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Q: My stepdaughter has become ineligible, due to her age of 23, for coverage under my companies group plan. Is she eligible to have my flex spending account attached to her Cobra account?
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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