Layoffs: FSA and Cobra

[cptacek]

I am getting laid off at the end of April. We will probably have to go on Cobra for insurance. Does anyone know what happens to the money I have paid in to my Flexible Spending Account? Do I get to keep it and use it for the rest of the year? Or is it gone the day I am laid off?

If I do get to keep it, can I use it to pay Cobra premiums?

[sweeps]

Usually it's yours to use up for health expenses for the rest of the year. I don't think you can use it to pay health insurance premiums since the money is being held by the FSA administrator.

Just shooting from the hip here though -- not an authoritative answer.

[Thrif-t]

You can use whatever amount you put in the health flex up until the time you leave, even if you haven't had that much in pay check deductions. I know that's kind of confusing..here's an example if you put 1,000 in your flex but only paid 200 so far in paycheck deductions you can go out and use the 1k for medical procedures or anything else that's covered, over the counter medicine. And no you cannot use it to cover your cobra premiums.

I really don't think you get to use it for the rest of the year, you'll need to check with your company.

[zetta]

One time, when I left a job, I was given the option of continuing to make contributions to the FSA through the end of the year. If I had done so, the money in the FSA could've been used through the end of the year. Otherwise it was only good through the end of my employment. The documents for this arrived about the same time as the CORBA documents.

I don't know if this is standard or not.

[Daylily]

I agree with Thrif-t. Get using up that money now. In some cases your employer swallows the difference between what you've used up and what you actually contributed to the plan.

Nice thing on the Cobra though is that you may get to benefit from the new plan where the government picks up 65% of the cost of the Cobra premium. At one time that program was only available for those who had lost their jobs due to Nafta. I participated in that program a couple years ago and found that it was helpful to only have to pay 35% of the Cobra premium.

[cptacek]

I am pretty sure I'll only be covering the 35%...from what I have read, I qualify. I'll be sure to buy a year's worth of contacts for DH and I, and make sure to get DR, Dentist and eye exams in the next month. Thanks!

[neonsport]

I got laid off... FSA questions

I got laid off about a month ago. I just got my COBRA papers in the mail.

I had set up $1000 in the FSA, and paid in for 7 of 12 months. When I applied for COBRA, I also elected to continue the FSA so I could spend the money I contributed, since I used very little of it before I was laid off.

Question is: Do I only get to spend the 8 (7+1) months I've contributed or can I spend all $1000 and quit the program after a month of payments and not owe anything if I spend the whole $1000?

[creditcardfree]

I'm guessing since you are no longer employed you will be able to only use the amount you contributed.

However, a few years ago when my husband had an account, we spent the full amount in the first couple of months. Then he was deployed and no longer with that employer to contribute those funds. The company just wrote the remaining amount off. This is generally the case, if you were to leave the employer early as well. I believe this is opposite of your situation.