Eligibility for medical cards will continue to be assessed on a financial means test basis.
However, there will be a greater focus on the burden of an illness or a condition during the assessment process.
The recommendations are contained in a report from an expert panel which examined the medical card system.
The panel recommended that a person's financial means was the best method to determine their qualification for a medical card, and that it was not "ethically justifiable" to draw up a list of medical conditions that would be given priority over others.
Under the new measures, medical cards given to people with terminal illnesses will no longer be reviewed.
Speaking at the announcement, the Health Minister, Leo Varadkar, said the new system will be more sensitive to people's needs.
"The changes that are being announced today will result in a reformed system that is fairer and more humane than the one that it is replacing.
"The financial means test remains the fairest way to assess eligibility, but we're also going to take into account the burden of a medial illness or condition through wider and more generous discretion than occurred in the past."
The reforms were announced following the publication of two reports into the medical card application process and eligibility.
One report said there was "clear evidence that the current Medical Car application system is inconsistent, poorly understood and inefficient", and made a series of recommendations to change the system.
The HSE identified ten "key actions" to improve the system, namely:
• An "enhanced assessment process" taking financial burden into account
• Better communication between the medical card assessment office and local health offices;
• Holders of a discretionary card due to serious illness will retain their card;
• GPs will be able to extend medical cards in difficult circumstances;
• A clinical advisory group will develop guidance on applications involving £significant medical conditions";
• Medical cards for people with terminal illnesses will, by default, no longer be reviewed;
• HSE will have power to provide people without a card with essential therapies or appliances;
• A single, integrated process to apply for a medical card, GP visit card, Long-Term Illness scheme, and Drugs Payment Scheme;
• Access points in health offices to support and assist people to make applications;
• A review of provision of medical aids and appliances to people without a medical card, and children with severe disabilities.