FSA & Now HSA

[coleboy]

One of our clients has an FSA where they contributed a certain dollar amount for each employee regardless of whether they enrolled in the FSA or not. Now we have found out that they have an HSA. Without telling us, they have been putting that employer contribution into the account of anyone who has the HSA. We have still been putting that employer contribution into that FSA for everyone. The employer is not happy!

Can the employer choose where she wants to make that employer contribution on an employee by employee basis? That is, if she decided she's funding the FSA, doesn't she need to fund it for everyone? Can she fund it only for those who aren't in the FSA?

Also, because there is an HSA, can't she only have a limited FSA? Or can she have 2 FSA's? The limited one for those employees with the HSA's and a full FSA for those who do not have the HSA.