Medical care continues to get more and more expensive by the day. Hence, employers are now offering medical reimbursement facilities so that the employees and their families can receive the finest care possible without going through financial burden. A medical reimbursement is a contract between an employer and an employee in which the employer covers a proportion of the employee's medical expenditures.
You will also get the advantage of claiming an income tax medical reimbursement exemption of up to ₹15,000. However, to receive medical reimbursement benefits, you must follow the rules set by your organisation.
Here are a few medical reimbursement rules about which you must be aware of in order to receive the facility of tax exemption.
The medical reimbursement amount must be used only for medical expenditures.
Tax exemptions are only available for medical costs spent on your spouse, children, parents, and siblings who are non-working.
You can get the benefit of medical reimbursement on the bills of prescribed medications or any treatments received at clinics, private hospitals, and government hospitals.
The bills should be submitted to your employer. Any such reimbursements won't be eligible for claim when you submit your income tax returns.
In the fiscal year 2018–19, a standard deduction of ₹40,000 has been reinstated. You may use the new deductions to claim any tax breaks you may have from medical expenses including transportation costs.
Follow these simple steps to file a medical reimbursement claim:
In order to file a claim, you must have received the treatment in the network hospital of your organisation.
Contact the concerned department at your firm and inform them about your claim.
Provide all the bills related to your treatment.
Fill in the medical reimbursement claim form.
Following that, the organisation will verify the provided details.
Once your medical reimbursement form and given details get approved, you will receive your claim money in your bank account.
In some organisations, rather than compensating a percentage of an employee's incurred expenditures, the employer may offer a predetermined sum on a monthly basis for their medical bills. This is referred to as a medical allowance.
Most of the time, individuals confuse medical reimbursement with medical allowance. However, each is distinctive from the others. Here’s a closer look at their differences.
Under this, the employer covers a proportion of the employee's medical expenditures.
The employer offers a predetermined sum on a monthly basis for their medical bills.
You are required to submit the medical bills in order to claim it.
You are not required to submit any medical invoices to get the compensation.
You will get the benefit of tax exemption of up to ₹15,000.
It is not eligible for any tax exemptions.
Here are a few things about medical reimbursement facilities that are worth keeping in mind while filing for a medical reimbursement.
You cannot file a claim for healthcare expenditure from the previous financial year.
Private or government hospitals that are owned by your employer have no maximum limit on payments for expenses.
Premiums for mediclaim policies are covered by Section 80D benefits.
The Internal Revenue Code's Section 80D permits tax deductions in exchange for medical payments but not income tax exemptions.
No, funding acquired through a medical reimbursement claim is just a refund of costs that the employee has previously invested in himself/herself or other family members for medical purposes. Hence, it is not taxable.
Employees of the company, their spouses, children, and other family members who are not employed and are financially reliant on the employee.
No, you can’t file for a medical reimbursement claim from the previous year. Only the medical expenses you incurred in the relevant fiscal year may be reimbursed by your employer.
No, they are both different from each other. Medical reimbursement is a facility offered by any firm to its employees. It is a contract between an employer and an employee in which the employer covers a proportion of the employee's medical expenditures. On the other hand, some organisations offer a predetermined sum on a monthly basis for employees’ medical bills which is known as a medical allowance.
You will get the advantage of claiming a medical reimbursement income tax exemption of up to ₹15,000.
In order to file a claim, you must have received the treatment in the network hospital of your organisation. You can file for the same by providing medical treatment bills to your employer.