Jump to content

FSA Premium Under COBRA


Guest mls

Recommended Posts

We need some advice on your process for calculating the FSA healthcare premium for COBRA. I have read that an employee's COBRA premium for FSA is based on, plan year election, minus reimbursements to date, divided by the number of months left after the qualifying event date. Problem is, we have a payroll system bringing over the term with FSA info, a TPA who administers FSA who has the reimbursement amount, and a COBRA system, Travis that has the COBRA info. We don't see these three systems mingling to give us all the info we need. One idea I had was to have the COBRA beneficiary indicate that they want the HC FSA on their COBRA form and then we contact them with the premium so that we don't have to manually calculate the premium for everyone - just those who want to elect?? Any comments, suggestions?

Link to comment
Share on other sites

Guest Randy L

I disagree with what you have read regarding the method for calculating COBRA premium for health FSAs (Plan year election, minus reimbursements to date, divided by the number of months left after the qualifying event date). Proposed regulations under Section 125 (and the preamble to those regs) require FSAs to exhibit "risk-shifting characteristics of insurance" with the annual election amount payable throughout the plan year (uniform coverage rule). The monthly "premium" for health FSAs is considered to be 1/12 of the annual election amount. The COBRA premium would simply be 102% of that amount. Keep in mind, however, that the benefit payable under COBRA coverage is the "remaining balance" of the FSA. Also keep in mind that each qualified beneficiary is entitled to elect FSA coverage under COBRA and receive up to the remaining balance in benefits. New rules established by the final COBRA regulations should limit an employer's long-term exposure to adverse election of FSA coverage.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...