Lifestyle Spending Account eligible expenses

"What can our employees actually spend this money on?"

It's the question that lands in HR directors' inboxes within minutes of announcing a new Lifestyle Spending Account program. 

And it's a fair one. 

While traditional benefits have clear boundaries, LSAs occupy the exciting but sometimes confusing middle ground between structured benefits and complete flexibility.

For your finance team, it's about compliance and clear guidelines. For your employees, it's about maximizing a benefit they increasingly value. And for you? It's about striking the perfect balance that drives engagement without creating administrative nightmares.

This comprehensive guide tackles the nuanced industry of LSA-eligible expenses head-on. We've analyzed data from hundreds of successful programs to provide you with practical frameworks, real-world examples, and implementation strategies that transform LSAs from a nice-to-have perk into a powerful driver of workplace satisfaction and retention. Whether you're launching your first program or optimizing an existing one, you'll find key insights to make your LSA program both impactful and manageable.

Key takeaways

• LSAs are post-tax, employer-funded, and fully customizable, making them more flexible than traditional benefits, but also requiring clear, strategic guidelines to avoid confusion.
• Eligible LSA expenses typically cover physical fitness, mental health, financial wellness, home office setup, education, and family support, empowering holistic employee well-being.
• Ineligible expenses include luxury goods, entertainment, alcohol, gift cards, and anything not tied to wellness or development.
• High-impact LSAs align with company values, such as sustainability or professional growth, and reflect real employee needs through continuous feedback and clear communication.
• Tracking LSA usage helps optimize benefits strategy, revealing what categories matter most and providing data to support ROI and retention outcomes.
• Forma simplifies LSA delivery through global scalability, automated compliance, real-time reporting, and personalized support, making flexible benefits easier to manage and more impactful. <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Schedule a demo today</span>

Why LSA eligibility doesn't have to be complicated

Lifestyle Spending Accounts (LSA) are flexible, employer-funded benefits that allow employees to spend on a wide range of wellness, lifestyle, and personal development expenses. What makes LSAs so appealing is their adaptability; companies can define what expenses are eligible based on their workforce’s unique needs and values.

Unlike pre-tax accounts like HSAs or FSAs, LSAs are post-tax benefits and eligible expenses are not regulated by the government. Instead, employers have broad control over what qualifies as an eligible expense. While this freedom is a major advantage, it also requires thoughtful planning to avoid confusion, inconsistent approvals, or underutilized funds.

Eligibility can vary widely between organizations, covering everything from gym memberships and therapy sessions to pet care, home office upgrades, or eco-friendly transportation. As a result, defining, documenting, and communicating these guidelines clearly is critical for both compliance and employee satisfaction.

List of Lifestyle Spending Account eligible expenses

While the actual eligible expenses vary from one organization to another, here’s a general list of things that most LSAs typically include.

Physical fitness & wellness

Physical well-being forms the foundation of employee productivity and satisfaction. LSA funds directed toward these expenses encourage healthy habits and preventative care.

• Gym memberships (monthly or annual access to fitness facilities)
• Fitness studio memberships (specialized workout environments like CrossFit or cycling studios)
• Exercise equipment (treadmills, weights, yoga mats, etc.)
• Fitness classes (yoga, pilates, spin, etc.)
• Personal trainers (one-on-one customized fitness guidance)
• Fitness trackers and smartwatches (devices that monitor health metrics like blood pressure, heart rate, O2 stats, etc.)
• Sports league fees (recreational team sports participation)
• Massage therapy (therapeutic bodywork sessions)
• Nutritional counseling (personalized dietary guidance)
• Wellness retreats (immersive health experiences)
• Meditation classes (mindfulness and stress reduction sessions)
• Mental health apps subscriptions (digital tools for emotional well-being)

Financial wellness

Financial stress significantly impacts workplace performance. These offerings help employees build long-term security while reducing money-related anxiety.

• Financial literacy courses (education on money management fundamentals)
• Student loan reimbursement (assistance with educational debt)
• Financial advisor fees (professional guidance for financial planning)
• Retirement planning services (preparation for post-career financial security)
• Tax preparation services (professional assistance with annual tax filing)
• Budgeting app subscriptions (digital tools for tracking expenses)
• Financial wellness seminars (group education on financial topics)

Work-from-home

With remote and hybrid arrangements becoming permanent fixtures, these items create productive home office environments that support employee comfort and efficiency.

