HRA account balances upon COBRA

[JDuns]

I am trying to get a sense of what other people are doing with HRA account balances when someone goes on COBRA. Lets say Employee, Spouse and Kids are all covered by a HRA that has a balance of $5000 on the day of the COBRA Qualifying Event.

If the Employee terminates and the family elects COBRA, it is clear that the family would start with a $5000 account balance.

If Employee and Spouse divorce (or Kid graduates college) and Spouse/Kid elects COBRA, does Spouse/Kid start with a $5000 HRA account balance while Employee's $5000 account remains intact.

Any citations would be appreciated.

[leevena]

Your example of the divorce/kid graduates is a little confusing. The $5,000 HRA fund is owned by the employee and follows that employee into COBRA. There could not be another $5,000 fund for the spouse/kid. Where would that additional $5,000 come from?

As for the child graduating, if the child is still eligible and covered under the COBRA plan with the COBRA employee, then the monies can be used for that child's expenses. If the child is not covered, then the expenses are not eligible for the HRA reimbursement.

As for a divorce, I have no idea what would happen to that HRA fund. Seems to me that it is a legal question that would be left up to the attorneys at time of seperation/divorce. I would be interested in knowing this answer.

[JDuns]

www.onque.com/tips/hras.html

The above referenced cite has two methods of allocating the HRA account balances that both increase the employer provided benefit (option 1 doubles the balance and option 2 more than doubles it). I am trying to get a sense of whether the analysis described in this is the common practice.