How Does Your Company Handle Unclaimed Medical Reimbursements at Year-End?

How is the unclaimed medical reimbursement amount treated at the end of the financial year in your companies? What is the ideal way?

1. To give it to the employee along with his March salary after deduction of applicable tax as he has not submitted any bills to claim the same.
2. Amount to be lapsed and not given out to him during the month of March or any time during the year since he has not put in his bills to claim.
3. The amount can be carried forward up to the end of the next financial year and can be claimed in the coming year after submission of bills.

Kindly provide a reply as to what is followed in your companies. Also, what is the solution as per the law.

Thanks and regards,
Rekha

Hi,

The ideal way is to pay the amount to the employees subject to tax as applicable.

Regards,
Suvarna

The amount can be paid in March salary with a deduction of tax on it.

Regards,
Shankar
HR Executive,
Reliance Communication
Navi Mumbai

Some companies allow medical reimbursement as an additional benefit, which is not treated as part of CTC. In such situations, the balance entitlement must lapse at the end of the financial year (as the case may be). As there are tax concessions on it up to Rs. 15,000.00 in a year, it is better to keep the year as the financial year.

Some companies treat it as part of CTC. In such situations, it should not lapse because otherwise, the employee will not get what was his due. So either it has to be carried forward, or it needs to be paid along with other taxable income. It would be better to allow its accumulation up to a certain limit because the main purpose of this reimbursement is to help the employee in case of medical treatment, the quantum of which in monetary terms cannot be predicted. Occurrence also cannot be predicted. But accumulation beyond a limit could put sudden pressures on the finances of the company. Therefore, a balance is required. Put a limit on accumulation, and if the unclaimed amount exceeds this limit, pay the excess amount with wages.

KKT