Yes, she exempt from FICA tax even though you are using FSA. She would also be exempt if you were claiming the day care credit.
There is an exception: the parent is subject to FICA if both the following conditions apply: A) Your parent cares for your child who is either under the age of 18, or has a physical or mental condition that requires the personal care of an adult for at least four continuous weeks in a calendar quarter. B) You marital status is one of the following: You are divorced and have not remarried; you are a widow or widower; or you are living with a spouse whose physical or mental condition prevents him or her from caring for your child for at least four continuous weeks in a calendar quarter.
Reference: https://www.marketwatch.com/story/tax-rules-for-hiring-family-members-2012-03-27
