Is a FSA eligible for continuation under COBRA?

US DOL Info#00ff00 Q: Is a FSA eligible for continuation under COBRA? US DOL Info#00ff00 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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