Compliance Q&A: Your Essential Answers on COBRA Subsidies, FSA Prorating, and the New Dependent Care Limit

11.06.25  |  FSA MID-YEAR ELECTION AMOUNT

 

Q.  Is an eligible employee allowed to elect the health FSA maximum when they enter mid-plan year or should the election amount be prorated for the remaining months?

A.  When an employee joins a health FSA in the middle of the plan year, they can contribute the full annual maximum to the FSA. There is no need to prorate the maximum contribution limit.

 

11.13.25  |  COBRA SUBSIDY ENDING CONSIDERED A QLE

 

Q.  An employee has a COBRA subsidy from their prior employer that is ending. Is that a qualified life event, allowing them to enroll in the new employer’s plan outside of open enrollment?

A.  No, the ending of any COBRA subsidy is not a HIPAA special enrollment event that would entitle an employee to enroll in a new employer’s plan outside of open enrollment.

 

11.20.25  |  ICHRA AND CREDITABLE COVERAGE NOTICE

 

Q.  Does the Medicare Creditable Coverage notice need to be sent for an employer group that is covered under the DC Exchange (ICHRA)?

A.  Individual Coverage HRAs (ICHRAs) are considered group health plans and they are subject to the creditable coverage reporting requirements for Medicare. ICHRA coverage is considered non-creditable coverage (even if an employee acquires creditable coverage from the Exchange).

 

The dependent care limit is increased to $7,500 effective Jan. 1, 2026, and this is based on the calendar year. That said, the employer may need to amend its plan to take advantage of this increased limit as of Jan. 1, 2026.

 

Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.



Author: Gus Altuzarra
Gus is the CEO of Aston Sharp Insurance Services. In 2012, Gus founded Aston Sharp to start offering a larger scope of insurance products to his clients. With extensive history in life, disability, and long-term care planning, Gus acts as a full service insurance advisor. Gus initially started working with group employers offering assistance with the new changes mandated by the ACA (Affordable Care Act). The in-flow of new technology in recent years has created an opportunity to revolutionize an outdated industry. Gus now works to consolidate Employee Benefits, HR, Payroll, Work Comp, and ACA compliance all under one roof – delivering an easy-to-use technology driven solution to his clients.

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