DEFINITION of 'Reimbursement Plan'

A generic term for several types of plans that reimburse employees for various types of work-related expenses. These expenses can include medical, auto, travel, meal and entertainment costs. Reimbursement plans are instituted by employers in order to allow them to pay for a more accurate amount of employee expenses incurred instead of having to provide a broad allowance or increase in compensation to cover them.

BREAKING DOWN 'Reimbursement Plan'

Reimbursement plans can take many forms, such as accountable and nonaccountable plans, de minimis fringe benefits, or automobile mileage and travel allowances. Employees cannot take personal deductions of any kind for expenses that are covered under a reimbursement plan. Employees must submit adequately detailed records of expenses via logs or receipts in order for employers to be able to deduct the reimbursements.

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