The Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions amend the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to require group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated.

COBRA requires continuation coverage to be offered to covered employees, their spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to certain specific events. COBRA continuation coverage is often more expensive than the amount that active employees are required to pay for group health coverage, since the employer usually pays part of the cost of employees' coverage.

The law generally applies to all group health plans maintained by private-sector employers with 20 or more employees, or by state or local governments. The law does not apply to plans sponsored by the Federal Government or by churches and certain church-related organizations. In addition, many states have laws similar to COBRA, including those that apply to health insurers of employers with less than 20 employees (sometimes called mini-COBRA).

If you become entitled to elect COBRA continuation coverage when you otherwise would lose group health coverage under a group health plan, you should consider all options you may have to get other health coverage before you make your decision. There may be more affordable or more generous coverage options for you and your family through other group health plan coverage (such as a spouse's plan), the Health Insurance Marketplace, or Medicaid.

In order to be entitled to elect COBRA continuation coverage, your group health plan must be covered by COBRA; a qualifying event must occur; and you must be a qualified beneficiary for that event.

Qualifying Events - Qualifying events are events that cause an individual to lose his or her group health coverage. The type of qualifying event determines who the qualified beneficiaries are for that event and the period of time that a plan must offer continuation coverage. COBRA establishes only the minimum requirements for continuation coverage. A plan may always choose to provide longer periods of continuation coverage.

The following are qualifying events for covered employees if they cause the covered employee to lose coverage:

Termination of the employee's employment for any reason other than gross misconduct; or

Reduction in the number of hours of employment.

The following are qualifying events for the spouse and dependent child of a covered employee if they cause the spouse or dependent child to lose coverage:

Termination of the covered employee's employment for any reason other than gross misconduct;

Reduction in the hours worked by the covered employee;

Covered employee becomes entitled to Medicare;

Divorce or legal separation of the spouse from the covered employee; or

Death of the covered employee.

In addition to the above, the following is a qualifying event for a dependent child of a covered employee if it causes the child to lose coverage:

Loss of dependent child status under the plan rules. Under the Affordable Care Act, plans that offer coverage to children on their parents' plan must make the coverage available until the adult child reaches the age of 26.

Qualified Beneficiaries - A qualified beneficiary is an individual covered by a group health plan on the day before a qualifying event occurred that caused him or her to lose coverage. Only certain individuals can become qualified beneficiaries due to a qualifying event, and the type of qualifying event determines who can become a qualified beneficiary when it happens. A qualified beneficiary must be a covered employee, the employee's spouse or former spouse, or the employee's dependent child. In addition, any child born to or placed for adoption with a covered employee during a period of continuation coverage is automatically considered a qualified beneficiary.

To be eligible for COBRA coverage, you must have been enrolled in your employer's health plan when you worked and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.

Group health plans must provide covered employees and their families with certain notices explaining their COBRA rights. Group health plans must give each employee and spouse who becomes covered under the plan a general notice describing COBRA rights within the first 90 days of coverage.

When the plan receives a notice of a qualifying event, it must give the qualified beneficiaries an election notice which describes their rights to continuation coverage and how to make an election. This notice must be provided within 14 days after the plan receives notice of the qualifying event.

If you are entitled to elect COBRA coverage, you must be given an election period of at least 60 days (starting on the later of the date you are furnished the election notice or the date you would lose coverage) to choose whether or not to elect continuation coverage.

Each of the qualified beneficiaries for a qualifying event may independently elect COBRA coverage. This means that if both you and your spouse are entitled to elect continuation coverage, you each may decide separately whether to do so. The covered employee or spouse must be allowed to elect on behalf of any dependent children or on behalf of all of the qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child.

If you waive COBRA coverage during the election period, you must be permitted later to revoke your waiver of coverage and to elect continuation coverage as long as you do so during the election period. Then, the plan need only provide continuation coverage beginning on the date you revoke the waiver.

COBRA requires that continuation coverage extend from the date of the qualifying event for a limited period of 18 or 36 months. The length of time depends on the type of qualifying event that gave rise to the COBRA rights. A plan, however, may provide longer periods of coverage beyond the maximum period required by law.

When the qualifying event is the covered employee's termination of employment or reduction in hours of employment, qualified beneficiaries are entitled to 18 months of continuation coverage.

