Employer contributions to a healthcare Flexible Spending Account (FSA) are allowed, but there are limits on how much the employer can add on top of the employee’s contribution under IRS rules.
For 2025, the employee contribution limit is $3,300. If the employer wants to contribute additional funds, the total amount available in the FSA (employee + employer) cannot exceed the greater of:
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the employee contribution + $500, or
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twice the employee’s contribution amount
Here’s how it works:
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If the employee contributes less than $500, the employer can still contribute up to $500
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If the employee contributes $500 or more, the employer can only contribute up to the same amount as the employee’s contribution (a dollar-for-dollar match of the employee’s contribution)
So, for example:
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An employee contributes $300 → the employer could add up to $500, for a total of $800
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An employee contributes $1,000 → the employer could match up to $1,000, for a total of $2,000
These rules apply when the employer contribution is offered through the Section 125 cafeteria plan. Outside of that structure, employer funds may be treated differently or require separate compliance.
As always, the specific plan design and employer policies may vary, so it’s important to refer to your plan documents for details.