Q.- A terminated employee’s spouse (not the former employee) is electing to continue health FSA coverage through COBRA. Can the former employee’s eligible expenses be reimbursed from the COBRA coverage?
A.- Yes. Code section 105(b) provides that an expense must be incurred by the employee, the employee’s spouse or the employee’s child who has not attained age 27 as of the end of the end of the tax year to be eligible for reimbursement from a health FSA. If the spouse elects the FSA under COBRA, expenses for any of the family members (the former employee, the spouse and dependent children) will be eligible for reimbursement.