Which employees are eligible to enroll in an FSA plan?

Most full-time employees are eligible to participate in an FSA, so long as their employer offers health insurance. Employees do not need to enroll in a health insurance plan to enroll in an FSA. In general, business owners are not eligible to participate in the tax benefits of the plan. Employees who already have an HSA should not enroll in a Health Care  FSA. They may still enroll in a Dependent Care FSA.

An employee working 30 hours per week or more will become eligible for enrollment in the company's FSA on the first of the month following the employee's hire date.

  • Current employees can enroll during their company's initial enrollment period (after the plan is set up), during FSA Open Enrollment, or due to a qualifying life event.
  • Newly hired employees have 30 days after being hired to enroll in an FSA. Learn more.

  • Union employees (if any) will be eligible for participation in the FSA.

For more information on FSA enrollment deadlines for employees, see this page.

Employees Ineligible for FSA Enrollment

Some employees are not eligible to enroll in an FSA.

  • Though there are exceptions, self-employed employees and shareholders who own 2% or more in an S-Corp, LLC, LLP, PC, sole proprietorship, or partnerships are generally ineligible for FSAs.
  • Employees with HSAs should not enroll in an FSA. However, employees with HSAs are only able to enroll in a Child & Elderly Care FSA. According to the IRS:

"A health FSA that reimburses all qualified section 213( d ) medical expenses without other restrictions is a health plan that constitutes other coverage. Consequently, an individual who is covered by a health FSA that pays or reimburses all qualified medical POSTN-105229-14 3 expenses is not an eligible individual for purposes of making contributions to an HSA[...]"

Zenefits does not provide tax advice. Contact a tax advisor for guidance on a specific employee's eligibiity.

Was this article helpful?  

Still need our help? Our support team is waiting to help you. Contact us