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| Is a FSA eligible for continuation under COBRA? |
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Q: Is a FSA eligible for continuation under COBRA?
A: A 125 Cafeteria plan allows employee's put a portion of their earnings, pre-taxed, into a Flexible Spending Account (FSA), which they can use to pay for medical bills or expenses. Some types of FSA's are: dependant care or for day care expenses, or for health care expenses. Employer's who give their employee's an option to choose a 125 Cafeteria plan must offer a continuation of these plans upon a qualifying COBRA event. Employees, who choose to continue their health FSA under COBRA, will have to contribute 102% of their current accounts monthly contributions. Those contributions will be post-tax and then you will be able to get 100% of claims reimbursed.
Any tax advantages will be lost and if there is any unused balance in a health FSA account at the term of the COBRA coverage, it will be forfeited.
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