LSA Eligible Expenses
Find out what you can use a Lifestyle Spending Account for.
In this piece
A Lifestyle Spending Account (LSA) is an employer-funded benefit that reimburses employees for expenses related to their wellbeing and personal development. Understanding LSA eligibility and its benefits is essential for those considering this flexible employee benefit.
Who is eligible for an LSA?
Eligibility for an LSA is determined by your employer, as these accounts are entirely employer-funded and employer-designed.
The key eligibility factors for Lifestyle Spending Accounts include:
- Employment Status. Generally, full-time employees are eligible, though employers may extend eligibility to part-time employees or contractors based on their policies.
- Waiting Periods. Some employers implement a waiting period (typically 30-90 days) before new employees can access LSA funds.
- Spending Categories. Employers define specific categories where funds can be used, which may include wellness, fitness, education, financial planning, family care, and more.
- Annual Allowance. Employers determine the amount allocated to each employee's LSA, which can vary based on factors like position, tenure, or employment status.
Unlike HSAs, LSAs do not have federally mandated eligibility requirements or contribution limits, giving employers flexibility in designing their programs.
What are the advantages of having an LSA?
LSAs offer significant flexibility and support for employee wellbeing. The funds can be used for a wide range of lifestyle expenses that fall outside traditional benefits packages.
LSA benefits include access to funds for physical wellness, mental health support, professional development, and work-life balance initiatives. These accounts help employees address personal needs that may otherwise go unmet.
Furthermore, LSAs can help reduce financial stress by covering expenses related to family care, remote work setup, or financial planning. They provide a customizable benefit that recognizes the diverse needs of today's workforce.
What are the qualifying expenses for an LSA?
Qualified expenses vary by employer but typically include:
- Fitness memberships and equipment
- Mental health services
- Educational courses and professional development
- Family care expenses
- Remote work equipment
- Financial wellness services
- Personal development activities
However, expenses that don't align with the employer's defined categories or that may be covered by other benefits programs are generally not eligible.
If unsure about a specific expense, it's best to consult your benefits administrator or refer to your employer's LSA policy documentation.
Implementing an LSA program
When implementing an LSA program, employers should consider:
- Budget allocations for different employee groups
- Eligible spending categories that align with company values
- User experience for submitting and approving claims
- Compliance with relevant tax regulations
Effective LSA programs balance flexibility with clear guidelines to maximize employee satisfaction and program effectiveness.
Get started with Forma
Looking to offer an LSA as part of your employee benefits package? At Forma, we provide Lifestyle Spending Accounts for companies worldwide.
If you're interested in enhancing employee wellbeing through the flexibility of LSAs, contact us today.
What is LSA eligible?
Find out what items are LSA eligible below.