“Unlike an HRA (which is a whole other ball of wax), when an employee with an HSA terminates, there is no right to COBRA on the HSA. The money in the HSA fund at the time of termination however belongs to the employee. An employee with a HSA can pay COBRA premiums with their HSA funds but this has no bearing on the cost of premiums or on the employer.”
What do you mean by “there is no right to COBRA on the HSA”? That folks are no longer entitled to HSA contributions (either employer or employee} to their account?
How would that interact with the actual policy benefits, in that the policy that goes with an HSA is often designed around elements of the HSA?
Thanks,
sitetest
How would that interact with the actual policy benefits, in that the policy that goes with an HSA is often designed around elements of the HSA?
With an HSA all the money in the HSA account belongs to the employee as soon as those funds are contributed (both employee and employer contributions) including after termination. And after terminating with your employer, you can move the funds out of the employer’s HSA banking institution into one of your choosing, for example find an account with a better rate of return if you have enough money in the account. You can even use funds in an HSA to pay for COBRA premiums. That’s what is so good about an HSA, it is 100% employee owned and 100% portable and unlike an FSA or HRA, the unused funds at the end of the plan year or at termination do not revert back to the employer.
The difference is that, unlike with an HRA, with an HSA if the employer funds part of the employee’s HSA contribution which some do, at termination and or with election of COBRA benefits, the employer is no longer obligated to fund the employer portion – that’s why it is said that there is “no right to COBRA with an HSA”.
If an employee has an HRA and elects COBRA the employer has to continue to fund their share of the HRA contribution.
http://info.cobraguard.net/COBRA-blog/bid/121807/HRA-vs-HSA-COBRA-Administration-Considerations