Q.- An employee is terminating employment. He has a health flexible spending account, but he has already taken out more than he has put into the account. Do we have to offer him COBRA for the health FSA?
A.- No. If the employee has overspent his account as of date of the qualifying event (more was reimbursed from his health FSA than he contributed to his health FSA), COBRA does not have to be offered.
If he has underspent his account as of the date of the qualifying event (more was contributed to his FSA than reimbursed from his FSA), COBRA must be offered, but may be terminated at the end of the year in which the qualifying event occurs (assuming the plan is salary reduction contributions, only).