• Ergonomic desk chairs (seating designed to prevent posture issues)
• Standing desks (adjustable workstations to reduce sedentary time)
• Computer equipment (laptops, desktops, peripherals, etc.)
• Monitors and accessories (screens and peripherals for improved workflow)
• Internet service (to ensure reliable connectivity for remote work)
• Productivity software (tools to enhance work efficiency, like pomodoro timers, premium subscriptions, etc.)
• Noise-canceling headphones (high-quality audio devices that minimize distractions with active noise cancelling to block our environmental noises)
• Desk organization tools (storage and arrangement solutions)

Education & development

Continuous learning opportunities demonstrate investment in employee growth while building valuable skills that benefit both individual careers and company innovation.

• Professional certification courses (industry-specific credentials)
• College tuition assistance (partial or full reimbursement for degree programs)
• Language learning programs (courses to develop multilingual skills)
• Skills development workshops (focused training on specific competencies)
• Books and educational materials (reading resources for self-directed learning)
• Online course subscriptions (platforms like LinkedIn Learning or Coursera)
• Conference registration fees (industry events for networking and education)

Family & personal

Work-life integration matters more than ever to today's workforce. These benefits acknowledge employees' responsibilities beyond the workplace and provide meaningful support.

• Childcare services (daycare, after-school programs, in-home care, etc.)
• Elder care support (assistance for aging family members)
• Pet care (veterinary visits, pet insurance, etc.)
• Adoption assistance (financial support for growing families)
• Fertility treatment (coverage for family planning options)
• Legal services (consultation and document preparation)
• Identity theft protection (security monitoring and recovery services)
• Housing assistance (relocation expenses or mortgage counseling)
• Commuter benefits (transit passes or parking reimbursement)

Life enhancement

Personal fulfillment contributes to workplace engagement. These offerings support employees' unique interests and passions, fostering creativity and overall satisfaction.

• Hobby-related equipment and classes (supplies for personal interests)
• Cooking classes (culinary skill development sessions)
• Music lessons (instrumental or vocal instruction)
• Art supplies (materials for creative expression)
• Gardening equipment (tools and supplies for plant cultivation)
• Camping gear (outdoor recreation equipment)
• Travel experiences related to personal growth (educational or cultural trips)
• Charitable donations (contributions to nonprofit organizations)
• Community service programs (organized volunteer opportunities)

What isn't eligible under an LSA?

While LSAs offer flexibility, certain expenses typically fall outside eligibility guidelines:

Generally ineligible expenses

• Medical expenses
• Luxury items with no clear wellness or development purpose
• Gambling activities
• Purchases of alcohol or tobacco products
• Political contributions
• Gift cards or cash equivalents
• Regular clothing (not related to fitness or work)
• Regular groceries (not related to nutritional programs)
• Entertainment subscriptions without an educational component
• Weapons or firearm purchases
• Cosmetic procedures not related to wellness
• Vacation expenses without development component
• Fines or legal penalties

It's important to note that specific eligibility rules can vary based on:

• Your company's LSA program design
• Any applicable tax considerations
• Industry-specific regulations
• Regional legal requirements

How LSA programs support employee well-being

LSA programs are uniquely positioned to support holistic employee well-being across multiple dimensions. Here’s how the flexibility from LSAs can help your employees.

Physical health

Lifestyle Spending Accounts empower employees to take proactive steps toward improving their physical health by funding access to gym memberships, fitness studio classes, personal training sessions, and exercise equipment such as treadmills, yoga mats, and weights. 

By removing cost barriers to these resources, LSAs make it easier for employees to prioritize regular physical activity, a key factor in overall health and resilience. Encouraging movement and exercise leads to proven outcomes, including reduced absenteeism, better cardiovascular health, and lower stress levels. 

For employers, this translates to fewer health-related claims, lower insurance premiums over time, and higher day-to-day productivity. Additionally, LSAs can support recovery and injury prevention through services such as massage therapy. This comprehensive support for physical wellness makes LSAs an effective tool for promoting a healthier, more energetic workforce.

Mental well-being

Mental health is increasingly recognized as essential to employee well-being and long-term success, and LSAs offer employees access to resources that can make a measurable difference. These programs can cover subscriptions to meditation and mindfulness apps, therapy services, mental health workshops, and stress-reduction classes like yoga or tai chi. 

When employees have the opportunity to care for their mental health in ways that fit their lifestyle, they are less likely to experience burnout, anxiety, or prolonged disengagement. 

LSAs also normalize the idea that emotional wellness deserves equal attention as physical health, contributing to a workplace culture that values balance and psychological safety. In an environment where mental well-being is supported, employees are more focused, communicative, and resilient, traits that directly benefit team dynamics and overall performance.

Financial security

Financial stress remains one of the top contributors to poor mental health and workplace distraction. LSAs offer a flexible solution by allowing employers to support their teams with resources that improve financial literacy and security. 

Eligible expenses may include access to certified financial planners, budgeting tools, student loan repayment assistance, and retirement planning services. For younger employees, especially Millennials and Gen Z, student loan support is often one of the most appreciated forms of assistance. Older workers may prioritize tax preparation or estate planning services. 

