UBA Partner Firms help employers stay one step ahead by answering their employee benefits compliance questions with timely and accurate answers.
Answers to compliance questions are provided by UBA Alliance, Kutak Rock.
7.9.26 | QUALIFYING EVENT QUESTION Q. An employee’s 23-year-old dependent wants to leave the parent’s health plan and enroll in the dependent’s employer plan effective Jan. 1. The parent’s plan renews on July 1. Should the parent drop the dependent from the parent’s plan effective June 30, creating a qualifying event for the dependent to enroll in their employer’s plan on July 1? Or should the dependent wait until Jan. 1 to enroll in their employer’s plan, creating a qualifying event for the parent to drop the dependent from their plan at that time? A. Either option should work. If the dependent is dropped from the parent’s plan during the parent’s open enrollment, this should be a qualifying event allowing the dependent to enroll mid-year in their employer’s plan. Likewise, the dependent can enroll in their employer’s plan at their open enrollment, and this will be a qualifying event entitling the parent to drop the dependent mid-year.
7.2.26 | COBRA FOR HOLDING COMPANY Q. Our client, a holding company with 12 employees, owns a subsidiary with more than 50 employees. They operate under different tax IDs. The holding company does not offer COBRA, but the subsidiary does offer COBRA. The holding company is looking for a compliant solution that they can offer to employees who leave the company. Can COBRA still be offered even if the holding company has fewer than 20 employees? A. If the holding company owns all of the subsidiary, the two companies are treated as one for COBRA purposes. This means that the holding company must comply with COBRA with respect to their 12 employees. This is not optional, it is mandatory.
6.25.26 | PCORI FEE CALCULATION Q. Can you confirm that the PCORI fee is $3.84 multiplied by the average number of lives covered under the plan? A. You are correct. For plan years ending between Oct. 1, 2025, and Oct. 1, 2026, the PCORI fee is $3.84 per covered life.
6.18.26 | CMS CREDITABLE COVERAGE DISCLOSURE Q. Our client is using an ICHRA and is filling out the CMS Creditable Coverage Disclosure form. The form asks if all options offered are creditable, non-creditable, or a mix. The group's ICHRA is considered non-creditable coverage, but he Marketplace plans can be creditable coverage depending on the plan. How should the employer respond on the form? A. With an ICHRA, the employer reports that it offers non-creditable coverage, regardless of whether a Marketplace plan under the ICHRA is creditable or not. The question is getting to the ICHRA, and that is always reported as non-creditable.
6.11.26 | HSA EMPLOYEE-ONLY VERSUS FAMILY CONTRIBUTIONS Q. If an employee is enrolling in employee-only coverage under an HDHP plan, can he contribute an HSA to the family maximum level of $8,750 if his spouse has employee + children coverage? Would the spouse also need to be enrolled in an HDHP? If the spouse and children are also enrolled in an HDHP and the employee is allowed to contribute the full family contribution, can his contribution be pre-tax? A. If the employee is enrolled in employee-only HDHP coverage, and the employee’s spouse and chidren are enrolled in a separate HDHP, the two spouses can contribute to either of their HSAs up to the family limit. This means the employee can contribute up to the family limit in their HSA, even though the employee is only enrolled in employee-only HDHP coverage, because the spouse is enrolled in family HDHP coverage. Contributions to both HSAs can be pre-tax, if each employer’s cafeteria plan permits pre-tax HSA contributions (most do).
6.4.26 | FORM 5500 AND COMMON OWNERSHIP Q. Two employers have common ownership but offer separate benefit plans with unique policy numbers and have separate ERISA wrap documents. When counting employees for Form 5500 filing, are employees counted separately in each company, or would common ownership indicate that the two employer groups are counted together? A. For purposes of the 5500 filing, you look to the total number of participants in a plan, regardless of whether the employer (or another employer in the controlled group) sponsors another similar plan. Common ownership would only matter if employees of both companies participate in the same plan.
