Lifestyle Spending Accounts
Many workers are paying greater attention to their benefits and wondering how to stretch their dollars further. While many employers are familiar with health savings accounts (HSAs) and flexible spending accounts (FSAs), lifestyle spending accounts (LSAs) are an emerging benefit that can provide flexible and personalized support to employees. Meaningful and competitive benefits are a leading way for employers to attract and retain workers—and LSAs could be a desirable piece of the benefits puzzle.
According to a 2022 Mercer survey, just under 10% of employers reported offering LSAs as part of their benefits packages. However, 70% of respondents had considered doing so. As employees demand customized benefits packages and more employers offer LSAs, it's important for employers to understand the specifics of this spending account and consider if they are a good fit for their organization and employees. This article explores LSAs, including their benefits and disadvantages.
An LSA is a taxable, employer-funded benefit to support employee physical, mental, emotional and financial health and wellness. Employers determine their annual contribution amount and how employees can spend their LSA funds. They place parameters on acceptable products, services and expenses—sometimes covering other costs not typically included in a group plan.
Common LSA expenses include:
In addition to these common expenses, some employers may also offer LSA funds for anything employees say promotes their personal wellness.
First and foremost, LSAs can help employees make better lifestyle choices. In turn, employees are healthier, happier and likely more engaged and productive at work. Since LSAs do not have pre-tax implications, employers can offer this benefit to various workers, including full-time, part-time and contract.
Additionally, LSAs are an attractive offering based on the following benefits:
Employers considering LSAs should also weigh potential disadvantages to ensure the offering is a good fit for the organization:
An LSA is an increasingly popular offering that goes above and beyond traditional health plans, providing employees with a flexible option to support their everyday needs. More employers are offering LSAs as they continue to search for ways to make their benefits relevant and valuable to their employees.
As with any benefits offering, education will remain necessary to increase employee utilization. Employers are uniquely positioned to help employees understand the importance of LSAs and how to best spend their funds and boost their overall well-being.
Marty has spent most of the last 20 years developing software in the marketing space and creating pathways for software systems to talk to each other with high efficiency. He heads our digital marketing efforts as well as oversees any technology implementations for our clients. As a partner, Marty is also responsible for internal systems in which help our team communicates with each other and our clients.