LSAs Go Beyond the Reach of “Traditional” Benefits
Does your employer offer Lifestyle Spending Accounts (LSAs)? Although used in Canada and other countries for a while now, they’re just now gaining popularity here in the U.S. These accounts are super flexible and can be used for almost anything that makes your life healthier, easier, or better in some way. And the best news is anyone can have an LSA, depending on employer preferences. You can even have one if you’re not eligible for “traditional” benefits.
How do LSAs work?
Unlike health plans or FSAs with a strict enrollment period, employers can begin a LSA program at any time. LSAs are completely employer-funded. Employees are taxed only on the amount of LSA funds that they spend or receive as reimbursements.
Because there are no tax advantages (like with FSAs and HSAs), there aren’t a lot of regulations or restrictions. So these might just be the most versatile of all the employer-sponsored benefits.
What expenses are eligible?
Your employer chooses LSA-qualified expenses, which can include an almost unlimited pool of products and services (except for Section 223 healthcare expenses). When they first started, LSAs were largely known as fitness accounts because most were used to pay for gym memberships, personal trainers, fitness classes, and the like.
But with changing workforce demographics and employee interests, LSAs are now being used for a much wider range of eligible products and services. Common expense categories include:
- Financial literacy (classes in personal finance, budgeting, investing, etc.)
- Mental health care and stress reduction
- Sports fees (team participation fees, ski passes, golf memberships, etc.)
- Continuing education and skills training
- Adult and child enrichment programs
- Cultural and entertainment activities
- Personal services (streaming entertainment channels, grocery delivery, spa days, etc.)
- And even more…
How do I use my LSA?
Your employer sets the amount available to each employee and on what timetable (annually, semi-annually, quarterly, etc.). Most LSA accounts require that you pay for the product, service, or activity first and then submit receipts for reimbursement. Or your employer may offer an account-linked debit card that you can use up front and then submit your receipts afterward. Some LSA accounts even come with a super-convenient mobile app!
We’re here to help
Lifestyle Spending Accounts are still relatively new, and some employers aren’t yet familiar with them. Betty and I know about them, though, and we’d be happy to help your employer (and their third-party administrator or benefits broker) learn more about LSAs. To start, why not share this article?!?!