 exemption, together with the transport allowance exemption, with effect from the financial year 2018-19, and replaced them with the standard deduction under Section 16(ia). So there is no longer a distinct Rs. 15,000 medical-reimbursement exemption; a salaried employee instead gets the standard deduction, which is Rs. 50,000 in the old regime and Rs. 75,000 in the new regime.

The upshot is straightforward. Reimbursement of actual treatment at a government or CGHS-approved hospital remains outside the tax net as a perquisite, in both regimes. The old flat Rs. 15,000 exemption for general medical reimbursement is gone, folded into the standard deduction. For how the standard deduction and the regime choice work through the salary and pension computation, see the income tax for government employees and income tax for pensioners articles.

Caveats and current orders

Two points call for care. First, CGHS rates and the rules on reimbursement from non-empanelled hospitals are revised from time to time, and a recent order can change the rate at which a non-empanelled treatment is reimbursed, so a beneficiary planning a claim should confirm the current rate position for the treatment and the city. Second, the reimbursement cap means the choice of hospital drives how much of the bill is recovered, so the single most useful step a beneficiary can take is to use the empanelled network on a referral, where the CGHS rate is the billed rate and there is no shortfall, and to keep reimbursement for the emergencies and the situations the network cannot cover.

The rules in this article are the settled framework: the CGHS-rate cap, the emergency route with its certificate, the MRC forms, the six-month limit with condonation beyond it, the 90 per cent indoor advance, and the CS(MA) parallel for serving employees in non-CGHS cities. The exact rate for a given treatment, and any recent tightening of the non-empanelled reimbursement rate, are matters of the current orders, which a beneficiary should confirm before a large claim.

Frequently Asked Questions (FAQs)

How much of a medical bill does CGHS reimburse?
Reimbursement is at CGHS-approved rates or the actual amount, whichever is lower. Where the treatment was in a place with no CGHS facility, the rates of the nearest CGHS city apply. If the hospital charged more than the CGHS rate, the beneficiary bears the difference, so the reimbursement is the CGHS rate, not the bill. This cap is the single most important thing to understand about medical reimbursement.
Which form is used for a CGHS medical reimbursement claim?
A serving employee uses Form MRC(S) and a pensioner uses Form MRC(P). These are the beneficiary-specific claim forms introduced after the 2014 revision, which replaced the earlier single medical reimbursement claim form. The completed form goes with the original bills, the discharge summary and the prescriptions.
What is the time limit to submit a medical reimbursement claim?
Six months from the date of discharge or completion of treatment. The limit was raised from three months to six months in 2020. A claim submitted after six months needs condonation of the delay by the competent authority, so a beneficiary should file within the six months and, if that is not possible, apply for condonation with reasons.
Can I go to any hospital in an emergency?
Yes. In a genuine emergency a beneficiary may go to any hospital, government, empanelled private or non-empanelled private, without prior permission or a referral. The claim must carry an emergency certificate from the treating doctor establishing the emergency, along with the itemised bills and the discharge summary. The reimbursement is still at CGHS rates or actuals, whichever is lower.
Is a medical advance available for a costly treatment?
Yes. A medical advance of up to 90 per cent of the approved CGHS package rate is available for indoor hospitalisation, on a certificate from the treating doctor, so a beneficiary facing a major or prolonged treatment does not have to fund it entirely up front. The advance is adjusted against the final claim after the treatment.
Is medical reimbursement taxable?
Reimbursement of the actual cost of treatment in a government hospital, a CGHS Wellness Centre or empanelled hospital, or another government-approved hospital is not a taxable perquisite, under the proviso to Section 17(2) of the Income-tax Act, and this holds in both the old and the new tax regime. The earlier separate income-tax exemption of up to Rs. 15,000 a year for general medical reimbursement was withdrawn from the financial year 2018-19 and replaced by the standard deduction, so there is no longer a distinct Rs. 15,000 exemption.
Where does a pensioner submit the reimbursement claim?
A pensioner submits Form MRC(P), with the original vouchers, to the Chief Medical Officer in charge of the CGHS Wellness Centre where the pensioner is registered. The Wellness Centre verifies the claim against a checklist, issues a dated acknowledgement, and forwards it to the Office of the Additional Director CGHS of the city, which passes the admissible amount for payment. A serving employee routes the claim through the head of office.

External references

References

  1. Revised CGHS Guidelines, Ministry of Health and Family Welfare: reimbursement of medical expenses at CGHS rates or actuals, whichever is lower, and at the nearest CGHS city’s rates in a non-CGHS place.
  2. Ministry of Health and Family Welfare, Office Memorandum of June 2020: revision of the time limit for submission of a final medical reimbursement claim from three months to six months.
  3. Ministry of Health and Family Welfare orders on the grant of a medical advance of up to 90 per cent of the approved rate for indoor treatment.
  4. Central Services (Medical Attendance) Rules, 1944 (reimbursement for serving employees in non-CGHS areas).
  5. Income-tax Act 1961, proviso to Section 17(2) (medical treatment at a government or approved hospital not a perquisite) and Section 16(ia) (standard deduction), as amended by the Finance Act 2018.