5.28.26 | MISSED FORM 5500 FILINGS Q. A client just discovered that they have never filed a Form 5500. The client is working to gather the data to complete the missed filings, but is concerned that carriers and other vendors will not be able to provide data for all years when filing was missed. How far back should the client go when completing these filings? A. The employer should take advantage of the Department of Labor's (DOL) Delinquent Filer Voluntary Compliance Program. This program allows the employer to go back as far as necessary to correct Form 5500 filings and pay a single penalty that is much more reasonable than the potential penalties. The employer should file 5500s as far back as it is required and submit whatever information it can get. A welfare plan needs 100 participants on the first day of the plan year to be subject to a 5500. If the employer is unable to complete all of the 5500s, the DOL has expressed lenience in using this Delinquent Filer program. With this program, it is in the employer’s best interest to go as far back as necessary since the number of delinquent filings does not impact the amount of the fee payable to the Department of Labor.
5.21.26 | COBRA COVERAGE FOR NEW CHILD Q. If a former employee elects COBRA and has a baby during her 18 months of COBRA coverage, is that baby eligible for COBRA coverage? A. Yes, a child born to COBRA qualified beneficiary can be added to the COBRA coverage. The plan must add the child if timely notified of the birth by the COBRA beneficiary.
5.14.26 | HSA CONTRIBUTION LIMIT Q. An employee on an HDHP plan has elected employee-only medical and family dental/vision coverage. He wants to increase his HSA contributions, thinking he should be able to contribute up to the $8,750 family limit since he has family dental/vision coverage. Is the employee limited to the $4,400 annual HSA contribution since he has employee-only medical coverage? A. You are correct. This employee is limited to the employee-only limit because the employee has single HDHP coverage. The family dental and vision elections are not relevant for purposes of determining the HSA contribution limit.
5.7.26 | HSA CONTRIBUTION Q. Can individuals contribute to their spouse's or domestic partner's HSA account pre-tax through payroll? If they do this, are they missing out on the FICA tax savings? If they are not married and have a domestic partner, is there any effect on contributions? A. Employees can only contribute to their own HSA account on a pre-tax basis. By making after-tax contributions, they would be missing out on the relatively small FICA tax savings. If an employee has employee + 1 or family coverage, and the +1 is a domestic partner the employee can still contribute the full family maximum to the HSA.
4.30.26 | STANDALONE EAP SUBJECT TO COBRA Q. When a group purchases an EAP outside of their ancillary carrier's free program, is this standalone EAP product a COBRA benefit to employees? A. Whether an EAP is subject to COBRA depends on the structure of the EAP and whether it provides "medical care." If the EAP provides medical care, which can include mental health counseling, it is subject to COBRA. But if the EAP does not provide medical care (for example, it does not provide counseling but simply provides referrals to a counselor), the EAP is not subject to COBRA. Most EAPs tend to provide some form of medical care and therefore are subject to COBRA.
4.23.26 | MARRIED DEPENDENT STAYING ON PLAN UNTIL AGE 26 Q. Can a 23-year-old dependent remain on an employee's plan until age 26 even though she is getting married later this year? A. Yes, a dependent child is allowed to stay on a parent's plan while married and under the age of 26. It does not matter that the dependent child is married. By law, the parent's plan must allow the dependent to stay on the plan until age 26.
4.16.26 | ACA REPORTING FOR CONTROLLED GROUP Q. An employer group has four divisions, each with its own tax ID number. The divisions are all under the same medical plans. Two of the divisions have fewer than 50 employees and the other two divisions have more than 50 employees. What are the ACA reporting requirements for the divisions under 50 employees? A. Because the divisions are in the same "controlled group" and the controlled group has more than 50 employees, each division within the controlled group is subject to the ACA reporting requirement, even if a division on its own has fewer than 50 employees.
4.9.26 | FORM 5500 FOR COUNTY GOVERNMENT Q. Do county government entities need to complete Form 5500 if they have more than 100 participants, or are they not subject to ERISA and exempt from filing? A. County governmental employers are not subject to ERISA and therefore don't need to file a Form 5500 on their health and welfare plans, regardless of the number of plan participants.
4.2.26 | SPD WRAP DOCUMENT UPDATE FREQUENCY Q. Our client is using a Summary Plan Description (SPD)/Wrap document from 2021. They have not changed their carriers or eligibility rules since then. Do they need to update their SPD/Wrap documents? A. Not necessarily. If none of the material terms of the SPD have changed, the SPD only needs to be updated and re-distributed every 10 years. But if there has been a material change to the SPD, it must be updated and re-distributed every 5 years.
