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 a 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 Lifestyle Spending Accounts (LSA)s demonstrates your caring for employees’ well-being in and out of the office, making them feel more connected to your company and their work.

Keep reading to learn what a Lifestyle Spending Account is, what expenses are eligible for reimbursement, and what makes an LSA such a popular new benefit for modern workplaces.

What we’ll cover:

What is a Lifestyle Spending Account?

A Lifestyle Spending Account (LSA) is an employer-funded account 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

In 2022, 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 exactly 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 undoubtedly is a worthwhile investment.

Surprise and delight

Companies that offer Lifestyle Spending Accounts are outnumbered by employees who desire these flexible benefits. A recent Mercer Insights Survey revealed that only 10% of employers currently have an LSA, yet 70% are planning to introduce one due to employee feedback.

There are benefits your employees might expect — health insurance or a retirement plan, and those that delight. A Lifestyle Spending Account promises to delight.

What are eligible expenses for a Lifestyle Spending Account?

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

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 membership
  • Wellness and fitness classes, subscriptions, and equipment
  • Personal training
  • Nutritional supplements and meal kits
  • Apps and wearable technology

Financial management

Self-care and personal development

  • Meditation
  • Life coaching
  • Health coaching
  • Continuing education
  • Virtual care

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 a benefit 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 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 employee 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.

How an LSA differs from HSA (and FSA)

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

Lifestyle Spending Account

Health Spending Account

  • A flexible employee benefit plan that funds health and wellness activities and services
  • Eligible expenses are determined by the employer
  • Taxable benefit for employees
  • An employee benefit plan that funds qualified medical expenses
  • Eligible expenses determined by law
  • Nontaxable benefit for employees

*A Flexible Spending Account functions much in the same way as a Health Savings Account, except that the funds belong to the employer rather than the employee and do not roll over from year to year.

Advantages of an LSA

Design your own benefit model

With an LSA, you can design your own benefit model and determine the eligible population, dollar amount, funding frequency, and spending time frame.

Choose what an LSA funds

You can choose what an LSA funds and direct spending in a way that aligns with company culture and values. Because this is a post-tax benefit, employers have much more freedom in determining reimbursement categories.

Offer a completely flexible benefit

An LSA is a completely flexible benefit that allows employees to choose where they would like to apply funds. Providing diverse options is one of the keys to attracting and retaining talent.

Complement your existing HSA or FSA offerings

Already offer an HSA or FSA to your employees? An LSA is a perfect complement to your existing HSA or FSA offerings to extend even more flexible and customizable benefits.

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 the LSA offerings from Espresa today.


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