Accounting For Mediclaim Reimbursement To Employees

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Bapun Dasgupta (Querist)
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30 June 2025 The employees (both existing and retired) of the entity choose their respective medical insurance plans and pay the relevant annual premiums. They then send their payment receipts to the entity which reimburses the same to them.

While scrutinizing the insurance papers, it is found that the terms of plans of many employees may fall beyond the last day of the financial year viz. 31 March, 2026 (say the plan is from July, 2025 till July, 2026) while the reimbursements are made in July 2025 itself on production of evidences of payments made by the employees.

Query :
In such cases, while accounting for the reimbursement payments for a particular financial year, is it necessary to segregate between prepaid and current year's expenses in the books based on the plan period even though these are one time reimbursement payments made within the financial year 2025-26?

Thank you and best regards

Jayasurya B

Jayasurya B (Expert)
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02 July 2025 Yes your view is correct, As per the fundamental of accounting, if the expenditure pertains to both financial year then expenditure should be booked on accrual basis. AS per this concept, expenditure should be booked in the year in which such expenses related or pertained even though full payment in the current financial year.

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