A group health plan may terminate coverage earlier than the end of the maximum period for any of the following reasons:

Premiums are not paid in full on a timely basis;

The employer ceases to maintain any group health plan;

A qualified beneficiary begins coverage under another group health plan after electing continuation coverage;

A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage; or

A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving continuation coverage (such as fraud).

If you are entitled to an 18-month maximum period of continuation coverage, you may become eligible for an extension of the maximum time period in two circumstances. The first is when a qualified beneficiary is disabled; the second is when a second qualifying event occurs.

Disability - If any one of the qualified beneficiaries in your family is disabled and meets certain requirements, all of the qualified beneficiaries receiving continuation coverage due to a single qualifying event are entitled to an 11-month extension of the maximum period of continuation coverage (for a total maximum period of 29 months of continuation coverage). The plan can charge qualified beneficiaries an increased premium, up to 150 percent of the cost of coverage, during the 11- month disability extension.

Second Qualifying Event - If you are receiving an 18-month maximum period of continuation coverage, you may become entitled to an 18-month extension (giving a total maximum period of 36 months of continuation coverage) if you experience a second qualifying event that is the death of a covered employee, the divorce or legal separation of a covered employee and spouse, a covered employee's becoming entitled to Medicare (in certain circumstances), or a loss of dependent child status under the plan.

Your group health plan can require you to pay for COBRA continuation coverage. The amount charged to qualified beneficiaries cannot exceed 102 percent of the cost to the plan for similarly situated individuals covered under the plan who have not incurred a qualifying event. In determining COBRA premiums, the plan can include the costs paid by employees and the employer, plus an additional 2 percent for administrative costs.

For qualified beneficiaries receiving the 11-month disability extension, the COBRA premium for those additional months may be increased to 150 percent of the plan's total cost of coverage for similarly situated individuals.

If the amount of a payment made to the plan is incorrect but is not significantly less than the amount due, the plan is required to notify you of the deficiency and grant a reasonable period (for this purpose, 30 days is considered reasonable) to pay the difference. The plan is not obligated to send monthly premium notices.

Some employers may subsidize or pay the entire cost of health coverage, including COBRA coverage, for terminating employees and their families as part of a severance agreement.

The Family and Medical Leave Act (FMLA) requires an employer to maintain coverage under any group health plan for an employee on FMLA leave under the same conditions coverage would have been provided if the employee had continued working. Coverage provided under the FMLA is not COBRA coverage, and taking FMLA leave is not a qualifying event under COBRA. A COBRA qualifying event may occur, however, when an employer's obligation to maintain health benefits under FMLA ceases, such as when an employee taking FMLA leave decides not to return to work and notifies an employer of his or her intent not to return to work.

If there is no longer a health plan, there is no COBRA coverage available.

A Flexible Spending Account (FSA) allows you to put aside a set amount of money from your paychecks before taxes to pay for certain specific health care or dependent care expenses, which lowers your taxable income.

The main advantage of an FSA is the tax savings it offers. An FSA enables you to pay for eligible out-of-pocket expenses with money you set aside from your pay before any taxes are taken out. Without an FSA, you would still pay for these expenses, but you would do so using money remaining in your paycheck after taxes are withheld.

Health Care FSAs cover eligible health-related expenses for you and your dependents that are not covered or reimbursed by your health plan, dental plan, vision plan, or any other type of insurance.

Dependent Care FSAs are used to pay for eligible child care expenses for children under age 13, or day care for anyone who you claim as a dependent on your Federal tax return who is physically or mentally incapable of self-care, so you and your spouse work (or if your spouse is a full-time student or disabled). The Dependent Care FSA is not for health care expenses for your dependents.

As you incur eligible health care expenses and/or dependent day care expenses throughout the year, you can get reimbursed from your Health Care FSA or Dependent Care FSA by submitting a claim form and itemized receipts to the FSA administrator. Or use your FSA debit card to pay for eligible health care expenses directly from the available funds in your Health Care FSA.

Due to IRS regulations, your enrollment and contribution amount remains in effect for the plan year, unless you have a qualifying family status change, such as a marriage, birth or death of a dependent.

