MANILA – Government workers in the Philippines are set to receive their first annual medical allowance of 7,000 pesos or about US$120 this year, the country’s budget department announced.

The medical benefit—approved by President Ferdinand Marcos Jr. in August 2024—aims to augment public sector workers’ purchase of additional health insurance.

“Beginning 2025, they can already receive the medical allowance to help them with getting an HMO (health maintenance organisation) for their health-related expenses or spending,” said Amenah Pangandaman, secretary of the Department of Budget and Management, as reported by Rappler.

‘Safeguarding a healthy workforce’

Pangandaman called the new benefit “a promise fulfilled” for the public sector. “This has been my dream for a long time for our fellow public servants,” she said.

“This medical allowance is not just a benefit; it’s a vital investment in safeguarding a healthy workforce and ensuring that they perform at their best,” the budget secretary added.

The health coverage includes a wide range of government workers, regardless of their agency or employment status.

• National agencies, local government units, state colleges and universities, government-owned and controlled corporations (GOCCs)
• Elected or appointed officials
• Regular, casual and contractual workers
• Full-time or part-time employees

However, certain classes of workers—such as those working in the military; legislative and judicial branches; and offices with fiscal autonomy—will not be covered by the benefit. Consultants, project-based workers, student workers, and those hired through job orders and service contracts are also exempt.

Funding will be taken from agencies’ personnel services allotments, miscellaneous personal benefits funds, or similar appropriations. GOCCs, meanwhile, can tap into annual operating budgets.

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Converting medical benefit to cash benefit

Government agencies can decide on the HMO product and coverage type of their workforce. However, some individuals may choose to receive the equivalent benefit in cash to pay for their expenses—such as hospitalisation, medical tests, and medicine—or use the proceeds to purchase or renew HMO products of their choice.

“Such arrangement,” the government said, “is without prejudice to the preference of employees to opt out from such group purchase, and individually avail of another HMO product.”

Workers from remote communities with limited access to HMO services may convert the benefit to its cash equivalent.

PhilHealth increases benefit packages

Meanwhile, the country’s national health insurer, PhilHealth, announced its decision to increase benefit packages by 50%.

Starting this month, members will see higher coverage for 9,000 types of illnesses and treatments, including those for chronic kidney disease and heart disease.

PhilHealth will also insure emergency outpatient care once exempt from previous benefit packages.

The expansion of PhilHealth coverage comes only weeks after the government refused to allocate any subsidy to the insurer under the 2025 national budget.

President Marcos and lawmakers withheld funding, pointing to PhilHealth’s PhP500 billion in reserve funds. “The cost to provide their services in one year is less than P100 billion,” Marcos previously said.

The insurer, however, promises to “adjust and adapt” despite receiving zero subsidy, said Dr. Israel Francis Pargas, spokesperson for PhilHealth.

PhilHealth will also likely hold off on increasing member contributions this year, Pargas added.

Lawmakers are instead asking the agency to find ways to lower insurance premiums, ABS-CBN News reported last month.

PhilHealth President and CEO Emmanuel Ledesma said he will meet with his team to examine this prospect.

“We are fully supporting that reduction—and that is a very huge reduction,” he said.