We have a new healthcare FSA plan and are offering COBRA to those who lose the coverage. I have spoken to two large COBRA TPAs who say they only allow beneficiaries to continue the FSA until the end of the plan year following the qualifying event date. I know that new COBRA regs say you can do this effective January 1, 2000, but the TPAs say they have always done. We want to do this way too. Any problems with this?

My understanding of the new regs is that even though they are effective for plan years beginning on or after Jan. 1,2000, you can rely on them now if you choose, or continue to rely on the old proposed regs. I think the key is to communicate clearly to your FSA participants which way you intend to handle.