I just learned something new (to me).
Recently, one of my small group clients had to let a long-time employee go. The plan itself is HSA-compliant, and the employer (very generously) funds each employee's account with $750 a year. He also covers the lion's share of the premium.
The unfortunate employee reached out to me to see what his options were. The group wasn't large enough to be subject to COBRA, but here in Ohio we have a so-called "mini-COBRA" law that guarantees (in specific circumstances) that the employee can continue his group plan for up to a year (paying the full freight, of course). One can imagine that this gets, as my dear departed sister used to say, "spendy:" in this case, upwards of $1,000 a month for the employee and dependents, all while he's between jobs.
Ouch.
One option we explored was a short-term medical plan, which would be much less expensive (under $300 a month) but which has its own limitations.
Here's where it gets interesting: I recalled that one could use HSA funds to pay for COBRA premiums, but wasn't sure if that would also include "mini-COBRA" state continuation plans.
So I reached out to our gurus of all things HSA (and FSA, and HRA) at FlexBank, who assured me that:
"HSA funds can be used to pay for Cobra and State continuation premiums. See attached list of qualifying expenses for the HSA under eligible expenses." [emphasis added]
[ed: that list is available to interested readers, just drop us a line]
Interesting!
So, I don't know yet which way the former employee will go (if at all), but at least he has another funding option.
Recently, one of my small group clients had to let a long-time employee go. The plan itself is HSA-compliant, and the employer (very generously) funds each employee's account with $750 a year. He also covers the lion's share of the premium.
The unfortunate employee reached out to me to see what his options were. The group wasn't large enough to be subject to COBRA, but here in Ohio we have a so-called "mini-COBRA" law that guarantees (in specific circumstances) that the employee can continue his group plan for up to a year (paying the full freight, of course). One can imagine that this gets, as my dear departed sister used to say, "spendy:" in this case, upwards of $1,000 a month for the employee and dependents, all while he's between jobs.
Ouch.
One option we explored was a short-term medical plan, which would be much less expensive (under $300 a month) but which has its own limitations.
Here's where it gets interesting: I recalled that one could use HSA funds to pay for COBRA premiums, but wasn't sure if that would also include "mini-COBRA" state continuation plans.
So I reached out to our gurus of all things HSA (and FSA, and HRA) at FlexBank, who assured me that:
"HSA funds can be used to pay for Cobra and State continuation premiums. See attached list of qualifying expenses for the HSA under eligible expenses." [emphasis added]
[ed: that list is available to interested readers, just drop us a line]
Interesting!
So, I don't know yet which way the former employee will go (if at all), but at least he has another funding option.
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