No. FSAs are an IRS-regulated benefit, and your FSA enrollment does not carry over from year to year. Your contributions end on last day of the plan year. You will need to enroll in an FSA during each annual benefits open enrollment period if you wish to participate in an FSA for the following calendar year.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows you to continue your Health Care FSA with after-tax contributions even after losing your eligibility to participate (for example, due to termination of your employment). To submit claims for expenses incurred after you become eligible for COBRA, you must continue your FSA through COBRA.

A Health Savings Account allows individuals to pay for current health expenses and save for future qualified medical expenses on a pre-tax basis. Funds deposited into an HSA are not taxed, the balance in the HSA grows tax free, and that amount is available on a tax free basis to pay medical costs. Your voluntary contributions to your HSA reduce your taxable income. When you enroll in an HDHP, the health plan determines whether you are eligible for a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) based on the information you provide.

• Your own HSA voluntary contributions are tax-deductible. Your own HSA contributions are either tax-deductible or pre-tax (if made by payroll deduction).

• Interest earned on your account is tax-free

• Tax-free withdrawals may be made for qualified medical expenses

• Unused funds and interest are carried over, without limit, from year to year

• You own the HSA and it is yours to keep - even when you change plans or retire

• Your HSA is administered by a trustee/custodian

Generally qualified medical expenses will be determined by the plan in conformance with FEHB law and Section 213. See IRS Publication 502 for a list of qualified medical expenses.

Yes. Your HSA funds are invested. Depending on which HSA plan you are enrolled in, the interest rate and payment of interest will vary.  Most HSA Trustees have higher earning investment opportunities once a threshold balance is accumulated. Your earnings are tax free.

Yes. Your funds will accumulate without a maximum cap. However, the annual limit you can contribute to the HSA may not exceed the maximum contribution amount set by the IRS , plus "catch up" contributions for those ages 55 to 65.

You own your account, so you keep your HSA, even if you change health plans. If you no longer are enrolled in an HDHP you are not eligible to make contributions to your HSA, but you may request withdrawals for qualified medical expenses.

First, you must elect a qualified high deductible health plan. Generally, once the plan receives your enrollment, the plan will mail you an information packet which includes forms for you to complete and return to the plan. When the plan receives the completed forms, the plan will notify its administrator of the HSA. The HSA administrator will then set up your account.

Your HSA would pass to your surviving spouse or named beneficiary tax free. If you are unmarried and do not have a named beneficiary, the money is disbursed to your estate and is subject to any applicable taxes.

The IRS sets the maximum contribution limits. The 2023 maximum annual contribution limit for HDHPs are $3,850 for Self Only coverage and $7,750 for Self Plus One or Self and Family coverage.

Catch-up contributions are only available to those between the ages 55 and 65. If you are covered by your HSA for the entire year, you may deposit the entire catch-up amount starting with the year you turn 55. Currently, an additional $1,000 catch-up contribution is allowed.

Employees who are enrolled in HDHPs are usually eligible to make pre-tax allotments to their HSAs through their payroll office. Your own voluntary HSA contributions are either tax-deductible or pre-tax (if made by payroll deduction).

Yes. You may withdraw money from your HSA for items other than qualified health expenses, but it will be subject to income tax and, if you are under 65 years old, an additional 20 percent tax penalty on the amount withdrawn.

You must participate in a qualified High Deductible Health Plan, have no other insurance coverage other than those specifically allowed, and not be claimed as a dependent on someone else's tax return in order to be eligible for an HSA. Some examples of other coverage that would cause ineligibility are: a health care flexible spending account (HCFSA), a spouse's FSA, a spouse's family enrollment in an HMO, other non-high deductible health insurance coverage, TRICARE, Medicare, or receipt of VA or IHS healthcare benefits within the previous three months. You can still have other disability, dental, vision and long-term care insurance policies.

You can use the money in your HSA immediately, or you can allow the money to accumulate for future use. However, you can only use the amount currently in your account.

It depends. For participating health plan providers, it is recommended payment be made after the health plan’s negotiated provider discount has been applied.  The Explanation of Benefits (EOB) describes your liability after the health plan’s negotiated discount has been applied.

Yes, you should keep your receipts. If you are audited by the IRS, you may need to explain your HSA expenditures.