— ISSUE 9 —

COBRA and Medicare: How they interact


Understanding how COBRA and Medicare interact can be tricky. The relationship between the two depends upon Medicare entitlement. An individual is entitled to Medicare if he or she is eligible for and enrolled in Medicare.

If an employee is entitled to Medicare prior to his or her COBRA qualifying event, you must still offer COBRA. The employee would be eligible for 18 months of COBRA from the date coverage was lost (provided the event reason is termination of employment/retirement or reduction in hours).

It is important to note that if the employee who is enrolled in Medicare also elects COBRA, Medicare typically pays primary and the COBRA coverage becomes secondary.

Conversely, if Medicare entitlement occurs after an employee has already been offered and enrolled with COBRA, then the employee’s COBRA can be terminated early. His or her COBRA benefits should be terminated as of their Medicare effective date.

In this case, the employee’s Medicare entitlement may also be considered a second qualifying event for his or her dependents, entitling them to an 18-month extension of their COBRA for a total eligibility period of 36 months (counted from the original COBRA begin date). However, this can only be a second qualifying event if it would have caused the individual(s) to lose coverage under the plan in the absence of the first qualifying event.

If you have any questions concerning COBRA and Medicare, our team of dedicated COBRA analysts is happy to assist you. Feel free to contact your dedicated account analyst at any time, or the COBRA Department at COBRA@upmc.edu.

Disclaimer: The above information is for informational purposes only and is not legal or tax advice. UPMC Health Plan and UPMC Benefit Management Services do not provide legal or tax advice. For legal or tax advice, please contact your attorney or tax adviser. For more information, see this guide from the U.S. Department of Labor. .

Important announcement:

IRS adjusts HSA family contribution maximum

On March 5, 2018, the IRS released Revenue Procedure: 2018-18, which changed the 2018 HSA family contribution maximum from $6,900 to $6,850. Our systems have been updated accordingly. If an employee has over-contributed, he or she can submit a distribution request for the excess contribution using the HSA distribution form available on their member portal. As always, our Member Services team can assist your employees at 1-855-492-8762.

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FSA grace period and rollover

Typically, employees have a deadline to use their health care flexible spending accounts (FSAs) by the end of their plan year. IRS regulations allow some flexibility when it comes to plan design, allowing grace period and rollover options. UPMC Consumer Advantage offers these grace period and rollover options permitted under IRS regulations, which gives employees more choice regarding when to spend their FSA funds. It is the employer’s decision to allow either one of these options, but both cannot apply.

Grace period - A grace period allows employees to use their entire unused account balance to pay for eligible expenses incurred during the first two and a half months of the next plan year before the money is forfeited. This lets employees worry less about spending down at the end of year because they can spend their unused funds during the beginning of the new plan year.

Rollover - A rollover allows employees to roll up to $500 of their unused FSA contributions from the previous plan year into the next year plan year. This option allows employees to worry less about losing their funds at the end of the year and spend their unused funds, up to $500, in the next plan year.

Offering a grace period or rollover gives employees more freedom to spend their unused funds, reduces needless spending that can be used for more important expenses, and creates a more attractive benefit package for employers. If you are interested in having a grace period or rollover built into your UPMC Consumer Advantage FSA, please contact your account manager or broker.


The above information is for informational purposes only and is not legal or tax advice. UPMC Health Plan and UPMC Benefit Management Services do not provide legal or tax advice. For legal or tax advice, please contact your attorney or tax adviser.