For FY 2026, qualified civilian government employees in the Philippines are entitled to a Medical Allowance of up to ₱7,000 per year — the same rate as FY 2025. This benefit is authorized under Section 7 Executive Order (EO) No. 64, s. 2024, and governed by the guidelines set forth in DBM Budget Circular No. 2024-6.
What is the Medical Allowance?
The Medical Allowance is a health-related benefit granted to civilian government employees to help them access Health Maintenance Organization (HMO)-type benefits. It was established under Section 7 of Executive Order No. 64, s. 2024, signed by President Ferdinand R. Marcos Jr. on August 2, 2024, which also updated the salary schedule for government workers.
The allowance is classified under the Standard Allowances and Benefits component of the Total Compensation Framework, in line with Congress Joint Resolution No. 4, s. 2009 and Republic Act (RA) No. 11466. The Department of Budget and Management (DBM) issued Budget Circular No. 2024-6 on December 12, 2024, to lay out the full rules and regulations governing the grant of this benefit.
The Medical Allowance may be granted in the following forms:
- HMO-type product coverage — either purchased by the agency on behalf of its employees, or by the employees’ organizations or groups. Individual employees may opt out of group purchases and choose their own HMO product.
- Cash form (for paying/renewing an HMO benefit) — employees who avail of their own HMO product may receive the allowance in cash, which must be used to cover the HMO product for the year.
- Cash form (for actual medical expenses) — in cases where acquiring HMO coverage is not possible due to the employee’s location being in a Geographically Isolated and Disadvantaged Area (GIDA), the absence of an HMO branch in the locality, or denial of HMO application.
What is Geographically Isolated and Disadvantaged Area (GIDA)?
Geographically Isolated and Disadvantaged Areas (GIDAs)- refer to communities/areas which are specifically disadvantaged due to the presence of both physical (refers to characteristics that limit the delivery of and/or access to basic health services to communities that are difficult to reach due to distance, weather conditions, and transportation difficulties) and socio-economic (refers to social, cultural, and economic characteristics of the community that limit access to and utilization of health services)
factors. [see DBM Budget Circular No. 2024-6]
Who Is Entitled to the Medical Allowance?
The Medical Allowance covers all civilian government personnel, regardless of appointment status (regular, casual, or contractual; appointive or elective; full-time or part-time), in the following types of agencies:
- National Government Agencies (NGAs), including State Universities and Colleges (SUCs)
- Government-Owned or -Controlled Corporations (GOCCs) not covered by RA No. 10149 and EO No. 150, s. 2021
- Local Government Units (LGUs)
- Local Water Districts (LWDs)
To qualify, an employee must:
- Be occupying a regular, contractual, or casual position.
- Render at least six (6) months of service (180 days) within the fiscal year. This includes leaves of absence with pay and alternative work arrangements.
Newly hired employees qualify only after completing six months of service.
Transferred employees — if not yet granted the allowance by their former agency, the new agency shall grant it (with certification). If already granted by the former agency in the same year, no double-granting is allowed.
Employees on detail receive the allowance from their mother agency; those on secondment receive it from the recipient agency.
Who Is Excluded?
The following are NOT covered by the Medical Allowance under Budget Circular No. 2024-6:
- Employees already receiving HMO benefits under special laws
- Officials and employees of the legislative and judicial branches and fiscally autonomous offices (though they may still grant the allowance internally)
- Military personnel (AFP) and uniformed personnel of the PNP, Bureau of Fire Protection, Bureau of Jail Management and Penology, Philippine Coast Guard, Bureau of Corrections, and others
- GOCC employees under the GCG Compensation System (RA No. 10149 / EO No. 150)
- Non-employee personnel such as consultants, job-order workers, student laborers, and those hired without an employer-employee relationship
How Much Is the Medical Allowance and How Is It Computed?
For FY 2026, the Medical Allowance rate remained at:
₱7,000.00 per employee per annum
For full-time employees, this amount applies in full.
For part-time employees, the amount is computed proportionately:
Medical Allowance = ₱7,000 × (Hours of Part-Time Service per Day ÷ 8 Hours)
If a part-time employee works in two or more agencies, each agency pays a proportionate share — but the total from all agencies combined must not exceed ₱7,000.
Important notes:
- If the HMO product chosen costs less than ₱7,000, the employee is not required to refund the difference.
- The Medical Allowance is classified as a “de minimis” benefit and is exempt from income tax and withholding tax, per Revenue Memorandum Circular No. 107-2024 of the BIR.
