Can I use a Lifestyle Spending Account (LSA) for health monitoring devices?

Are you curious if you can use your Lifestyle Spending Account (LSA) to purchase health monitoring devices like fitness trackers or smartwatches?

With the growing popularity of wearable technology and the increasing emphasis on employee wellness, many employers are offering LSAs as part of their benefits package.

But what exactly is an LSA, and how can you make the most of this valuable benefit?

What is a Lifestyle Spending Account (LSA)?

An LSA is an employer-funded account that allows you to spend money on eligible expenses that promote healthy habits and overall well-being. Unlike traditional health insurance or flexible spending accounts, LSAs are funded with post-tax dollars and offer more flexibility in terms of what expenses qualify.

Employers can customize their LSA plans to include a wide range of eligible expenses, from fitness equipment and gym memberships to wellness apps and stress-reduction programs. This allows companies to tailor their benefits to the specific needs and interests of their workforce.

Examples of LSA-eligible expenses

So, what types of expenses can you typically cover with your LSA funds? Here are a few common examples:

Fitness trackers: Devices like Fitbits, Apple Watches, and Garmin smartwatches that track your activity levels, heart rate, and sleep patterns are often eligible for reimbursement through an LSA.

Wellness apps: Subscription fees for meditation apps (like Headspace or Calm), nutrition tracking tools (like MyFitnessPal), and other digital wellness platforms may qualify under your employer's LSA plan.

Gym memberships and fitness classes: Many LSAs allow you to use funds to cover the cost of joining a gym or studio, as well as fees for individual classes like yoga, spinning, or strength training.

Home fitness equipment: If you prefer to work out at home, your LSA may reimburse you for purchases like dumbbells, resistance bands, exercise mats, or even larger items like treadmills or stationary bikes.

Are Health Monitoring Devices Eligible for LSA Coverage?

The short answer is: it depends on your employer's specific LSA plan. While many companies include fitness trackers and other wellness-focused devices as eligible expenses, the exact coverage can vary widely.

Key Considerations for LSA Eligibility

1. Employer-Defined Eligibility
LSAs are customizable employer-funded accounts, so coverage for health monitoring devices varies by company. Examples from employer plans include:  

• Fitness trackers (e.g., Fitbit, Garmin, Apple Watch) are explicitly eligible under some LSAs, as seen in Dartmouth's program[1].  
• Biometric devices (e.g., Lumen metabolism tracker) may qualify if the employer includes "wellness technology" as an eligible category[2][7].  

2. Distinction from FSA/HSA  

• LSAs often cover wellness-focused devices (e.g., step trackers, heart rate monitors) without requiring medical justification[1][3][8].  
• FSA/HSA typically exclude general wellness devices unless prescribed for a medical condition (e.g., Withings ScanWatch for cardiac monitoring)[15].  

Common Eligible Devices

Device TypeExamplesEmployer Plan ReferenceFitness trackersFitbit, Apple Watch, GarminDartmouth LSA[1], Forma[7]Metabolic trackersLumenWithFlex[2]Home health monitorsBlood pressure cuffs, smart scalesForma[7], DataPath[10]

Limitations and Exclusions

• Excluded accessories: Chargers, replacement bands, or non-essential add-ons are often ineligible[1].  
• Medical-grade devices: LSAs generally don't cover FDA-regulated medical devices (e.g., glucose monitors), which may require FSA/HSA reimbursement[13][15].  

How to Confirm Eligibility

1. Review your employer's LSA documentation for listed eligible expenses.  
2. Submit a pre-approval request if the device isn't explicitly mentioned but aligns with wellness categories like "fitness technology" or "preventive health"[10][12].  
3. Consult HR for clarification on ambiguous cases (e.g., smartwatches with ECG capabilities)[15].  

In summary, many LSAs allow reimbursement for health monitoring devices tied to general wellness, but coverage is not universal. Employers have broad discretion, so program specifics determine eligibility.

Benefits of Using an LSA for Health Monitoring Devices

Using your LSA to purchase health monitoring devices can provide several advantages, both for your personal well-being and your financial bottom line.

1. Financial Savings

One of the most significant benefits of using LSA funds for health monitoring devices is the potential cost savings. Fitness trackers, smartwatches, and other wellness-focused gadgets can be expensive, often costing hundreds of dollars.

By leveraging your LSA, you can offset some or all of the cost of these devices, making them more accessible and affordable. This is especially valuable if you're interested in trying out a new device or upgrading to the latest model without breaking the bank.

2. Encouragement of Healthy Habits

Another key advantage of covering health monitoring devices through your LSA is the incentive it provides to prioritize your well-being. When your employer offers to reimburse you for a fitness tracker or smartwatch, it sends a clear message that they value your health and want to support your efforts to stay active and engaged.

This encouragement can be a powerful motivator, helping you establish and maintain healthy habits like regular exercise, mindful eating, and better sleep. By tracking your progress and setting goals with your device, you can stay accountable and on track toward your wellness objectives.

3. Flexibility and Personalization

One of the most appealing aspects of LSAs is the flexibility they offer in terms of eligible expenses. Unlike more restrictive benefits like health insurance or FSAs, LSAs allow you to choose the devices and services that best suit your individual needs and preferences.

