Can I use a Lifestyle Spending Account (LSA) for allergy treatments?
Can LSAs cover allergy treatments? Learn what’s eligible and how to use your funds effectively in 2025.
In this piece
If you're wondering whether you can use a Lifestyle Spending Account (LSA) to cover allergy treatments, you're not alone. Many people are curious about how to make the most of their employer-provided benefits.
In this article, we'll dive into the specifics of LSAs and explore whether allergy treatments are typically eligible expenses. We'll also compare LSAs to other types of spending accounts, such as Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs).
By the end, you'll have a clear understanding of how LSAs work and whether you can use them to manage your allergy-related expenses.
What are Lifestyle Spending Accounts (LSAs)?
LSAs are employer-funded accounts designed to cover a wide range of lifestyle and wellness expenses. Unlike traditional health insurance or medical spending accounts, LSAs offer more flexibility in terms of eligible expenses.
Employers have the freedom to customize the categories of expenses that are eligible under their LSA program. This means that while one company's LSA might cover gym memberships and fitness classes, another might focus on stress-reduction activities like massage therapy or meditation apps.
The key takeaway is that LSAs are highly personalized and can be tailored to meet the unique needs and priorities of each organization and its employees.
Examples of LSA-eligible expenses
So, what kinds of expenses can you typically cover with an LSA? Here are a few examples:
- Fitness memberships and classes
- Health and wellness apps
- Stress-reduction activities like yoga or tai chi
- Financial wellness programs
- Professional development courses
- Childcare or eldercare services
- Nutritional counseling and meal planning services
- Home office equipment and supplies
As you can see, the range of eligible expenses is quite broad and can encompass many aspects of an employee's personal and professional life.
How LSAs differ from HSAs and FSAs
If you're familiar with HSAs and FSAs, you might be wondering how LSAs differ from these other types of spending accounts.
The main distinction is that HSAs and FSAs are specifically designed to cover medical expenses, such as doctor visits, prescription medications, and medical procedures. These accounts are subject to strict IRS regulations regarding eligible expenses and contribution limits.
In contrast, LSAs are more flexible and can cover a wider range of expenses beyond just medical costs. LSAs are funded solely by the employer, whereas HSAs and FSAs allow for employee contributions as well.
Another key difference is that LSA funds are considered taxable income to the employee, while HSA and FSA contributions are made on a pre-tax basis.
Can you use LSAs for allergy treatments?
Most LSAs do not cover allergy treatments by default, as these accounts prioritize non-medical lifestyle expenses. However, exceptions may apply depending on how your employer structures their LSA program.
Employers have the discretion to include allergy-related expenses in their LSA if they choose to do so. For example, if your employer's LSA includes a "wellness" or "health" category, certain allergy-related items like air purifiers or hypoallergenic bedding might qualify for reimbursement.
It's important to review your specific employer's LSA guidelines to understand what expenses are eligible under their program.
Documentation requirements for allergy-related LSA claims
If your employer does allow allergy-related expenses under their LSA, you may need to provide additional documentation to substantiate your claim. This could include:
- A Letter of Medical Necessity (LMN) from your healthcare provider explaining why the expense is necessary for managing your allergies
- Itemized receipts or invoices for the expense
- Any additional forms or documentation required by your employer or LSA administrator
Keeping detailed records and submitting all required documentation can help ensure a smooth reimbursement process for any allergy-related LSA claims.
Scenarios where LSAs might cover allergy treatments
While LSAs don't typically cover medical treatments like allergy shots or prescription medications, there are some scenarios where allergy-related expenses might be eligible for reimbursement. Here are a few examples:
- Home air purifiers: If you have severe allergies that impact your ability to work comfortably from home, an air purifier for your home office might qualify under a "remote work" or "home office equipment" LSA category.
- Hypoallergenic bedding: If your employer's LSA includes a "sleep and relaxation" category, hypoallergenic bedding or pillows designed to reduce allergen exposure might be eligible.
- Allergy-friendly cleaning products: Some employers might allow allergy-friendly cleaning supplies under a "home cleaning" or "personal care" LSA category, especially if these products are necessary to maintain a healthy and productive work environment.
Benefits of using LSAs for allergy treatments
If your employer's LSA does cover allergy-related expenses, there are several advantages to using these funds for your treatment costs.
Tax advantages of LSA funds
While LSA funds are considered taxable income, you can still benefit from using pre-tax dollars to pay for eligible expenses. This means you'll be able to stretch your money further and potentially save on out-of-pocket costs for managing your allergies.
Keep in mind that the tax implications of LSA funds may vary depending on your individual circumstances and the specific structure of your employer's program. It's always a good idea to consult with a tax professional or your HR department to understand how LSA reimbursements may impact your taxes.
