Lifestyle Spending Accounts (LSAs) are employer-funded accounts that provide a taxable cash benefit to employees to pay for everyday wellness expenses. Only employers can contribute to this account and have a lot of control over how their LSA functions.
Employers choose:
- How much money they will make available
- The cadence at which that money is replenished
- What happens to unused funds at the end of the plan term
- Which types of expenses employees can reimburse for
LSA eligibility requirements
There are virtually no eligibility requirements for LSAs. Employers can choose to offer their LSA to all employees or to certain employee classes as long as their imposed eligibility requirements aren’t discriminatory in nature. Employees can only access an LSA if eligible through a sponsoring employer.
As these accounts are taxable, the IRS does not mandate what expenses can be covered like pre-tax accounts like HSAs and FSAs. Employers can decide which expenses LSAs cover. Common types of eligible expenses include: gym memberships, home office equipment, mental wellness apps and more. Employers can even offer more than one type of LSA.
Why offer it
- Employers can design the LSA(s) however they see fit, giving them full control over how the account is used.
- Contributes to employee health and financial wellness. Can help to reduce employees’ financial stress by setting aside money for everyday expenses and encourage employees to make healthy financial and lifestyle choices.
- Offers employees a flexible benefit. Enables employees to spend on what they want and need.
- Helps to support remote workers. If you used to offer free lunch and standing desks, you can use an LSA to provide the same or similar perks to employees now working remotely.
- Encourage a healthier, more productive workforce. LSAs can be used for certain wellness initiatives and support like gym memberships, wellness apps, health or career coaching, and more.
Lively's LSA Guide
What a Lifestyle Spending Account is, the benefits of offering one, and what employers and employees need to know about participating in one.
Best practices for LSA design.
Hw to develop a framework for designing the LSA best plan for your company so that it delivers maximum impact and receives optimal engagement from your employees.
Support and delight employees with Lively LSA
Offer a simple, configurable reimbursement account for employers to support the whole employee, while balancing business needs and culture goals. Learn more.