Reimbursement is the act of compensating someone for an
out-of-pocket expense by giving them an amount of money equal to what was spent.
Companies, governments and
nonprofit
A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...
organizations may compensate their
employee
Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any other ...
s or officers for necessary and reasonable expenses; under
US
law, these expenses may be
deducted from taxes by the organization and treated as untaxed income for the recipient provided that accountability conditions are met.
UK law provides for deductions for
travel and subsistence. Reimbursement is also provided for supply,
day care, mobile, medical, or education expenses, as determined by the payer. Similarly, a
university,
academic conference, or
business conference
A convention, in the sense of a meeting, is a gathering of individuals who meet at an arranged place and time in order to discuss or engage in some common interest. The most common conventions are based upon industry, profession, and fandom. ...
may reimburse the expenses of an invited speaker or attendee.
Reimbursement is also used in insurance, when a provider pays for expenses after they have been paid directly by the policy holder or another party. This is especially relevant in
health insurance
Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among ma ...
, due to urgency, high costs, and administrative procedures which may cause a healthcare provider to incur costs pending reimbursement by a private or public provider (in the US, e.g.,
Medicare or a
Health Reimbursement Account). Segments of the
healthcare industry, such as
medical device manufacturers, rely on reimbursement for income and produce resources assisting their customers (hospitals, physicians, etc.) in obtaining reimbursement.
Governments may reimburse
taxpayers in several ways. A
tax refund reduces the net tax paid, such as income tax, potentially to zero. Taxpayers may receive complete reimbursement for other taxes, such as for
Value-added tax due to low income, subsequent export of the goods sold, or not being the final recipient. A local government may use reimbursement to reduce property taxes for a favored organization or low-income individual.
Employee reimbursements for travel are very popular. Often times when an employee is travelling for work, they will need to track expenses and submit to their employer for reimbursement.
Barriers to reimbursement
Organizations have motive to limit reimbursement expenses, whether
fraud
In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compens ...
ulent,
frivolous, or
legitimate.
If a reimbursement process is made cumbersome or inconvenient to the applicant, then the probability that the applicant will successfully obtain the funds decreases, regardless of legitimacy, resulting in fewer paid reimbursement claims overall.
Elements of cost-reducing reimbursement processes include:
* Insistence on submission of printed reimbursement forms (instead of email or online forms)
* Lengthy forms requiring detailed explanations
* Requiring that the applicant submit paper forms
* Requiring that original
receipts (instead of copies) be attached with form
* Requiring that the applicant personally deliver documents to specific locations, which may be distant and have narrow and inconvenient operating hours
* Stringent rejection of forms with errors, even if the errors are minor or inconsequential
* Issuing paper
checks
Check or cheque, may refer to:
Places
* Check, Virginia
Arts, entertainment, and media
* ''Check'' (film), a 2021 Indian Telugu-language film
* ''The Checks'' (episode), a 1996 TV episode of ''Seinfeld''
Games and sports
* Check (chess), a thr ...
(instead of cash or
direct deposit), and possibly requiring that these be received at specific locations
In addition, a variety of tactics for denying reimbursement, including
rescission, are associated with the insurance industry.
References
{{Authority control
Insurance
Tax
Expense