By allowing employees to apply LSA funds toward their specific financial goals or challenges, employers demonstrate a deep understanding of their workforce’s diverse needs. Reducing financial stress leads to better decision-making, reduced absenteeism, and a stronger sense of control, all of which support both individual success and organizational performance.

Work-life integration

LSAs also enhance employee well-being by promoting healthier work-life integration. Unlike traditional benefits that focus narrowly on healthcare, LSAs recognize that fulfillment and balance extend beyond the workplace. 

Employees can use LSA funds on hobbies, creative pursuits, wellness retreats, family services like childcare or elder care, and even pet care. These personalized benefits allow individuals to invest in parts of their life that bring joy, stability, and personal growth. 

Supporting these non-work dimensions leads to more engaged, energized employees who feel genuinely supported, not just as workers, but as people. This kind of holistic care fosters loyalty and creates a culture where employees are empowered to bring their whole selves to work. In doing so, LSAs become a powerful tool for retention, morale, and long-term satisfaction.

Maximizing the impact of your LSA program

While LSAs themselves are a positive step in the right direction to improve the utilization rates for your benefit program, here are some ways to make your flexible benefits even more impactful for your employees.

Align with company values

A high-impact LSA program should reflect and reinforce your company’s core values. Whether your organization emphasizes innovation, sustainability, family support, or lifelong learning, your eligible expense categories should align accordingly. 

For example, a company focused on environmental responsibility might allow reimbursements for bike purchases or eco-friendly commuting. A business that values professional growth could prioritize skill-building courses or conference stipends. 

This alignment signals to employees that the organization’s values aren’t just statements on a wall; they’re backed by tangible support. When the design of your LSA program reinforces your mission, it deepens engagement and strengthens cultural cohesion, making benefits a way to attract and retain top talent.

Communicate clearly

Even the most generous LSA program can fall flat if employees don’t fully understand how to use it. Clear, consistent communication is key to ensuring employees know what expenses are eligible, how to submit claims, what deadlines apply, and where to find support. 

It’s important to remember that if you’re working with a third-party administrator for your LSAs, the responsibility of communication falls on their shoulders. However, you should do what you can to facilitate your LSA provider’s efforts to improve utilization rates. 

The more accessible the information, the more likely employees are to use their benefits to their full potential. Strong communication not only drives engagement, but it also builds trust and transparency around your benefits strategy.

Gather feedback

To keep your LSA program relevant and effective, it’s important to treat it as an evolving resource. Regularly gather employee feedback through surveys, focus groups, or informal conversations to understand what’s working and what could be improved. 

Employees’ needs shift over time, especially as your workforce grows or diversifies, so your benefit categories should adapt accordingly. Maybe there’s demand for more mental health support, or employees want to apply funds toward sustainability or family care. 

Incorporating this input into your program design not only increases utilization but also signals that you’re listening and willing to adapt. Involving employees in shaping the program makes it more inclusive and more valued.

Measure usage

Tracking how employees use their LSAs provides critical insights into what’s valued and where you can make improvements. Monitor usage rates, popular expense categories, and claim frequency to see what benefits are actually making a difference. 

This data, commonly provided by your flexible benefits provider, can help you optimize your offerings, allocate funds more strategically, and identify underutilized areas that may need better communication or adjustment. 

For example, if fitness reimbursements are heavily used but mental health apps are not, you might reevaluate either the value or awareness of that category. Measuring usage also supports stronger ROI reporting, helping leadership understand the program’s impact on employee satisfaction and retention.

Closing thoughts - Partner with Forma for your LSAs

When it comes to delivering impactful, flexible benefits, Forma is the trusted partner for modern organizations looking to offer Lifestyle Spending Accounts that truly make a difference. 

Our platform is designed to help you create personalized, scalable, and compliant LSA programs that align with your culture and meet your employees’ diverse needs, no matter where they are.

With Forma, your teams gain access to a seamless experience:

• Multiple payment options, including preloaded cards, reimbursements, and our curated Forma Store
• Coverage for everything from wellness and fitness to professional development, mental health, and family support
• Global reach, with multi-currency support and localized experiences in over 100 countries
• Automated claims processing, tax compliance handling, and real-time analytics for your HR team
• Clear communication and hands-on support to drive engagement and boost utilization

Forma makes it simple to offer benefits your people will love and actually use. <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Schedule a demo today</span> and see how we support your employees with our LSA strategy.

*This document is for informational purposes. Forma is not engaged in the practice of law. Nothing contained herein is intended as tax or legal advice nor to replace tax or legal advice from counsel. If you need tax or legal advice, please consult with counsel or a certified tax professional.