Your employees are craving healthy connections in this remote and hybrid work world. Another team call isn’t going to cut it. You need relevant, flexible benefits that employees appreciate because they want to be seen and supported as whole, unique people.

Making sure your people feel valued by meeting their individual needs can go a long way toward attracting new talent and cultivating loyalty. Offering a Lifestyle Spending Account (LSA) demonstrates your caring for employees’ well-being in and out of the office, making them feel more connected to your company and their work.

So what is a Lifestyle Spending Account, and how does it work? Keep reading to learn more about this popular employee benefit and why it’s become essential in the modern workplace.

What we’ll cover:

What is a Lifestyle Spending Account?

A Lifestyle Spending Account (LSA) is an employer-sponsored benefit that supports employees’ overall health and wellness. LSAs are a great way for employers to show their commitment to creating a happy and healthy workplace for their employees.

Truly working at work

Many employees are feeling exhausted and burned out. Lately, “quiet quitting” has us abuzz. Or maybe it’s just working at work. Either way, even U.S. Secretary of Labor Marty Walsh recently chimed in: “If you are an employer, you should catch on early enough that your employees aren’t satisfied, aren’t happy, and then there needs to be a dialogue, a conversation.”

Opening up this dialogue is how you determine what flexible benefits will be relevant and valuable to your people. Tailor your offerings and address underlying sources of unhappiness before they lead to turnover.

While salary does matter, if the holistic employee experience falls short, employees will start to look for a better fit. Keeping employees happy and healthy can be synchronous and is undoubtedly a worthwhile investment.

Surprise and delight

According to a recent Mercer Insights survey, there is a higher demand for flexible benefits among employees than there are companies offering Lifestyle Spending Accounts. Currently, only 10% of employers have LSAs, but 70% intend to implement them based on employee feedback.

There are traditional benefits your employees might expect, such as health insurance or a retirement plan. A Lifestyle Spending account is a benefit that goes beyond the norm and truly delights employees.

How does a Lifestyle Spending Account work?

A Lifestyle Spending Account lends ultimate flexibility as an employee benefit. Beyond fitness reimbursements, LSAs allow freedom of choice to give back where it matters.

Wherever your employees are, create a customized LSA to meet their needs and values while aligning with your company’s mission and vision. With an LSA, you can design your own benefit model and determine the eligible population, dollar amount, funding frequency, and spending timeframe. Employees can use the funds from an LSA to invest in their own health and well-being in a tax-advantaged way.

How is an LSA set up?

LSAs are off-cycle. No need to align to a benefits plan year; you can launch an LSA any time of the year. Since it is not a regulated plan benefit, you can implement it whenever you’re ready.

For example, you could launch on April 1 or July 28. Employers may choose to make a one-time contribution at the beginning of the year or contribute on a per-pay-period basis.

LSA can have a pro-rated plan design. Flexible amounts, tailored to employee status (contract, part-time, full-time, and more) in any location worldwide.

How is an LSA funded?

Employers fund the account and decide the scope of eligible expenses. LSA funds are provided to employees as a taxable benefit as part of their benefits package. LSAs are 100% customizable with no parameters on expenditures and no budgetary minimums or maximums outside of the employer’s plan design.

Because this is a post-tax benefit, employers have much more freedom in determining reimbursement categories. Employers can choose eligible expenses for LSAs and direct spending in a way that aligns with the company culture and values.

Read more: How to Fund a Lifestyle Spending Account and Save Your Budget

How can employees earn LSA funds?

Earned allowance offerings are unique. Incentivized challenges provide creative ways for employers to encourage their people to earn funds for their Lifestyle Spending Accounts. All the while supporting the corporate mission, vision, and values.

Set your people-positive policy to align with your LSA goals with a values-centered expense type. The ultimate, bolt-on customization for your people-first culture. Here are some ideas:

Volunteer Work

Allow your people to put their volunteer time where their values are by supporting employees who volunteer their time and energy for charitable causes. Whether through company-sponsored volunteer events or individual volunteer efforts, a Volunteer Reimbursement Program can drive philanthropic engagement.

