Usually not.
Just like with HRAs, whether a business owner can participate in a Flexible Spending Account (FSA) depends on the type of business entity and how the IRS classifies the owner.
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C-corporation owners can participate in an FSA. They’re considered employees, so they can make pre-tax contributions and receive reimbursements like any other W-2 employee.
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Sole proprietors, partners, and more-than-2% S-corporation shareholders cannot participate. The IRS considers them self-employed, not employees, so they’re not eligible for Section 125 cafeteria plan benefits like FSAs.
However, these business owners can still offer FSAs to their W-2 employees.