Question of the Week - FSA Participation Restrictions

Posted by BAS - 16 January, 2025

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Q. - Can we structure our Health FSA to restrict participation to only those who are covered under our medical plan?

A. - Yes. An employer can structure its Health FSA to restrict enrollment to only those employees who participate in the employer’s medical plan. This is not a popular plan design, but it is permitted under the Code section 125 cafeteria plan rules (see Prop Reg §1.125-5(g)).


Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.

MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).

Topics: Dependent Day Care FSA, Healthcare FSA, Health Care Flexible Spending Account (HCFSA)


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