COBRA & FSA

[Guest sphile]

We have a participant that was in the FSA. She terminated her employment but still has money available in her FSA. If she elects the FSA under COBRA, are those funds available to her? Also does she still have to make a contribution to her FSA under COBRA? Or can she just spend down the funds? Any advice would be great!! Thanks

[Mary C]

If she elects COBRA, not only are the unreimbursed funds in her account available to her, but the entire year's election (less reimbursed amount) is available. She will need to keep contributing (paying) to the plan her normal monthly contribution amount plus the 2% admin fee (if you charge it) in order to keep FSA COBRA in force.

[Guest sphile]

Thanks for the response Mary. The participant can't just elect COBRA and use the remaining funds? She will still have to make the monthly contributions? Thanks again

[papogi]

Yes. The participant must pay the premiums in order to keep the flex COBRA in force.

[Guest FAQ]

Note that if she does not elect COBRA, the participant would have access to the funds already contributed, but only to reimburse expenses that were incurred prior to her termination of employment. Many plans impose a time limit for submitting such claims, however, such as 90 days after the individual ceases to be a participant.

As noted above, if the participant wants to use funds contributed prior to termination of employment to reimburse expenses incurred after termination of employment, she must elect COBRA.

[Guest dragonflier]

Note that she would only have to elect and contribute to Cobra until she had submitted claims up to her full election amount. For example, if she had $500 still unclaimed and elected Cobra knowing that she was going to have $500 in reimbursable expenses before the end of the plan year, she would not have to continue contributing to Cobra after incurring the expense. She would just need to submit the claim and could be done with Cobra even if the full plan year election had not been paid in.