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Tax Benefit To Employee On Medical Reimbursement

Allowances and reimbursements to employees provide many benefits in the corporate world. Among such assistance from the employers, employees also enjoy medical benefits, which include reimbursement of medical costs of the employees, partner, or their children. Such reimbursements are called Medical Reimbursements, under which employers reimburse the share of the health costs incurred by the employees. Exemption of no more than Rs 15,000 is authorized by the Income Tax Act on medical reimbursements generated by the company.

What is Medical Reimbursement?

A lot of health benefits are given to employees these days because they are facing many issues because of their long working hours, work stress & other factors, and medical costs incurred by them. One such benefit given by the company to employees is Medical Reimbursement. It is an arrangement under which employers reimburse part of their medical expenses incurred by the employees. According to the Income Tax Act, the tax exemption is set up to Rs 15,000 on medical reimbursement.

Also Read:- What is Travel Allowance | What is Housing Rent Allowance (HRA) | What is the Dearness Allowance

How does Reimbursement of Medical Costs Work?

The system starts off evolving with obtaining a prescription from a doctor along with a medical or health facility that offers healthcare services. The bill will consist of info such as the name of the service, date, amount charged, and different health-related facts. These bills and prescriptions are then submitted to the company for reimbursement.

Medical reimbursement is a simple and easy way. The employee has to pay for their medical expenses, prepare a bill from the hospital, and submit it to their company for reimbursement. The company will then reimburse the amount paid by employees.

Benefits of Medical Reimbursement

Benefits of Medical Reimbursement

Here are some benefits of medical reimbursement

  •  Covers medical charges: The benefit of medical reimbursement is to reimburse the medical costs that an individual incurs. This benefit offers economic assistance to individuals and allows them to cover the cost of their medical treatments.
  • Tax advantages: Medical reimbursement gives tax benefits. This way, the amount reimbursed will be tax-free under positive conditions.
  • Prevents unexpected economic fees: Medical reimbursement can help people cover unexpected medical costs if they occur
  • Access to quality healthcare: Medical reimbursement helps individuals to get access to quality healthcare facilities without stress about high medical costs. It helps you to get treatments on time without any financial stress.

How Much Amount Can Be Claimed?

The employees can take the tax benefit of the expenditure incurred by a limit of up to Rs 15,000. The exemption is to be effective at the reimbursement of costs that can be incurred on medical payments. An employer can reimburse the amount that is spent by the employee.

Tax Exemption Under Medical Reimbursement

Reimbursement of medical fees is taxable by the government under some conditions. An employee is eligible for tax exemption up to the amount of the medical reimbursement given by the agency. If the amount exceeds the required amount, the more fees are taxable.

What are the eligibility criteria for claiming Medical Reimbursement?

The Income Tax Act possesses some requirements that employees should meet to become eligible for medical reimbursement. Here are the eligibility criteria

  • Certain expenses must have been made for medical treatment through the employee.
  • The amount spent will be for his personal or his family (consists of spouse, kids, parents, and siblings )
  • Such an amount will be issued in the form of reimbursement by the business company.
  • The reimbursed amount by the company should not exceed Rs 15,000 (in the financial year).

How do you claim Medical Reimbursement benefits?

Here are the steps you should follow to claim medical reimbursement

  1. Obtain the desired documents: It consists of the prescription and payments.
  2. Submit the documents to the company or insurance organization: The employees need to post the applicable documents to their agency or insurance enterprise to complete the process of reimbursement.
  3. Verify the documents: The company will check the reimbursement claims and verify that the claims meet the standards for reimbursement.
  4. Approval: Once the documents are verified, the organization or insurance company will approve the reimbursement.
  5. Reimbursement: After approval, the employer or insurance enterprise will reimburse the claimed amount to the employee

Things to take into account about Medical Reimbursement

Here are some important things that employees should know regarding medical reimbursement

  • Timely submission: Submit the reimbursement claim on time to ensure timely reimbursements.
  • Keep records: Maintain records of payments, prescriptions, and other documentation associated with the reimbursement claim. This will assist in case of any discrepancies.
  • Cross-check the claim: Cross-check the reimbursement claims bill and tally them to avoid any discrepancies.

Conclusion

Employees get relief from taxes when it comes to their health. It is important to note that positive eligibility criteria and other necessities should be met to get this exemption under Medical Reimbursement. It is suggested to the employees to keep away from medical allowances with Medical Reimbursement because these are different terms, and other assumptions might carry you under the taxation, leaving you not using a choice but to pay tax, even in case you have an emergency for your health.

FAQs

Can I get medical reimbursement as a part of my salary?

Yes, some employers include medical reimbursement as a part of the salary package. In such cases, the amount of reimbursement is constant and given to the employee every month, quarterly, or annual basis.

Does medical reimbursement get brought in salary?

It depends on the organization’s medical insurance coverage. In some cases, medical reimbursement is given to employees with their salary, whereas in some cases, the employees should submit the medical bills to claim medical reimbursement. In other cases, you may get the reimbursement one after the other from the salary. However, the amount of reimbursement cannot exceed the real medical costs incurred by the employee.

Can I claim medical expenses in my ITR?

Yes, you may claim medical expenses as a tax deduction under Section 80D of the Income Tax Act in a situation with positive conditions.

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