COBRA Coverage - Health FSA

[Guest AKW]

An employee terminates employment with a balance in their Health FSA. They are offered COBRA for the Health FSA.

At the same time, they are hired by another employer, and become eligible for their FSA plan. Can they still continue COBRA through the former employer, and at the same time be covered under the new employer's FSA plan?

Thanks.

[oriecat]

Even if they could (which I think will depend upon when the new coverage starts and when the COBRA was elected), why would they want to when they won't have any pretax advantage to it?

[papogi]

Oriecat, because they could COBRA the first employer's FSA for one or two months with post tax dollars and clean it out under the uniform coverage rule. Then have an FSA with the new employer with a smaller election thereby getting more out of his/her FSA's in the year than he/she contributed. As for the answer to the original poster, not sure. If the FSA is seen as employer-provided group health coverage (which it becomes under 125 and 106), then I don't see why not. Honestly, not sure though...

[Guest Sieve]

If the employee begins participating in the new employer's FSA before electing COBRA coverage, then he/she can be covered under both. If, however, after electing COBRA coverage, the employee then begins participating in the new FSA, COBRA coverage can be lost. (Prop. Treas. Reg. Section 4980B-7, Q&A-2 and -3.)