It’s tempting to treat FSAs and HRAs as “not real insurance,” and therefore skip COBRA thinking. For employers with 20+ employees, that instinct is often wrong.
Health FSAs
Health FSAs are group health plans. COBRA can apply, though a special exception may limit the obligation when the FSA is excepted benefits and certain conditions are met (including the participant’s account being underspent relative to what’s left in premiums). The exception is technical — don’t assume it from vibes.
HRAs
Most HRAs require COBRA offers on qualifying events. Premium calculation is famously awkward: you can’t just divide the annual HRA max by 12 and call it a day. IRS guidance points toward actuarial or past-cost methods, and the COBRA premium generally shouldn’t vary solely because one person has a different remaining balance.
QSEHRAs are the notable outlier — they’re carved up differently and generally aren’t subject to the same COBRA continuation framework as traditional HRAs.
Practical takeaway
Your COBRA vendor needs clean plan codes for every account-based arrangement, not just medical. When someone terminates in April with an HRA balance and an FSA election, the letter package should reflect the plans that actually require an offer.
If your COBRA notices still only mention “medical/dental/vision,” it’s time for a template review.