Continuation of Employer Contributions to HFSA

[Guest LCorbin]

I've a client who sponsors a Health FSA plan that is funded via pre-tax ee deductions and employer contributions. This client wants to pull back all funds that it contributed if the employee terminates and elects to continue Health FSA coverage under COBRA.

First, is the employer permitted to revoke its unused funds upon an employee's termination? Secondly, is an employer required to continue making contributions to a COBRA participant's HFSA?

[Guest nobletorch]

A HCRA Plan is basically a mutual insurance plan. That is why the total amount of the plan becomes available at the first of the year rather that as contributed. The employer’s only choices are

· Stop their monthly contributions for that employee when they terminate.

· The plan will limit prior contributions (both the employee’s and employer’s) to services completed/paid for before the termination date.