COBRA for FSA

[Guest Heather Sachs]

Do employers have to offer COBRA to terminated employees who have not overspent their account ?

How do you determine if an employer is eligible NOT to offer COBRA ?

[Guest PTD]

If the contributions the employee will have to pay to keep the account is more than the balance available, you would not offer. It would have to benefit the employee, since they are still eligible to sumbit FSA claims for the balance in the account.

[MARYMM]

Do employers have to offer COBRA to terminated employees who have not overspent their account ?

How do you determine if an employer is eligible NOT to offer COBRA ?

My understanding is that if the employee is not overspent, COBRA must always be offered.

It is up to the employee to determine whether it is beneficial to do a COBRA continuation or not. For example, if the ee had already incurred expenses equal to their account balance but had not submitted them, there would be no benefit to COBRA participation. If the ee had not yet incurred the expenses but planned to, then COBRA would make sense for them. Some ee's use their FSA's for a "big ticket" item such as Lasix vision surgery or a child's orthodontia. If the ee had not had the services yet, COBRA would be the only way to avoid forfeiting their contributions.

[oriecat]

How do you determine if an employer is eligible NOT to offer COBRA ?

My understanding is that if the employee is not overspent, COBRA must always be offered.

I believe the standard COBRA requirements would still apply... from the DOL COBRA FAQ -

Plan Coverage - Group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA. Both full and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.

[papogi]

MARYMM is correct. For HIPAA-exempt FSA plans (most are) COBRA must be offered for Health FSA’s if the participant has not yet been reimbursed an amount equal to or greater than the amount contributed by the participant. If the participant has gotten more out of the account than he/she has put in, the employer is not required to offer COBRA. Note that even in cases where COBRA is required, the employer need only offer it up to the end of the current flex plan year, and no further (again, assuming the FSA is HIPAA-exempt).