3.26.26 | SMOKER SURCHARGE Q. Is the 50% maximum surcharge for smokers based on the full cost of coverage (employee + employer contribution), or on the amount actually charged to non-smoking employees for coverage? A. A smoking surcharge cannot exceed 50% of the total cost of employee-only coverage. It does not matter how much of the total cost is paid by the employee or the employer.
3.19.26 | PROVIDING PLAN DOCUMENTS IN OTHER LANGUAGES Q. In an employer group, 8% of the employees are literate only in Chinese and 10% only in French Creole. Do the annual legal notices and Summary Plan Descriptions need to be translated into those languages? A. ERISA does not require that the Summary Plan Description and other ERISA documents be provided in a language other than English, but ERISA does require that an employer provide assistance in a non-English language in certain circumstances. Due to this "assistance" requirement, most employers will provide ERISA governed documents in another language in certain circumstances.
If the employer has 100 or more participants in the plan, assistance in a foreign language should be provided if the lesser of 500 or 10% of the participants are literate only in the same non-English language. If the employer has fewer than 100 participants, assistance is only required if 25% or more of the participants are literate only in the same non-English language.
Even if these rules do not apply, many employers interpret ERISA’s fiduciary duties as requiring documents be translated when a significant population of the plan is only literate in a non-English language. "Significant" is generally viewed as being approximately 10% of the plan’s participants.
3.12.26 | STATE CONTINUATION COVERAGE Q. An employer group in Connecticut has a level-funded plan and fewer than 20 employees. Is the state continuation coverage applicable to this group? A. Level-funded plans are treated the same as self-funded plans for insurance purposes. This means that Connecticut's state continuation rules do NOT apply to a level-funded plan.
3.4.26 | EMPLOYEE HSA CONTRIBUTIONS WITH SPOUSE ON MEDICARE Q. An employee is under age 65 and has employee plus spouse coverage but the spouse is over age 65 and enrolled in Medicare. Is the employee limited to the individual maximum for HSA contributions? A. The family HSA limit is available to this employee regardless of whether the spouse has other coverage, like Medicare. As long as the employee has employee + 1 or family HDHP coverage, the employee can contribute the family limit to their HSA.
2.26.26 | TRANSFERRING COMMUTER BENEFIT FUNDS Q. Can an employer allow an employee to transfer their parking funds to their transit funds under the employer's commuter benefit plan? A. As long as the transfers don't cause an employee to exceed the maximum contribution for commuter benefits, and the transfer is permitted by the commuter plan documents, this is allowable. In 2020, the IRS explicitly approved this type of transfer.
2.19.26 | DROPPING VOLUNTARY ELECTIONS Q. Can an employee cancel their voluntary life or voluntary critical illness coverage outside of open enrollment and without a qualifying life event if these benefits are post-tax? A. If the elections are made post-tax, they do not have to comply with the Qualifying Life Event rules that apply to pre-tax elections. So if the plan allows an employee to drop coverage at any time, and the employer allows this flexibility, there is no concern with employees dropping after-tax coverages without a Qualifying Life Event.
2.12.26 | COMPANY OWNER PARTICIPATION IN HRA Q. Our client is an S Corporation, located in Massachusetts, with 15 employees and is fully insured. They offer an HRA to cover half of the member medical deductible. Can the two owners participate in the HRA? A. No, 2% or more shareholders in an S corporation cannot participate in an HRA. Any reimbursements to the owners will be considered taxable compensation.
2.5.26 | QUALIFYING EVENT CLARIFICATION Q. An employee and his spouse are under age 26 and covered by their respective parents' health plans. His wife's father will be leaving his job soon and the wife will lose coverage. Is this a qualifying event for both the employee and his wife to enroll in the employee's group plan, or is it a qualifying event for only the wife, who would need to look for an individual plan? A. The law permits the employee to enroll in his employer’s plan in this case due to his wife losing coverage under another employer’s group health plan. This would be a qualifying life event for the employee, and the employee is entitled to enroll himself and any dependents (including his spouse) in his employer’s plan as a result of the wife’s loss of coverage.
1.29.26 | ACA 1094/1095-c FILING REQUIREMENTS FOR LEVEL-FUNDED SMALL GROUPS Q. Do small groups (fewer than 50 employees) on level-funded plans have any 1094-C or 1095-C filing obligations, or are those requirements still limited to applicable large employers? A. All applicable large employers (50 or more employees) have ACA reporting obligations, regardless of whether their plan is fully insured, self-funded, or level funded.
