Big Shift in Employee Healthcare: CGHS May Be Replaced by Insurance-Based Scheme under 8th Pay Commission

Massive Update for Central Government Employees and Pensioners on Health Benefits

New Delhi, April 12, 2025 – In a move that could significantly transform the healthcare benefits available to lakhs of central government employees and pensioners, the government is reportedly considering replacing the Central Government Health Scheme (CGHS) with a new insurance-based model. This comes in the wake of the official formation of the 8th Pay Commission, which aims to modernize and revise salaries, pensions, and other allowances.

As per reports, this new health initiative may be called the Central Government Employees and Pensioners Health Insurance Scheme (CGEPHIS) and could be administered through IRDAI-approved insurance companies.

What is CGHS and Why Change It?

The Central Government Health Scheme (CGHS) has been in place for decades, offering subsidized medical care—including doctor consultations, lab tests, hospitalisation, and medicine—to central employees, pensioners, and their families. However, one of the biggest drawbacks of CGHS has been its limited presence in urban areas, leaving many pensioners and employees in rural or semi-urban regions with restricted access.

Due to its geographical limitations and outdated infrastructure, experts and past Pay Commissions have consistently raised the need for reform.

Previous Commissions Also Suggested Major Health Scheme Overhauls

Both the 6th and 7th Pay Commissions had earlier proposed that CGHS be replaced or restructured to include broader healthcare coverage. The 6th Pay Commission recommended a voluntary health insurance scheme, mandatory for newly recruited employees. The 7th Pay Commission went a step further, suggesting the inclusion of pensioners living outside CGHS zones through alternative models like the CS(MA) and ECHS schemes, enabling cashless treatment.

What Could the New CGEPHIS Offer?

Although the Health Ministry has yet to issue an official notification, early indications point to a health insurance model that may offer:

• Nationwide cashless healthcare access

• Tie-ups with private and government hospitals

• A flexible contribution model

• Better integration with digital health platforms

This shift would bring a massive transformation in the government’s healthcare delivery model, enabling better reach and quality of care.

The Role of the 8th Pay Commission

Announced in January 2025, the 8th Pay Commission was primarily tasked with reviewing the pay structure, allowances, and pension rules in light of rising inflation and cost of living. However, its role also includes assessing welfare schemes, especially those affecting employee health and well-being.

Now, with increasing demand from employees and repeated suggestions from earlier commissions, all eyes are on whether the 8th Pay Commission will formally recommend CGHS replacement with CGEPHIS.

Awaiting Final Confirmation

While this development has sparked hope among employees and retirees, the lack of official confirmation from the government means that the proposal is still under discussion. Central employees’ associations have welcomed the idea but are waiting for further clarity on implementation, coverage, and premium contributions.

This change, if approved, could mark a historic shift in how health benefits are delivered to lakhs of public sector employees across the country.