Flexibility in choosing allergy treatment providers
One of the key benefits of using LSA funds for allergy treatments is the flexibility it provides in selecting your preferred providers and products. Unlike traditional health insurance plans that may limit you to in-network providers or specific brands, LSAs often allow you to choose the products and services that work best for your unique needs.
This flexibility empowers you to take control of your allergy management and make choices that align with your personal preferences and lifestyle. Whether you prefer natural remedies, cutting-edge technologies, or a combination of approaches, LSA funds can help you access the solutions that work best for you.
Improved employee well-being and productivity
Allergies can significantly impact your quality of life, both at home and in the workplace. By using LSA funds to manage your allergy symptoms, you can improve your overall well-being and productivity.
When you're able to effectively control your allergies, you may experience fewer sick days, reduced presenteeism (working while unwell), and improved focus and concentration at work. This not only benefits you personally but also contributes to a more engaged and productive workforce for your employer.
Additionally, using LSA funds for allergy treatments can help reduce stress and financial burden associated with managing a chronic condition. By having access to these funds, you can prioritize your health without worrying about the impact on your personal budget.
LSAs vs HSAs/FSAs for allergy treatments
While LSAs offer flexibility for lifestyle and wellness expenses, HSAs and FSAs are typically better suited for covering medical costs like allergy treatments. These accounts are specifically designed to help you save on healthcare expenses and offer unique tax advantages.
HSAs and FSAs allow you to set aside pre-tax funds for qualified medical expenses, which can include:
- Prescription allergy medications
- Over-the-counter allergy medicines (with a prescription or letter of medical necessity)
- Allergy testing and immunotherapy
- Medical devices like air purifiers or hypoallergenic bedding (with a letter of medical necessity)
By using pre-tax dollars from your HSA or FSA, you can reduce your out-of-pocket costs for managing allergies while also lowering your taxable income.
Comparing tax treatment, rollover rules, and contribution limits
When deciding between using an LSA, HSA, or FSA for allergy treatments, it's important to understand the differences in tax treatment, rollover rules, and contribution limits.
Account TypeTax TreatmentRollover RulesContribution Limits (2025)LSAEmployer-funded, taxable incomeVaries by employerSet by employerHSAPre-tax contributions, tax-free growth and withdrawals for qualified expensesUnlimited rollover$3,850 (self-only), $7,750 (family)FSAPre-tax contributions, tax-free withdrawals for qualified expensesLimited rollover (up to $610) or grace period$3,050
As you can see, HSAs offer the most favorable tax treatment and rollover rules, allowing you to accumulate funds over time for future medical expenses. FSAs provide similar tax benefits but have more limited rollover options and lower contribution limits.
LSAs, on the other hand, are funded solely by your employer and are considered taxable income. While they offer flexibility for lifestyle expenses, they may not provide the same tax advantages as HSAs and FSAs for medical costs like allergy treatments.
When to use an LSA vs HSA/FSA for allergy-related costs
So, when should you use an LSA versus an HSA or FSA for allergy-related expenses? The answer depends on your specific situation and the types of expenses you need to cover.
If you have significant medical costs related to your allergies, such as prescription medications, doctor visits, or immunotherapy, using your HSA or FSA funds will likely provide the most significant tax benefits and savings.
However, if your allergy-related expenses fall into more lifestyle-oriented categories, such as purchasing an air purifier for your home office or investing in hypoallergenic bedding, an LSA might be a good option. Just keep in mind that you may need to provide additional documentation, like a letter of medical necessity, to qualify for reimbursement under your employer's LSA program.
Ultimately, the key is to understand your employer's specific LSA, HSA, and FSA policies and to carefully track and document your expenses. By strategically using these accounts for different types of allergy-related costs, you can maximize your savings and take control of your health and well-being.
How to implement an LSA that covers allergy treatments
If you're an employer considering adding allergy treatments to your LSA program, there are several key steps to ensure a smooth implementation process.
Defining eligible expenses and documentation requirements
The first step is to clearly define which allergy-related expenses will be eligible under your LSA. This may include items like air purifiers, hypoallergenic bedding, or allergy-friendly cleaning products. Be specific about any limitations or exclusions to avoid confusion.
Next, determine what documentation employees will need to provide for reimbursement. This may include itemized receipts, a Letter of Medical Necessity (LMN) from a healthcare provider, or other forms specific to your LSA program. Creating a comprehensive expense eligibility list and documentation guide will streamline the claims process for both employees and administrators.
Communicating LSA benefits to employees
Effective communication is key to ensuring employees understand and utilize their LSA benefits. Start by clearly explaining the allergy-related expenses that are eligible and the documentation required for reimbursement. Provide examples to illustrate how employees can use their LSA funds to manage their allergies.