But small employers (fewer than 50 FTEs) also have ACA reporting requirements if the small employer sponsors a self-funded or level-funded plan. These employers must provide employees with a 1095-B, and report these 1095-Bs to the IRS using Form 1094-B. The employees' 1095-Bs are due by March 2, 2026, and must be submitted electronically to the IRS by March 31, 2026.
1.22.26 | QUALIFIED LIFE EVENT DUE TO LOSS OF ACA SUBSIDY Q. If an employee loses ACA subsidies, and premiums increase significantly as a result, would that be considered a qualifying life event, allowing them to drop coverage mid-year? A. Unfortunately, this is a very common question this year. Increased costs on the Marketplace due to the loss of ACA subsidies is not a qualifying life event entitling an employee to enroll in his or her employer's plan mid-year. The employee will need to wait until open enrollment (or a different qualifying life event).
1.15.26 | DEPENDENT'S MARRIAGE AS A QUALIFYING EVENT Q. An employee's dependent just got married and the employee wants to drop the dependent's coverage but doesn't know if she will move to her spouse's plan. Is the dependent's marriage a considered a qualifying event for the employee? A. A dependent’s marriage is not a qualifying life event that would allow the employee (parent) to change her health plan election mid-year. That said, if the dependent is enrolling in her new spouse’s plan, that enrollment would be a qualifying life event. The employee will need proof of the dependent’s enrollment in the new spouse’s plan.
1.8.26 | HSA WITH BRONZE PLANS Q. Does the expanded HSA eligibility created by the One Big Beautiful Bill apply to group plans, or just the individual market? A. The rule that considers a bronze plan to be compatible with an HSA only applies to bronze plans purchased on a state Exchange or Marketplace. This applies to individual coverage only and not group health plans. IRS Notice 2026-5 makes it clear that only individual bronze or catastrophic plans are automatically considered HSA eligible under the new OBBBA rules.
1.1.26 | PAYROLL DEDUCTION FOR STATE CONTINUATION COVERAGE Q. A small group is offering state continuation coverage to an employee due to a reduction in hours, which made them ineligible for benefits. Since the individual is still an employee, the group would like to continue deducting the employee portion of the premium through payroll, but without any employer contribution. Is this permitted? If so, would the payroll deduction be taken on a pre-tax or post-tax basis? A. Assuming part-time employees are still eligible to participate in the company’s cafeteria plan, it is possible to pay COBRA premiums on a pre-tax basis when the triggering event is a reduction in hours. The 2007 proposed cafeteria plan regulations make it clear that COBRA premiums are a qualified benefit that can be paid on a pre-tax basis.
12.25.25 | HSA TAX-FAVORED STATUS Q. A group offers a fully-insured medical HDHP and a self-funded dental plan. The medical plan is primary for oral surgery and will apply the deductible to the claim after in-network provider discounting. The dental plan is secondary and will cover half of what's applied to the member's deductible. The general rule is that a member on an HDHP can receive coverage from another plan for expenses going toward the health plan's deductible, provided the member is responsible for the minimum HSA deductible ($1,700 in 2026). Does this rule apply on care that's covered by both the medical and dental plans? A. An employee can have an HDHP and dental insurance and still contribute to an HSA. Dental insurance is considered an exception to the rule that generally prohibits any benefits prior to an employee satisfying the HDHP. An employee can receive benefits from a dental plan and that will not impact the ability of the employee to contribute to an HSA if the medical plan is an HDHP.
12.18.25 | COBRA EXTENSION FOR DEPENDENT OF EMPLOYEE WHO MOVES TO MEDICARE Q. If an employee's dependent is on COBRA and the employee moves to Medicare, is the time the dependent can remain on COBRA still set by the original qualifying event, or do they get an extension from the time the primary subscriber moved to Medicare? A. No, the Medicare extension only applies if the employee enrolls in Medicare before the COBRA qualifying event. Here, the dependent was already on COBRA when the employee enrolls in Medicare, so the original 18 month COBRA period will apply to the dependent and the original qualifying event.