When Is the Medical Allowance Released?
The Medical Allowance is granted once per fiscal year and is typically released within the first quarter of the fiscal year, subject to the availability of funds.
For National Government Agencies (NGAs) and SUCs, the allowance is charged against available Personnel Services (PS) allotments. If funds are insufficient, it may be charged against the Miscellaneous Personnel Benefits Fund or other appropriations under the annual General Appropriations Act (GAA).
For GOCCs, the amount is charged against the approved Corporate Operating Budget (COB).
For LGUs, the sanggunian (legislative council) determines the rate (not exceeding ₱7,000), charged against local government funds, subject to the Personnel Services limitation under the Local Government Code. The grant must be authorized through an appropriation ordinance.
For LWDs, the Board of Directors sets the rate (not exceeding ₱7,000), funded from the COB.
After the fiscal year, agencies must submit an annual report to the DBM not later than one (1) month after the end of the fiscal year, using the prescribed template in Annex “A” of Budget Circular No. 2024-6.
Legal Basis
Frequently Asked Questions
Q: How much is the Medical Allowance for government employees in FY 2026?
A: The Medical Allowance for FY 2026 is ₱7,000 per employee per annum, the same rate as FY 2025.
Q: Who qualifies for the Medical Allowance?
A: All civilian government personnel in NGAs, SUCs, covered GOCCs, LGUs, and LWDs — whether regular, casual, or contractual — qualify, provided they render at least six (6) months of service in the fiscal year.
Q: Can the Medical Allowance be given in cash?
A: Yes, in certain situations — when an employee lives in a GIDA, has no HMO branch in their locality, or was denied HMO coverage. In such cases, the cash may be used to cover actual medical expenses such as hospitalization, diagnostic tests, and medicines.
Q: Is the Medical Allowance taxable?
A: No. It is classified as a “de minimis” benefit and is exempt from both income tax and withholding tax under BIR Revenue Memorandum Circular No. 107-2024.
Q: What if I am a newly hired employee?
A: You may only avail of the Medical Allowance after completing six (6) months of service in the agency.
Q: What if I transferred to another agency?
A: If your former agency did not yet grant you the Medical Allowance for that year, your new agency will grant it (with a certification). If it was already granted by your former agency, your new agency cannot grant it again for the same fiscal year.
Q: What if the HMO product I chose costs less than ₱7,000?
A: You are not required to refund the difference to the government.
Q: Can I receive both HMO benefits under a special law and the Medical Allowance under EO 64?
A: No. An employee may only receive one or the other for the same period — not both.
Q: What if I work part-time in two government agencies?
A: You will receive a proportionate share from each agency, but the combined total cannot exceed ₱7,000.
Summary / Key Takeaways
Here is a quick recap of everything you need to know about the Medical Allowance for FY 2026:
- The Medical Allowance for FY 2026 is ₱7,000 per employee per annum — unchanged from FY 2025.
- It covers civilian government employees in NGAs, SUCs, covered GOCCs, LGUs, and LWDs, regardless of appointment status.
- To qualify, employees must render at least six (6) months of service in the fiscal year.
- The allowance may be used to purchase HMO coverage or, in qualifying cases, to cover actual medical expenses in cash.
- Part-time employees receive a proportionate amount based on their hours of service.
- The allowance is tax-exempt as a “de minimis” benefit per BIR RMC No. 107-2024.
- Excluded from coverage: military and uniformed personnel, legislative/judicial employees, GOCC employees under GCG, and non-employee personnel such as job-order workers.
- Legal basis: EO No. 64, s. 2024 and DBM Budget Circular No. 2024-6.
- Agencies must submit an annual report to DBM within one month after the fiscal year ends.
Related Posts
Looking for more information on government employee benefits? Check out these related articles:
- Monthly Guide: When Do Government Employees Receive Their Benefits?
- Q&A: Is the Medical Allowance of Government Employees Taxable?
- List of Government Employee Benefits for FY 2026
- Guidelines on the Grant of Uniform or Clothing Allowance to Civilian Government Personnel for FY 2026
- Benefits Calendar: When Do Government Employees Receive Their Benefits? A Month-by-Month Guide
This blog post is based on Executive Order No. 64, s. 2024 and DBM Budget Circular No. 2024-6, issued on December 12, 2024. For the full text of the circular, visit the DBM website. This post is for educational purposes only and should not be used as reference for any government transaction.