The Philippine government has approved an annual medical allowance of up to ₱7,000 for qualified civilian personnel, effective January 2025. This initiative, outlined in Executive Order No. 64 s. 2024, aims to support government workers’ health and well-being by subsidizing access to health maintenance organization (HMO) benefits.
Who is Eligible?
According to the Department of Budget and Management (DBM) Budget Circular No. 2024-6, the allowance covers all civilian government personnel in national government agencies, state universities and colleges, and select government-owned and controlled corporations. Employees in local government units and local water districts are also included.
Eligible recipients include those with regular, casual, or contractual appointments, whether appointive or elective, working full-time or part-time. However, job order and contract of service personnel are excluded from this benefit.
How the Medical Allowance Can Be Used
Government employees have several ways to utilize the ₱7,000 medical allowance. It can be used to avail of HMO-type product coverage through group purchases facilitated by government agencies or employee organizations. Employees may also opt to receive the allowance in cash to pay for or renew their HMO coverage.
In cases where HMO coverage is not easily accessible such as in remote areas or when applications are denied the allowance can be directly used to cover medical expenses like hospitalization, emergency care, diagnostic tests, and medicine purchases. This flexibility ensures that all eligible employees can benefit from the initiative based on their specific healthcare needs.
Tax-Free Status of the Allowance
The Bureau of Internal Revenue (BIR) has confirmed that the medical allowance qualifies as a de minimis benefit under Section 2.78.1(A)(3) of Revenue Regulations No. 2-98, as amended. Since the total amount does not exceed the ₱10,000 annual threshold for medical assistance, it is exempt from income tax and withholding tax. However, any amount exceeding this limit will be considered part of “other benefits” and taxed accordingly.
Government’s Commitment to Employee Welfare
DBM Secretary Amenah Pangandaman emphasized the significance of this initiative, stating that the medical allowance is a crucial step in ensuring a healthy workforce and enhancing productivity among government employees. This move demonstrates the government’s ongoing efforts to improve employee welfare through concrete financial support.
Conclusion
The approval of the tax-free ₱7,000 medical allowance is a significant development for Philippine government employees. By offering flexible healthcare coverage options and ensuring tax exemptions, the government reaffirms its commitment to prioritizing the well-being of its workforce.