12.11.25 | MEDICARE & GROUP INSURANCE Q. An employer has 19 full-time employees and 5 part-time employees. If there are 20 or more employees the group plan is primary and Medicare secondary. Is it correct that it does not matter if the employees are full-time or part-time, and is based on the number of employees in the 20 weeks in the prior calendar year? A. You are correct. For Medicare purposes, you count all employees, regardless of whether they are full time or part time. As long as the employer as 20 or more employees for each working day for 20 calendar weeks in the current or prior calendar year, the employer plan will be primary to Medicare.
12.4.25 | POLICY FOR SINGLE EMPLOYEE NOW SUBJECT TO COBRA Q. A California company has Kaiser and UHC policies and subject to COBRA. Separately, they opened a Kaiser Hawaii policy for their sole employee in Hawaii who has since left the company. There are no plans to hire another employee in Hawaii. Is the company required to keep the Hawaii policy active to accommodate the employee who needs to be offered COBRA? A. The employer is not required to keep the Hawaii Kaiser policy in effect if the employer no longer has any active Hawaii employees. The employee would be entitled to COBRA under the Kaiser CA and UHC policies.
11.27.25 | COBRA PREMIUMS FOR PART-TIME EMPLOYEE Q. An employee's hours have decreased to part time, making him ineligible for the company's Section 125 POP plan. Can the employee have the entire $500 employer plan cost for COBRA taken pre-tax from his part-time paycheck? A. Yes, if permitted by the POP plan, it is legally possible to pay the COBRA premiums through the POP plan while the COBRA beneficiary remains employed with his employer.
11.20.25 | ICHRA AND CREDITABLE COVERAGE NOTICE Q. Does the Medicare Creditable Coverage notice need to be sent for an employer group that is covered under the DC Exchange (ICHRA)? A. Individual Coverage HRAs (ICHRAs) are considered group health plans and they are subject to the creditable coverage reporting requirements for Medicare. ICHRA coverage is considered non-creditable coverage (even if an employee acquires creditable coverage from the Exchange).
11.13.25 | COBRA SUBSIDY ENDING CONSIDERED A QLE Q. An employee has a COBRA subsidy from their prior employer that is ending. Is that a qualified life event, allowing them to enroll in the new employer’s plan outside of open enrollment? A. No, the ending of any COBRA subsidy is not a HIPAA special enrollment event that would entitle an employee to enroll in a new employer’s plan outside of open enrollment.
11.06.25 | FSA MID-YEAR ELECTION AMOUNT Q. Is an eligible employee allowed to elect the health FSA maximum when they enter mid-plan year or should the election amount be prorated for the remaining months? A. When an employee joins a health FSA in the middle of the plan year, they can contribute the full annual maximum to the FSA. There is no need to prorate the maximum contribution limit.
The dependent care limit is increased to $7,500 effective Jan. 1, 2026, and this is based on the calendar year. That said, the employer may need to amend its plan to take advantage of this increased limit as of Jan. 1, 2026.
10.31.25 | FSA & DCA Q. If FSA and DCA plans start in December 2025, can the employer elect to contribute the full 2026 annual limits or only the full 2025 annual limits? A. The 2026 health FSA limit of $3,400 applies to plan years beginning on or after Jan. 1, 2026. The employer's health FSA will be subject to the $3,300 limit from Dec. 1, 2025, to Nov. 30, 2026.
The dependent care limit is increased to $7,500 effective Jan. 1, 2026, and this is based on the calendar year. That said, the employer may need to amend its plan to take advantage of this increased limit as of Jan. 1, 2026.
10.23.25 | MEDICARE PART D NOTICE TO COBRA PARTICIPANTS Q. Are Medicare Part D Notices required to be mailed out to active COBRA participants under the group plan? A. Yes, the Medicare Part D Creditable Coverage notice needs to go to all plan participants, including COBRA qualified beneficiaries.
