Medical reimbursement

Know how to claim medical reimbursement for your healthcare expenses. Read on to know the tax exemption on medical reimbursement.
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Medical reimbursement
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3 min
25-July-2023

Medical reimbursement is an important aspect to consider in the healthcare industry. It is the process of reimbursing expenses incurred on medical treatments. It can be in the form of a reimbursed claim to the patient or a direct payment to the service provider.

Medical reimbursement offers a lot of benefits to both the patients and healthcare givers. It is important to understand the reimbursement process, how to claim benefits, and also some important things to remember about medical reimbursement. Through medical reimbursement, individuals can seek compensation for various medical services, including doctor visits, diagnostic tests, hospitalisation, and prescription medications. This system provides flexibility in healthcare choices, allowing individuals to select their preferred healthcare providers and treatment options.

What is medical reimbursement?

Medical reimbursement, also known as reimbursement of medical expenses, is a vital process wherein individuals are compensated for healthcare costs they personally bear. In India, medical reimbursement for health insurance is a benefit often offered by employers, governed by laws, including those concerning medical reimbursement income tax. This assistance aids individuals in covering medical treatment expenses, complementing mediclaim insurance coverage.

Benefits of medical reimbursement

Here are some benefits of medical reimbursement:

Covers medical expenses:

The purpose of medical reimbursement is to reimburse the medical expenses that an individual incurs. This benefit offers financial aid to individuals and helps them cover the cost of their treatments.

Tax benefits:

Medical reimbursement offers tax benefits. This means the amount reimbursed is tax-free under certain conditions.

Prevents unexpected financial expenses:

Medical reimbursement can help individuals tackle unexpected medical expenses, since they are often covered under the reimbursement.

Access to quality healthcare:

Medical reimbursement provides individuals access to quality healthcare without worrying about the expenses. It helps them get timely treatments without any financial burden.

How does reimbursement of medical expenses work?

The process starts with obtaining a prescription from a doctor and a bill from the service provider such as a hospital or clinic that provides healthcare services. The bill will include details such as the name of the service, date, amount charged, and other relevant information. These bills and prescriptions are then submitted to the employer or insurance company for reimbursement.

Medical reimbursement is a simple and straightforward process. The employee has to pay for their medical expenses, obtain a bill from the service provider and submit it to their employer or insurance company for reimbursement. The employer will then reimburse the amount paid by the employee or directly pay the service provider.

Also, read on to know how to get the best family health insurance.

How to claim medical reimbursement benefits?

Here are the steps to claim medical reimbursement benefits:

Step 1: Obtain the required documents: This includes prescription and bills.

Step 2: Submit the documents to the employer or insurance company: The employee needs to submit the relevant documents to their employer or insurance company to initiate the process of reimbursement.

Step 3: Verify the documents: The employer or insurance company will assess the reimbursement claims and verify that the claims meet the criteria for reimbursement.

Step 4: Approval: Once the documents are verified, the employer or insurance company will approve the reimbursement.

Step 5: Reimbursement: After approval, the employer or insurance company will reimburse the claimed amount either to the employee or the service provider, depending on the process.

Tax exemption under medical reimbursement

Reimbursement of medical expenses is taxable by the government under certain circumstances. An employee is eligible for tax exemption up to the amount of the medical reimbursement provided by the employer. If the amount exceeds the specified amount, the excess amount is taxable.

What are the eligibility criteria for claiming medical expenses?

Here are the basic eligibility criteria for claiming medical expenses in health insurance.

  • The policyholder needs to have a health insurance policy with coverage for medical expenses.
  • The policy should be active, and you can claim for the medical treatment undergone during the policy period.
  • The policyholder must provide all the required documents to the insurer to support the claim.
  • The claims presented should be as per the terms and conditions listed in the policy document.

Things to remember about medical reimbursement

Timely submission: 

Submit the reimbursement claim within the set timelines to ensure timely reimbursements.

Keep records:

Maintain records of bills, prescriptions, and other documentation related to the medical reimbursement claim. This will help in case of any discrepancies.

Cross-check the claim:

Double-check the reimbursement claims against the invoice and tally them to avoid any discrepancies.

Do’s and don’ts of mediclaim insurance

Here are some medical reimbursement do's and don'ts to follow for a smooth and hassle-free process:

Mediclaim insurance – Do’s

Mediclaim insurance – Don’ts

Submit complete and accurate medical bills with all the supporting documents.

Do not submit a medical bill that is not related to your medical condition.

Ensure that your health insurance policy covers the medical treatment or procedure received.

Do not exaggerate the medical condition or expenses as it may lead to claim rejection.

Retain copies of all submitted documents.

Do not delay submitting the claim as it can impact the reimbursement process.

Keep track of the claim status by regularly checking online or contacting the insurance company.

Do not over-submit documentation with irrelevant details as it can delay the claim process.

Inquire about additional reimbursement coverage or benefits.

Do not ignore the terms and conditions of the insurance policy as it can lead to claim rejection.


Difference between medical reimbursement and medical allowance

Medical reimbursement and medical allowance are two components of an employee's salary structure. Though they may sound similar, they differ in their nature, purpose, and tax implications. Here's a comparison table to understand the difference between medical reimbursement and medical allowance:

Parameter

Medical reimbursement

Medical allowance

By definition

It is a refund of medical expenses incurred by an employee.

It is a fixed amount provided by an employer to the employee to meet medical expenses.

Tax implications

Medical reimbursement is tax-exempted under Section 17(2) of the Income Tax Act, 1961.

Medical allowance is taxable under income from salary.

Utilisation

Used for medical expenses incurred by the employee or their family members.

Used at the discretion of the employee, and the employee does not have to provide proof of medical expenditure.

Expense limit

The reimbursement amount is limited to actual medical bills incurred.

The allowance amount is fixed and not linked with the actual medical expenses incurred.


Overall, this benefit provides access to quality healthcare service that is crucial for healthy and productive lives of all individuals.

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Frequently asked questions

What is the salary limit for medical reimbursement?

There is no fixed salary limit for medical reimbursement under employee health insurance. However, as per the Income Tax Act, 1961, employees can claim tax exemption on medical expenses up to Rs. 15,000 in a financial year.

Can I get medical reimbursement as part of my salary?

Yes, some employers include medical reimbursement as part of the salary package. In such cases, the amount of reimbursement is fixed and provided to the employee on a monthly, quarterly, or annual basis.

Does medical reimbursement get added in the salary?

It depends on the employer's group health insurance policy. In some cases, medical reimbursement amount gets added to the salary, and the employee needs to submit the original bills to claim the reimbursement. In other cases, you may get the reimbursement separately from the salary. However, the amount of reimbursement cannot exceed the actual medical expenses incurred by the employee.

Can I claim medical expenses in my ITR?

Yes, you can claim medical expenses as a tax deduction under Section 80D of the Income Tax Act, subject to certain conditions.

Is medical claim reimbursement taxable?

Medical reimbursement is tax-exempted under Section 17(2) of the Income Tax Act, 1961.

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