Answer Bank Category: Fine for not acting on COBRA trigger?

Question:

You clarified that we have to offer COBRA benefits to variable-hour employees who lose their eligibility. We did not do that. And we have a number of employees whose coverage was terminated.

What are the fines and how should we handle this now?

Answer:


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Question:

We have a flexible spending arrangement (FSA) that allows employees to contribute portions of their earnings to be used for health expenses. The employee is not taxed on their contribution. We have always offered COBRA continuing coverage to employees who terminate their employment.

We now have the situation where we are offering COBRA to continuing employees who no longer meet the eligibility requirements for continued employer coverage because their hours of service have been reduced.

Can these employees use what’s in their FSA account to cover the cost of COBRA or an individual health plan they may get on an exchange?

Answer:


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Question:

We have a health flexible spending arrangement (FSA) where the employer contributes $1,000 per calendar year. One of our employees elected a salary reduction with respect to the health FSA of $2,000 for the year at the start of the year.

This contribution was made by a monthly salary reduction. The employee terminated their employment May 31. They had a $500 carryover amount in their FSA from the previous year. Up to May 31, the employee had submitted medical reimbursement payments of $1,100.

How much can they use of their remaining FSA for COBRA?

Answer:


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Question:

How does COBRA work when someone loses their eligibility for coverage?

Answer

Question:

What notification do we have to give an employee who is losing their eligibility for coverage?

Answer