More than 2% shareholders of an S-Corp, LLC, Partnerships and Sole Proprietors are not eligible to participate
in any aspect of a Section 125 plan. Spouses of these owners who work for the company cannot participate
because of the rules of attribution.
Owners of a C-Corp are eligible, but they must hold up to the
Plan eligibility is most often set to match the eligibility rules of the medical insurance plan,
but it can be different to exclude groups of employees such as union employees, part-time employees
Domestic Partners are generally not eligible because they do not meet the Code Section 125
definition of a qualified dependent.