By Paula Smith
When it comes to attracting and retaining employees, benefits have always played a vital role. In this very competitive environment, employers are looking beyond standard medical, dental and vision benefits to perks such as Lifestyle Benefit Accounts (LSAs).
An LSA is an employer-funded, taxable benefit designed to promote employee wellness, happiness and productivity. They’re designed to address physical, financial and emotional wellness needs.
Common Eligible Expenses:
| Physical Wellness | Financial Wellness | Emotional Wellness |
| Athletic equipment and accessories | Student loan reimbursement | Mediation classes |
| Exercise/fitness equipment | Home purchase expenses | Non-medical counseling Services: marital, parental, etc. |
| Gym, health club, spa and fitness studio membership | Financial advisor and planning services | Retreats: leadership, spiritual |
| Sport lessons: golf, swimming, tennis, dance, etc. | Financial seminars and classes | Pet care: walkers, day care, grooming |
| Workout apps, fitness trackers | Estate planning costs | Camping: tent, site rental fees, sleeping bags, etc. |
| Weight loss programs, nutrition counseling, food supplements | Identity theft services | Personal development classes: art, cooking, sewing, etc. |
| Entry fees for races and sports leagues | Pet insurance premiums | Annual park pass |
| Fitness classes: yoga, Pilates, cycling, etc. | Hunting and fishing licenses | |
| Passes: ski, snowboard, golf, tennis, etc. |
A Lifestyle Spending Account allows employees to make purchases and receive a reimbursement from their LSA. The employer determines which expenses are eligible and the funds are considered as taxable income to the employee. An LSA should not be used for IRS Section 213(d) health expenses.
LSA Program Options
Employers have several options when customizing their LSA, such as:
- Which plan types to offer (physical, financial, emotional)
- How much to contribute
- When contributions will be available for use
- Eligible employees
- Eligible expenses
- How funds will be handled at the end of the plan year (rollover or runout)
- How funds will be handled for terminated employees (runout period)
Benefit to Employers and Employees
A valuable addition to a standard benefit program, LSAs let employees choose activities that suit their lifestyle, with more control over how they use the benefit. For example, remote employees could buy exercise equipment for home or sign up for a nearby fitness class.
For employers, the LSA is a highly flexible offering that increases employee engagement and improves the overall benefits plan. It can differentiate the employer, making it more attractive to both current and prospective employees.
For more information on Lifestyle Spending Accounts, please contact your Employee Benefits advisor.
Vice President, New Business Specialist
McGriff
[email protected]