Managing medical reimbursements can be a cumbersome process. If you are new to the system of handling medical bills, you might as well lose track of the process. To help you ease the burden, electronic systems are now available for administering and managing medical reimbursements that simplify the overall process.
Let’s start with the basics i.e. understanding medical reimbursements. It is a common misconception that medical reimbursements and medical allowance are the same. But how many of us know the difference between the two? Most of the employees don’t pay attention to various components of their salary like house rent, medical, leave, travel and so on. If you are explaining such aspects to your employees for the first time, it is important for you to understand the difference. In this post, we’ll explain this and take a look at the electronic reimbursement services that are available to help corporates streamline their work, which will eventually benefit employees as well.
The Difference between Medical Reimbursements and Medical Allowance
While medical allowance and medical reimbursements are tools to cover the medical expenses incurred by employees, the key difference lies in the taxation policy. The medical allowance received throughout the year is a part of the taxable salary, but the medical reimbursement is exempt from tax to a certain limit. An employee can spend the medical allowance in cash or with their cards for the medical expenditures, but they’ll have to submit or upload the bill for claiming the medical reimbursements.
The Tax Rules Explained
Section 17(2) of the Income Tax Act, 1961 states that any reimbursement against a medical expense by an employee up to INR 15,000 is exempt from tax. It doesn’t matter whether it is claimed in part or in full.
An employee “XYZ” incurs INR 30,000 as the medical expenses and submits all the bills for medical reimbursements. In this case, he’ll be able to claim only INR 15,000 from the total expenses as exempted from tax.
If an employee “ABC” spends INR 25,000 as medical reimbursements but claims only up to INR 5000 for the year, he will get the tax exemptions only for that amount of INR 5000. The rest of the amount of INR 20,000 will be taxed.
Medical Reimbursement Rules
Employees can claim reimbursements not just for themselves but also for their family members (spouse, children, and dependent parents) as well. All the bills that are related to the purchase of medicine, medical checkups, doctor’s fee or other medical procedures can be submitted to claim the exemption. However, it is the company’s discretion.
Why Corporates Need An Electronic Reimbursement System?
It becomes very cumbersome to manage the bills of each employee which consumes a lot of time as well as resources. An electronic solution like Zeta Optima’s digitized reimbursements program has many benefits:
Enables digital reimbursements of medical expenses
Making and validating medical claims is done in very less time
All aspects of bill verification are outsourced to Optima experts.
Tailor the program as per the requirements.
Get insightful digital reports on the medical reimbursements on a real-time basis.
Reimbursement records are available for seven years to meet auditing requirements.
Save a lot of time and resources while ensuring that all the data is safe.
Your employees also stand to gain from an electronic reimbursement system - they just have to click a picture of their bills and upload them digitally on-the-go. They will also get the benefits of the Zeta Super Card that are accepted at several pharmacies, doctor’s clinic and so on. They can also access the Zeta app which is integrated with online health portals like Practo and HealthKart to book appointments or make purchases. In effect, with an electronic reimbursement, employers can save time and resources and employees can enjoy the convenience of the digital platform for quick, hassle-free reimbursements.
Sunder is a techie guy who loves to write about anything that is directly or remotely connected with technology. From hardcore tech stories to the overall influence of technology in life, Sunder is passionate about all things internet. When he is not surfing the internet, he is busy grooving on his [...]