Yes. Health Reimbursement Arrangements (HRAs) are subject to COBRA requirements (for employers with over 20 employees), meaning employers must allow employees and/or dependents to continue their HRA coverage after termination if they pay the cost themselves. 

HRAs, like other group health benefit plans, are subject to the continuation requirements of COBRA. Employers must give terminated employees the option to continue HRA coverage for a period after termination, and may charge the terminated employee up to 102% of the cost of this coverage.

If the participant participated in both the HRA and a group health insurance plan while employed, the employer may require that the terminated participant elect COBRA coverage for the group plan in order to elect COBRA for the HRA. In other words, the employer may give the terminated participant the options of electing: (a) no COBRA, (b) COBRA coverage only for the group health insurance, or (c) COBRA coverage for both the group health insurance and the HRA, but need not give the participant the option of electing COBRA only for the HRA.

For most purposes, terminated participants who have elected COBRA coverage are treated exactly like current, similarly situated employees. They should continue to receive HRA allowances and have the ability to submit new claims just like a current employee. If the HRA plan for current employees is changed or terminated, the change affects any current COBRA participants in the same way. The key difference is that the employer may charge the terminated participant and/or dependents for the cost of their coverage.

In general, an employer may charge a terminated employee and/or dependents monthly up to 102% of the cost of the coverage for a similarly situated individual in the plan. The IRS has not released specific guidelines for calculating the cost of an HRA plan in order to determine COBRA premium, except that the determination may not depend on the participant’s current HRA balance.

COBRA provides certain employees, retirees, spouses, former spouses, and dependent children the right to temporarily continue their employer sponsored health benefits (including HRA benefits). Companies, with more than 20 employees, are required to offer COBRA to participants that meet certain qualifying events. In order to participate in COBRA, an employee must pay the full cost of the premium or benefit. COBRA participants are generally eligible for coverage for a maximum of 18 months. 

For healthy individuals, COBRA is usually more expensive than individual insurance.

The Treasury Department and IRS issued new guidelines for people contributing to a Health Saving Accounts (HSAs) in 2010.

For 2010, in order to contribute to an HSA, your minimum deductible on health insurance from all sources (including HRAs) must be at least $1,200 (self-only coverage) or $2,400 (family coverage). The annual out-of-pocket maximum on your HDHP cannot exceed $5,950 (self-only coverage) or $11,900 (family coverage).

The maximum annual HSA contributions from all sources for 2010 are $3,050 (self-only coverage) or $6,150 (family coverage).

Please see the US Treasury Index Amounts for additional information.