10.16.25 | GOVERNMENT SHUTDOWN AND QUALIFYING LIFE EVENT Q. Is there any precedent that would allow a member to enroll in a group medical plan due to the government shutdown? The employee is enrolled in a spouse's Tricare plan and was told by a Tricare physician that she may not be able to receive all of her maternity check-ups due to the government shutdown. Could this be considered a qualifying life event allowing enrollment in an employer's health plan outside of open enrollment? A. On its face, the government shutdown, and potential ramifications to Tricare, is not a qualifying life event. That said, there is a qualifying life event for a “significant curtailment of coverage” under a plan. For example, if a PPO includes two hospital systems in one town, and one hospital system leaves the plan, that could be a significant curtailment of coverage triggering a qualifying life event. Arguably, if the government shutdown impacts Tricare so much as to create a significant curtailment of coverage, then I could see an employer saying it is a qualifying life event. The risk with that argument is that no one knows how long the government shutdown will last. If the shutdown lasts six months, the argument that it constitutes a significant curtailment of coverage is pretty strong. But if the shutdown ends tomorrow, the IRS would likely disagree that a two-week shutdown constituted a significant curtailment. And of course, no one can predict the future and know for sure when the shutdown will end.
So conservatively, the government shutdown is not a qualifying life event. But the longer it goes on, a more aggressive argument would be that the shutdown is causing a significant curtailment of coverage under Tricare and therefore is a qualifying life event.
10.9.25 | FMLA & EMPLOYER HSA CONTRIBUTIONS Q. Should employees on Family & Medical Leave Act (FMLA) leave continue to receive employer HSA contributions? A. Absent anything in the employer’s HSA funding policy to the contrary, employers are not required to continue funding HSA contributions for employees out on FMLA leave. HSAs are not considered group health plans protected by the FMLA.
10.2.25 | EMPLOYER-FUNDED HSA Q. Can an employer that offers an HDHP contribute more than 100% of the employee deductible expenses via an HSA account? A. Yes, an employer can fund an HSA up to the maximum limit. For 2025, this limit is $4,300 for single and $8,550 for family coverage. The deductible in an HDHP is separate and does not impact the HSA maximum contribution.
9.25.25 | HSA ELIGIBILITY Q. Does a person's health savings account need to be open for expenses to be eligible? For example, the employee was eligible on Sept. 1 but didn't open the account until Oct. 1 and wants to submit claims incurred in September. A. Medical expenses incurred before the HSA is opened are not considered a qualifying medical expense and HSA funds cannot cover those expenses. See IRS publication 969 for more information.
9.18.25 | QUALIFYING LIFE EVENT Q. The birth of a child is a qualifying life event, allowing an employee to change plans mid-year. Can an employee still change plans if they don’t add the child to the medical plan? A. The birth of a child is not only a qualifying life event, but it is a HIPAA special enrollment event. This means the employee has the right to change benefit options regardless of whether the employee adds the new child to the medical plan.
9.11.25 | HSA ELIGIBILITY FOR BRONZE PLANS Q. The One Big Beautiful Bill Act allows all bronze plans to be HSA eligible, even if they have a copay before the deductible. Does this apply only to bronze plans in the individual ACA market, or does it include small group plans and large group employers? A. The OBBBA makes all bronze plans that are available on the individual market through an Exchange HSA eligible. This does not extend to employer-provided plans.
9.4.25 | HSA ELIGIBILITY WITH EMBEDDED DEDUCTIBLE Q. Please explain how an embedded deductible affects eligibility to participate in an HSA. A. To be HSA eligible, the employee must only be enrolled a qualified high deductible health plan. For 2025, a qualified high deductible health plan requires a minimum deductible of $1,650 for single coverage and $3,300 for family coverage. If the medical plan provides benefits (other than preventative care) prior to satisfying these deductibles, the plan is not a qualifying high deductible health plan and the employee cannot contribute to an HSA.
An embedded deductible refers to a single person deductible embedded within a family plan. For example, if the family plan has a $3,300 deductible but an embedded deductible of $2,000 per person, this plan will pay benefits if one family member has $2,000 of expenses even though the family may not have satisfied the $3,300 family deductible. This type of plan design would NOT be a qualified high deductible plan because the plan would be paying benefits before satisfying the family deductible of $3,300. To be a qualifying high deductible health plan, the embedded deductible must be at least the same amount as the minimum family deductible.
For example, assume a family plan with a $5,000 deductible, but an embedded deductible of $3,300. This means the family must incur $5,000 of expenses before the plan pays anything. But if one family member has $3,300 in expenses, that family member’s bills over $3,300 will be covered. This plan design is a qualified high deductible health plan because the embedded deductible is at least as high as the minimum family high deductible ($3,300 in 2025).
