COBRA and Employer Funded FSA

[Guest RAJ]

I have an interesting dilema and I'm not sure where I can find the answer.

A company has an Employer Funded Health FSA. Full contributions have been made to each participant's account for 2002. This situation is that one of the participant's has died. The spouse, as beneficiary, would like to continue the plan through the remainder of the year. The plan document indicates that the plan year ends 12/31 or when a participant terminates employment (in this case, the death would result in the termination of employment). My understanding is that COBRA applies to FSA as long as the company is bound by COBRA and there is a balance in the account exceeding the remaining premiums. Since the account is paid up with employer contributions, and there is a balance remaining, the two questions I have are: Does COBRA have to be offered or can the employer, at it's discretion, continue to reimburse for services through the end of the year? If COBRA must be offered, would the company have to determine the approximate amount that would be owed and have the beneficiary pay the employer that amount? Help!!