COBRA and your FSA
FSAs qualify for COBRA coverage
If you're subject to COBRA (
review COBRA rules to verify), then you must offer COBRA for the health FSA. Here are a couple rules:
- You must offer this extension only until the end of the plan year in which the qualifying event occurred (not the full 18 or 36 months).
- You have the option not to offer COBRA at the time of termination if the employee has a negative balance in their FSA (if the employee has spent more than the amount contributed to-date)
Contributions still required
If your employee does select COBRA for their FSA, then they must continue to make contributions to the account on their own. There will be no more tax advantage because there is no payroll check to deduct contributions from. Because of this, many COBRA-eligible employees choose not to elect COBRA on their FSAs.
