COBRA & FSA

[Guest KarinB]

A question has arisen for a client regarding when Health FSA must be offered through COBRA. We were always under the assumption that it would have to be a benefit for the terminated employee to be offered. If the employees would have to pay more through COBRA premiums into their FSA account to get a lesser amount, where would the benefit be? Does anymore have a link to the Federal Register where I can find this explanation as to when an employer must offer FSA through COBRA?

Finally, if an COBRA particiapnt elects COBRA FSA, does the uniform coverage rule take effect?

[LRDG]

The benefit to the terminating employee offered Cobra is if there are available funds in the FSA that would otherwise be forfeited.

For example an employee who elected MFSA for services to be performed late in the year could face forfeiture if terminating employment mid year, prior to incurring expenses and service dates.

Keep in mind if date of termination is 01/15/09 the participants plan year ends on that date also. Service dates must be within the plan year, no later than the date of termination. Funds are at risk of forfeiture without a Cobra election.

Uniform coverage does apply to Cobra MFSA elections.

To encourage terminating MFSA participants to choose Cobra, and limit the effects of uniform coverage, our plan allows terminating participants to fund the MFSA from the final paycheck. Doing so allows employees the benefit of tax savings and funds the MFSA eliminating or at least minimizing the impact of uniform coverage. This requires advance knowledge and preperation, has worked well for participants and the organization.

edited to add Federal Register URL: http://www.gpoaccess.gov/fr/index.html

[J Simmons]

Here's a link to the reg for you to read about COBRA see sections 54.4980b-0 thru -10

[LRDG]

Does anymore have a link to the Federal Register where I can find this explanation as to when an employer must offer FSA through COBRA?

J Simmons reply includes a link to the Federal Registar.

The cut n' past i tried to link didn't work.

The link in the original posting does.

Try the URL address here:

http://www.gpoaccess.gov/fr/index.html