Tax exemption on medical reimbursements
This query is : Resolved
23 February 2012
- An employer reimburses:
1.- Medical expenses
2.- Medical Insurance premium
What are the exemptions available to the employee.under each head. What are the limits for senior citizens/others.
Satish
- An employer reimburses:
1.- Medical expenses
2.- Medical Insurance premium
What are the exemptions available to the employee.under each head. What are the limits for senior citizens/others.
Satish
Yogesh Agarwal
(Expert)
23 February 2012
Medical expenses reimbursed up to 15000 is exempt and medical insurance premium paid by an employer is taxable as perquisite.
The treatment of these two item shall be same in the hand of recipient irrespective of the age of the individual.
The treatment of these two item shall be same in the hand of recipient irrespective of the age of the individual.
Message likes :
1 times
26 July 2025
Great question! Here's a clear explanation about **tax exemption on medical reimbursements** and **Section 80D deductions**:
---
### 1. **Medical Expenses Reimbursed by Employer**
* **Medical expenses reimbursed by the employer** to the employee are **exempt from tax up to ₹15,000 per year**.
* If the reimbursement exceeds ₹15,000, the **excess amount is taxable as a perquisite** in the hands of the employee.
* This exemption applies **irrespective of the age** of the employee (i.e., same for senior citizens and others).
---
### 2. **Medical Insurance Premium Paid by Employer**
* **Medical insurance premiums paid or reimbursed by the employer** are generally treated as a **taxable perquisite** in the employee’s hands.
* This amount is **fully taxable** and no exemption limit applies here.
* The reason is that the premium is a benefit provided by the employer and is considered a perquisite.
---
### 3. **Section 80D Deduction**
* **Section 80D** allows the employee (or any individual) to claim deduction for **medical insurance premium paid by self, spouse, children, and parents**.
* Important: If **the employer reimburses medical insurance premium**, **you cannot claim deduction under Section 80D** on the same premium amount because you did not incur the expense.
* If you pay medical insurance premium yourself (not reimbursed by employer), you can claim deduction under Section 80D.
---
### 4. **Limits for Deduction under Section 80D**
| Category | Maximum Deduction Limit |
| ------------------------- | ------------------------------------------ |
| Self, spouse, children | Up to ₹25,000 per year |
| Senior citizen (above 60) | Up to ₹50,000 per year |
| Parents (if dependent) | Up to ₹25,000 or ₹50,000 if senior citizen |
---
### **Summary**
| Nature | Tax Treatment |
| ----------------------------------------------------- | ------------------------------------------------ |
| Medical expenses reimbursed (≤ ₹15,000) | Exempt from tax |
| Medical expenses reimbursed (> ₹15,000) | Taxable as perquisite |
| Medical insurance premium paid/reimbursed by employer | Taxable as perquisite |
| Medical insurance premium paid by employee/self | Deductible under Section 80D (subject to limits) |
---
If you want, I can help you plan medical expenses or insurance premium payments for optimal tax benefit. Would you like that?
---
### 1. **Medical Expenses Reimbursed by Employer**
* **Medical expenses reimbursed by the employer** to the employee are **exempt from tax up to ₹15,000 per year**.
* If the reimbursement exceeds ₹15,000, the **excess amount is taxable as a perquisite** in the hands of the employee.
* This exemption applies **irrespective of the age** of the employee (i.e., same for senior citizens and others).
---
### 2. **Medical Insurance Premium Paid by Employer**
* **Medical insurance premiums paid or reimbursed by the employer** are generally treated as a **taxable perquisite** in the employee’s hands.
* This amount is **fully taxable** and no exemption limit applies here.
* The reason is that the premium is a benefit provided by the employer and is considered a perquisite.
---
### 3. **Section 80D Deduction**
* **Section 80D** allows the employee (or any individual) to claim deduction for **medical insurance premium paid by self, spouse, children, and parents**.
* Important: If **the employer reimburses medical insurance premium**, **you cannot claim deduction under Section 80D** on the same premium amount because you did not incur the expense.
* If you pay medical insurance premium yourself (not reimbursed by employer), you can claim deduction under Section 80D.
---
### 4. **Limits for Deduction under Section 80D**
| Category | Maximum Deduction Limit |
| ------------------------- | ------------------------------------------ |
| Self, spouse, children | Up to ₹25,000 per year |
| Senior citizen (above 60) | Up to ₹50,000 per year |
| Parents (if dependent) | Up to ₹25,000 or ₹50,000 if senior citizen |
---
### **Summary**
| Nature | Tax Treatment |
| ----------------------------------------------------- | ------------------------------------------------ |
| Medical expenses reimbursed (≤ ₹15,000) | Exempt from tax |
| Medical expenses reimbursed (> ₹15,000) | Taxable as perquisite |
| Medical insurance premium paid/reimbursed by employer | Taxable as perquisite |
| Medical insurance premium paid by employee/self | Deductible under Section 80D (subject to limits) |
---
If you want, I can help you plan medical expenses or insurance premium payments for optimal tax benefit. Would you like that?
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