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What is Medical Reimbursement?

Good healthcare should always be a foremost priority. But the growing medical expenses make it challenging for many working individuals to get one. Therefore, in order to provide assistance regarding this, 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.

 

The need for medical reimbursement emerged as a result of long working hours, workplace stress, or other work-related causes. 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.

Medical Reimbursement Rules

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.

How to Make a Medical Reimbursement Claim?

Here are the steps to follow 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. 

Tax-Free Prerequisites for Medical Expenses Paid Abroad

If you or one of your family members is going abroad for medical treatment, here are a few things that you must remember to get tax-free treatment. 

 

  • As per the RBI guidelines, you are not obligated to pay taxes for any kind of treatment received overseas. 

  • Expenditure associated with an employee's or a family member's treatment, as well as the charge of a helper appointed to comfort the patient during treatment is also tax-free. 

  • The travel expenditures of patients and their companions who are either employees or family members of employees are not subject to tax if the employee's income is less than ₹2 Lakhs.

  • The travel costs of the patient/employee and the attendants are deducted if the employee's total income exceeds ₹2 Lakhs.

Medical Allowance

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.

Differences Between Medical Reimbursement and 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. 

Medical Reimbursement 

Medical Allowance

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. 

Things to Remember about Medical Reimbursement

Here are a few things about medical reimbursement facilities that you must keep in your mind.

 

  • 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.

Conclusion

Medical reimbursement is one of the excellent facilities that employers are offering these days to their employees. This is helping working individuals to seek adequate treatment for themselves or their family members in the case of a medical emergency without worrying about the cost. It has helped to alleviate the financial stress.

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FAQs

  • ✔️Is medical reimbursement taxable?

    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.

  • ✔️Who is eligible for medical reimbursement?

    Employees of the company, their spouses, children, and other family members who are not employed and are financially reliant on the employee.

  • ✔️Can I file a claim for medical expenses from the prior year?

    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.

  • ✔️Are medical reimbursement and medical allowance the same thing?

    No. Both are 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.

  • ✔️What tax advantages can medical reimbursement provide me?

    You will get the advantage of claiming a medical reimbursement income tax exemption of up to ₹15,000.

  • ✔️How can I file a claim for medical reimbursement?

    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.