8.28.25 | MID-YEAR TERMINATION DUE TO MEDICAID ELIGIBILITY Q. An employee was just approved for Medicaid and would like to terminate her benefits on the company's level-funded plan. Is this a qualifying event to terminate or waive benefits? A. Yes, an employee or dependent qualifying for – and enrolling in – Medicaid is a qualifying life event allowing the employee to terminate their benefits and those of any dependents.
8.21.25 | COBRA CONTINUATION FOR SMALL EMPLOYER PLAN Q. A small employer group fell below the 20-employee threshold to offer COBRA, but has two active COBRA participants. Does the employer have to manage COBRA for these two former employees until they exhaust coverage or cancel? Is the employer allowed to cancel this COBRA coverage now? A. If a plan was subject to COBRA and then becomes a small employer plan, the plan remains subject to COBRA for qualifying events that occurred when the plan was subject to COBRA. Q&A 5 in the U.S. Treasury regulations contains some useful examples highlighting this rule.
8.14.25 | SECOND COBRA QUALIFYING EVENT Q. An individual is on COBRA and had planned to enroll in his wife's plan when he exhausts 18 months of COBRA coverage at the end of October 2025 but was served divorce papers in May. Does this create a second qualifying event that triggers a COBRA extension from 18 months to 36 months? A. The divorce is not a second qualifying event that would extend the former employee’s 18 months of COBRA. For a divorce to extend COBRA, the divorce must be a second qualifying event. This means the divorce would have caused a loss of coverage if the former employee was not already on COBRA. That is not the case here since the divorce would not impact the employee’s eligibility under his former employer’s plan (only his spouse’s eligibility). As a result, the former employee is not entitled to extended COBRA due to his divorce.
8.7.25 | INCREASE IN DEPENDENT FSA LIMITS FOR 2026 Q. A client's dependent care FSA plan runs from Sept. 1, 2025, to Aug. 31, 2026. With the increase in limits for Dependent Day Care, can there be an additional open enrollment in January 2026 so the employees can defer more funds under the increased limits? A. Yes, an employer with a non-calendar year Dependent Care Assistance Plan (DCAP) can change the limit effective January 1, 2026, and provide employees with an open enrollment opportunity for their DCAP elections effective Jan. 1, 2026. The employer does not have to wait until the start of the 2026 DCAP plan year.
7.31.25 | MEDICARE PART A AND HSA Q. Does the One Big Beautiful Bill Act (OBBBA) allow Medicare Part A participants to participate in an HSA? A. No, the final version of the OBBBA did not include the proposal to allow Medicare Part A participants to participate in an HSA. This is still not allowed.
7.24.25 | HSA CATCH-UP CONTRIBUTION Q. If a person turns 55 this November, can they take advantage of the $1,000 HSA catch-up contribution, or do they need to wait until 2026? A. Yes, a person just has to turn 55 by the end of the year to make an HSA catch-up contribution for the year. So a 2025 HSA catch-up contribution is possible for this person turning 55 in November.
7.17.25 | USING HSA FOR CHILD'S MEDICAL EXPENSES Q. An employee and their spouse are enrolled in an HSA and the spouse has a child with an ex-wife. The employee and spouse do not claim the child as a tax dependent. Can the employee use HSA funds to pay for out-of-pocket medical/dental expenses for the child? A. The HSA cannot be used to pay for expenses of a child that is not a tax dependent of the HSA owner.
7.10.25 | COUNTING EMPLOYEES FOR PCORI FEE Q. How do we count employees for the PCORI fee when plan years for our medical plans and our HRA are not the same? A. If the HRA and medical plan are on different plan years, each plan must pay a separate PCORI fee. For purposes of determining the PCORI fee for the HRA, you only count employees (spouses and dependents are not included). This is different for the underlying medical plan which looks at total lives covered by the plan.
7.3.25 | COBRA DURATION Q. An employee and their spouse enrolled in Medicare less than 18 months prior to the employee's termination of employment. Would they be entitled to COBRA for 36 months after becoming eligible for Medicare? A. If the employee enrolled in Medicare prior to terminating employment, COBRA for the employee will be 18 months from the termination of employment. COBRA for the spouse will be the longer of 36 months from when the employee enrolled in Medicare, or 18 months from the termination of employment.
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