When to offer COBRA for health FSA

carolathey

I am trying to sort out when we must offer a departing employee the opportunity to COBRA his health FSA (pre-tax reimbursement account for medical expenses not covered by insurance). Some of the articles I've read are very confusing and seem to turn on whether the health FSA is subject to HIPAA (not the new HIPAA privacy rule but the Health Insurance Portability and Accountability Act).

Does anyone know of a simple way to explain how to determine whether we need to offer a departing employee the opportunity to COBRA his health FSA?

sandra_d

I am under the impression that anyone with a health FSA must be offered the opportunity to continue if they have money remaining available to claim, without having incurred enough expenses prior to termination in the middle of the plan year. Once they've incurred enough in expenses to close out their account, they no longer would be a COBRA participant. Also, since the end of the plan year is the longest time they have to claim what is in their account, if they still haven't incurred enough expenses to fully claim their account, the remainder is forfeited and their COBRA period is over at that time too.

Disclaimer x:D : I am not an attorney - but this is the education that I have received from our outside COBRA (TPA) administrator.

LindaS

Our information regarding medical and dependent FSAs (this was written by out TPA) states that, in the event of termination of employment a person "would be entitled to reimbursement for expenses which are incurred with the same plan year and BEFORE TERMINATION DATE". They also have only 90 days to turn in receipts for reimbursment and after that all monies left are forfeited. This is the same way it was handled with my previous employer.

Cap

Great explanation of this at- [url]www.benefitslink.com/cobra/topics/flexible.html[/url]
Hope it helps!