Total Well-Being

Encourage employees to prioritize their health and well-being by rewarding certain activities and achievements related to health and wellness to earn funds. These can include an annual physical exam, a biometric screening, flu shots, a nutrition course, attending a stress management workshop, learning how to meditate, attending fitness classes, or participating in on-demand fitness offerings.

Financial Wellness

Reward employees who prioritize their financial wellness. Your people can earn funds by attending a financial planning seminar, completing a debt reduction program, or setting up a retirement savings plan or college savings account.

Lifestyle Spending Account: eligible expenses

Eligible expenses for Lifestyle Spending Accounts can include anything related to promoting employees’ total well-being. An eligible expense may include any personal expense related to physical fitness and health, financial management, self-care and personal development, and even miscellaneous family and home expenses, like childcare.

Wellness is not one-size-fits-all. Being inclusive means acknowledging that an employee fitness challenge does little to engage the employee who already runs 30 miles each week. While one employee might prefer to invest in a standing desk, another just wants blue-light glasses. A working parent might prefer a meal kit to make her transition from work to home easier for everyone.

The employer determines eligible expenses for an LSA and provides an allowance for each employee. The funds withdrawn from the LSA are not subject to tax, so it provides a tax-advantaged way for employees to invest in their own personal health and well-being.

Physical fitness and health

  • Gym memberships
  • Wellness and fitness classes
  • Fitness equipment
  • Personal training
  • Nutritional supplements and meal kits
  • Workout apps and wearable technology

Financial management

Self-care and personal development

  • Meditation apps
  • Life coaching
  • Health coaching
  • Continuing education courses
  • Virtual care
  • Personal development classes

Family and home

  • Reproductive care
  • Surrogacy or adoption
  • Childcare
  • Eldercare
  • Pet care
  • Home office equipment and internet

Benefits of a Lifestyle Spending Account


Employers pursuing diversity, equity, and inclusion (DEI) initiatives may see LSAs as a straightforward way to address benefit gaps for women, specific racial and ethnic groups, LGBTQ+, neurodivergent employees, and populations with special life needs such as family building or emergency relief.


An LSA is an employee benefit program that is less reactive and more proactive. Employers can encourage healthy lifestyle choices by taking meaningful action to fund health and wellness needs that traditional health insurance plans or HSAs may not cover. And strengthen relationships with their employees in the process.

Consider: if a company is willing to subsidize the cost of entry into a bike race, their employee will dedicate countless hours to training, nutrition, and mental preparation for this effort. The employee benefits not only from the experience of the race itself but from a healthier mind and body gained from the endeavor. All thanks to their company’s investment in personal wellness.


These benefits can be super broad or hyper-focused, depending on how you want to address your employees’ individual needs.  You can direct spending that aligns with your company’s culture and core values.

LSA vs. HSA (and FSA)

Let’s set the Lifestyle Spending Account (LSA) apart from its better-known counterparts, the Health Savings Account (HSA) and Flexible Spending Account (FSA)*.

Lifestyle Spending Account

Health Savings Account

  • A flexible employee benefit plan that funds health and wellness activities and services
  • The employer determines eligible expenses
  • Taxable benefits for employees
  • An employee benefit plan that funds qualified medical expenses
  • The law determines eligible expenses
  • Nontaxable benefit for employees

*An FSA functions much in the same way as a HSA, except that the funds belong to the employer rather than the employee, and unused funds do not roll over from year to year.

Get started with a Lifestyle Spending Account

Lifestyle Spending Accounts allow employees to try something new with little risk. Curious about Pilates or guided meditation? Why not try?

Real talk: with most benefits, there’s a 50-50 chance your employees will actually use them. With an LSA, there’s, on average, 80% utilization by employees, and you only fund what they actually spend. So, in this case, if they don’t use it, you don’t lose it!

Rather than investing in yet another initiative employees may or may not use, employers can help subsidize various services, products, and experiences to fit employees’ unique lifestyles.

LSAs can be administered directly by the employer, or the management can be outsourced to an employee benefits platform. This offers relief for busy HR professionals and privacy for your employees about their choices.

Ready to get started with a Lifestyle Spending Account for your organization? Learn about Espresa’s Lifestyle Spending Account program today.


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