Do Employers Have to Make HSA Contributions to COBRA Beneficiary?

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Employer HSA contributions stop under COBRA

Employers are not required to make HSA contributions to COBRA beneficiaries. Health Savings Accounts (HSAs) are individual accounts that employees can contribute to with pre-tax dollars to use for qualified medical expenses. When an employee leaves a job and elects for COBRA continuation coverage, the employer's contribution to the HSA ceases.

COBRA, the Consolidated Omnibus Budget Reconciliation Act, gives employees the right to continue their group health benefits for a limited time under specific circumstances, such as job loss or reduction in hours. However, COBRA does not extend to HSA contributions.

Employees keep HSA funds for expenses

While it's true that employers are not obligated to contribute to HSAs for employees who opt for COBRA continuation coverage, it's essential for employees to understand that their HSA remains fully theirs. They can continue to use the funds for eligible medical expenses even after leaving their job.