Reimbursability

Reimbursability refers to the ability of costs or expenses to be repaid or compensated by another party. It is a normative concept used in contracts, accounting, healthcare, and travel or expense management to distinguish between costs that will be covered and those that will not.

In government and commercial contracting, reimbursable costs are those deemed allowable, allocable, and reasonable under the terms of a contract. In cost-type or cost-plus arrangements, the contractor is reimbursed for incurred costs plus a fee. By contrast, fixed-price or non-reimbursable elements are not subject to cost recovery beyond the agreed price. Reimbursable costs often require documentation, auditing, and adherence to specified guidelines or cost principles.

In healthcare, reimbursability governs how providers are paid for services. Reimbursement is typically based on negotiated rates, fee schedules, or allowed amounts, with patients sharing in out-of-pocket costs such as copays or deductibles. In travel and expense management, employees submit receipts for business-related costs, and the organization reimburses approved amounts according to policy, subject to limits and documentation requirements.

In accounting, reimbursable expenses are recorded to reflect reimbursements from external parties or cost centers within an organization. Policies aim to ensure that only necessary, reasonable, and allowable costs are reimbursed and that there is proper governance to prevent duplicate or improper payments.

Common challenges include ensuring policy compliance, determining what counts as reimbursable, and resolving disputes over eligibility. Benefits of clear reimbursability rules include improved budgeting, reduced financial risk for payers, and alignment of reimbursements with actual costs and regulations.