Late COBRA Election or Payment Exceptions

Question:  Can an employer make an exception for an individual who failed to timely elect or pay for COBRA coverage? Compliance Team Response: The COBRA rules generally require that qualified beneficiaries elect COBRA within 60 days of receiving the election notice, and that they make the first premium payment no later than 45 days after […]

Health FSA Eligibility Footprint Rule

Question:  Can an employer’s health FSA eligibility rules be different from the major medical plan? Compliance Team Response: Health FSAs must be considered an “excepted benefit” to avoid violating the ACA market reform provisions. The general requirements for a health FSA to be considered an excepted benefit (and therefore not subject to the ACA market […]

Streamlined ACA Reporting Methods

Question:  When can an employer use the “Qualifying Offer Method” or “98% Offer Method” for streamlined ACA reporting, and what are the advantages? Compliance Team Response: There are two streamlined ACA reporting methods available for employers that qualify: Qualifying Offer Method Requirements to Utilize Employers must meet two requirements to utilize the Qualifying Offer Method: […]

Mid-Year Enrollment of a Domestic Partner

Question:  When should an employer permit an employee to enroll a domestic partner in the health plan mid-year? Compliance Team Response: The Section 125 permitted election change event rules generally do not apply to domestic partner coverage because employees pay for such coverage on an after-tax basis (unless the domestic partner is the employee’s tax […]


Welcome to Compliance Friday Answers to the Service Team (FAST)!  Each Friday we publish our response to a question that the ABD Compliance Team received from a client or member of the EB Service Team.  These represent the most frequently asked (or interesting) questions we see. We post all of our FAST responses on the […]

Health FSA and Dependent Care FSA for Parents

Question:  When can an employee use the health FSA or dependent care FSA for a parent’s expenses? Compliance Team Response: Health FSA for Parents In order to take a distribution from the health FSA for a parent’s medical expenses, the parent must be a tax dependent under IRC §152 (as modified by §105(b)). This standard […]

Overspent Health FSA Upon Termination of Employment and Life Event

Question:  Can a cafeteria plan require employees to continue health FSA contributions upon experiencing a mid-year life event if the account is overspent? Compliance Team Response: That clearly is not permitted where an employee terminates employment.  However, as discussed below, the rules appear to be different where the employee experiences any other mid-year permitted election […]

Terminating Health Benefits for Employees on Disability Leave

Question:   When does an employee on disability leave lose active health plan coverage and become eligible for COBRA? Compliance Team Response: Active Health Benefits Continue: FMLA/CFRA/PDL Period (or Other State Protected Leave Law) Employees who are disabled may have job protected rights under FMLA/CFRA for up to 12 weeks.  Pregnancy disabilities also include a period […]

Health Plan Eligibility for Legal Guardianship Children

Question:  Can an employee enroll a child for whom she is the legal guardian in the health plan? Compliance Team Response: Health plans almost uniformly limit eligibility coverage to: Eligible employees; Spouses/domestic partners; and Children under age 26. Children typically include natural children, step-children, foster children, adopted children, and children placed with the employee for […]