Consider creating educational materials like FAQ pages, videos, or webinars to help employees navigate the LSA program. Regularly promote the allergy-related benefits through internal communication channels like email, intranet, or company meetings.
Encourage employees to ask questions and provide feedback on the LSA program. This will help you identify areas for improvement and ensure the program meets the needs of your workforce.
Best practices for LSA administration and compliance
To ensure the success of your LSA program, it's important to establish clear policies and procedures for administration and compliance. This includes:
- Designating a program administrator responsible for overseeing the LSA, reviewing claims, and ensuring compliance with applicable regulations
- Establishing a consistent process for submitting and processing reimbursement claims, including deadlines and turnaround times
- Regularly reviewing and updating your LSA policies to reflect changes in regulations, employee needs, or company priorities
- Maintaining accurate records of LSA funds, claims, and reimbursements for auditing and reporting purposes
- Providing regular updates to employees on the status of their LSA funds and claims
By prioritizing clear communication, efficient administration, and compliance best practices, you can create an LSA program that effectively supports your employees' allergy management needs while minimizing risk and administrative burden.
Are LSAs that include allergy treatments worth it?
Offering LSAs with allergy treatment coverage can boost employee satisfaction and well-being. When employees feel supported in managing their health conditions, they are more likely to be engaged, productive, and loyal to their employer.
Including allergy treatments in your LSA program sends a message that you value your employees' health and quality of life. It shows that you understand the impact allergies can have on their daily lives and are willing to invest in their well-being.
Additionally, providing allergy treatment coverage through an LSA can help reduce absenteeism and presenteeism related to allergy symptoms. When employees have access to the treatments they need, they are better able to manage their symptoms and maintain their productivity at work.
However, employers should weigh the costs and administrative considerations of expanding LSA eligible expenses. Adding allergy treatments to your LSA program may increase utilization and costs, which could impact your budget and resources.
It's important to carefully evaluate the potential ROI of including allergy treatments in your LSA. Consider factors such as:
- The prevalence of allergies among your employee population
- The types of allergy treatments and expenses you will cover
- The expected utilization and costs of allergy-related claims
- The potential impact on employee satisfaction, retention, and productivity
Conducting employee surveys or focus groups can help you gauge interest in and potential utilization of allergy treatment coverage through your LSA.
If you determine that the benefits outweigh the costs, implementing a comprehensive LSA program that includes allergy treatments can be a valuable investment in your employees' health and well-being.
Alternative ways to support employees with allergies
If adding allergy treatments to your LSA is not feasible or cost-effective, there are other ways you can support employees with allergies:
- Offer flexible work arrangements: Allow employees to work from home or adjust their schedules during peak allergy seasons to minimize exposure to allergens.
- Provide a supportive work environment: Ensure your workplace is clean, well-ventilated, and free from common allergens like dust, mold, and strong fragrances.
- Educate employees on allergy management: Provide resources and training on allergy prevention, symptom management, and treatment options.
- Promote healthy lifestyle habits: Encourage employees to maintain a healthy diet, exercise regularly, and manage stress, which can all contribute to better allergy control.
- Offer comprehensive health insurance: Ensure your health insurance plan provides adequate coverage for allergy testing, medications, and immunotherapy.
- Partner with local allergy clinics: Establish relationships with local allergy specialists or clinics to provide employees with access to expert care and resources.
By taking a holistic approach to supporting employees with allergies, you can create a healthier, more productive workforce while demonstrating your commitment to employee well-being.
Whether you can use an LSA for allergy treatments depends on your employer’s specific program. While LSAs typically cover wellness-related expenses, medical treatments like allergy shots and prescriptions are usually better suited for HSAs or FSAs. Forma helps companies design flexible, customizable benefits programs that support employees’ unique health and wellness needs.
What do you do if you're unsure?
If you're unsure about LSA eligibility, it's best to consult your benefits administrator or refer to your employer's LSA policy documentation for clarification.
What are LSA benefits for employers?
If you're an employer, there are multiple benefits to offering LSAs to your employees, including:
- Providing flexible support for diverse employee needs
- Increasing employee financial wellness and reducing stress
- Enhancing your total benefits package to attract and retain talent
- Demonstrating commitment to employee work-life balance
- Supporting employees through various life stages and situations
Want to learn more about LSAs? Check out our Lifestyle Spending Accounts (LSAs) benchmark report for 2025.
Get started with Forma today
Looking to offer an LSA as part of your employee benefits package? At Forma, we provide Lifestyle Spending Accounts to companies worldwide.
If you want your business to enhance employee wellbeing through the flexibility of LSAs, fill out the form below, and one of our experts will be in touch.