Whether you're a runner who wants a GPS-enabled watch to track your miles, or a busy professional looking for a discreet way to monitor your stress levels throughout the day, you can select the device that aligns with your unique goals and lifestyle.

This personalization ensures that you're getting the most value from your LSA funds and empowers you to take control of your well-being in a way that works for you.

How to Confirm LSA Eligibility for Health Monitoring Devices

If you're interested in using your LSA to purchase a health monitoring device, the first step is to review your employer's LSA documentation. This will typically include a list of eligible expenses, which may explicitly mention fitness trackers, smartwatches, or other wellness-focused devices.

Look for categories like "fitness technology," "wellness devices," or "preventive health equipment." If your desired device falls under one of these umbrellas, there's a good chance it will qualify for reimbursement.

However, if the device you're eyeing isn't specifically listed in the eligible expenses, don't give up just yet. Many employers allow for some flexibility in their LSA plans, especially when it comes to items that promote health and well-being.

In this case, your next step is to submit a pre-approval request to your HR department or benefits administrator. Explain how the device aligns with the overall goals of the LSA program, such as encouraging physical activity, reducing stress, or improving sleep.

Be sure to highlight any features or functionalities that are directly related to health monitoring, such as heart rate tracking, activity logging, or guided breathing exercises. The more you can demonstrate the wellness benefits of the device, the more likely it is to be approved.

If you're still unsure about eligibility after reviewing the documentation and submitting a pre-approval request, don't hesitate to consult your HR representative directly. They can provide clarification on any ambiguous cases or help you navigate the reimbursement process.

For example, some smartwatches now include advanced health monitoring features like ECG capabilities or blood oxygen level tracking. While these functions may blur the line between general wellness and medical-grade devices, your HR team can advise on whether they qualify under your specific LSA plan.

Remember, LSAs are designed to be flexible and supportive of employee well-being. By taking the time to understand your employer's policies and advocating for your health needs, you can make the most of this valuable benefit and invest in the devices that will help you thrive.

What Are the Tax Implications of LSA Reimbursements?

When you receive reimbursements from your Lifestyle Spending Account (LSA) for health monitoring devices or other eligible expenses, it's important to understand the tax implications.

LSA reimbursements are considered taxable income for employees. This means that any money you receive from your LSA will be added to your total taxable income for the year.

Your employer is required to report LSA reimbursements on your W-2 form, which you'll receive at the end of the tax year. The amount reimbursed will be included in Box 1 (Wages, tips, other compensation) and may also be reported in Box 14 (Other).

It's worth noting that while LSA funds are subject to income tax, they are typically exempt from payroll taxes like Social Security and Medicare. However, this can vary depending on your employer's specific plan and the type of expenses reimbursed.

As with any tax-related matter, it's always a good idea to consult a qualified tax professional for personalized advice. They can help you understand how LSA reimbursements will impact your individual tax situation and ensure that you're properly reporting the income on your tax return.

Keep in mind that the tax treatment of LSAs is different from other types of benefits like Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs). While HSA and FSA contributions are often made with pre-tax dollars, LSA funds are post-tax and therefore subject to income tax when reimbursed.

Despite the tax implications, using your LSA to purchase health monitoring devices can still be a valuable way to invest in your well-being and save money on expensive gadgets. By understanding how reimbursements are taxed and factoring that into your overall financial planning, you can make informed decisions about how to allocate your LSA funds and maximize the benefit to your health and your wallet.

How Can Employers Implement an LSA That Covers Health Monitoring Devices?

Implementing a Lifestyle Spending Account (LSA) that covers health monitoring devices is a smart way for employers to invest in their workforce's well-being. A comprehensive LSA provider can streamline the process and ensure a successful rollout.

To get started, familiarize yourself with the benefits and best practices of LSAs. This will help you design a program that meets your company's unique needs and aligns with your overall wellness goals.

Next, clearly define which health monitoring devices and related expenses are eligible for reimbursement under your LSA. Be specific about the types of devices covered (e.g., fitness trackers, smartwatches, blood pressure monitors) and any limitations or exclusions that apply.

Communicate these guidelines to your employees in a transparent and accessible way. Consider creating a dedicated LSA portal or handbook that outlines the program details, eligibility criteria, and reimbursement process.

Choose an LSA platform that makes it easy for employees to submit expenses and receive reimbursements. Look for features like mobile app submission, direct deposit, and real-time tracking of account balances and claims status.

Regularly promote your LSA and the eligible health monitoring devices to drive adoption and engagement. Highlight success stories from employees who have used their LSA funds to purchase devices and improve their well-being.

Finally, gather feedback from your team and analyze utilization data to continually refine and optimize your LSA program. This will help you ensure that your investment in employee wellness is making a meaningful impact and delivering value for both your workforce and your organization.

Forma makes it easy for you to maximize your Lifestyle Spending Account (LSA) by offering a seamless platform that supports a wide range of eligible wellness expenses, including health monitoring devices. With flexible plan design and clear reimbursement processes, Forma helps you get the most value from your benefits. Schedule a consultation with one of our experts today.