Can We Allow Laid-Off Employees to Spend Down Their Health FSAs Without Electing COBRA?

“QUESTION: Our company offers a calendar-year cafeteria plan with a health FSA funded through employee salary reductions. The health FSA is subject to COBRA, and our plan documents provide that health FSA coverage ends upon termination of employment. Before year-end, we expect to eliminate several positions at our company. Can we amend our plan to permit the laid-off employees with unused amounts remaining in their health FSAs to be reimbursed for eligible expenses incurred after their employment terminates, so that they can use up their account balances without electing COBRA?” (EBIA Weekly Newsletter)

By |2017-01-19T10:26:24+00:00October 9th, 2016|2016 News, News|