Lifestyle Spending Account (LSA)

Lifestyle Spending Accounts are fully funded and owned by the employer. That means unused funds at the end of the benefit period usually go back to the employer. This gives employers the flexibility and control to design programs that align with organizational goals and values.

There are no IRS cap on LSA contributions, which means employers have the freedom to decide how much to offer and how often–whether quarterly, annually, or lifetime allowances. Most programs offer between $250 and $2,000 per employee pear year, depending on the company’s goals and buget.

LSAs can cover a wide range of wellness-related expenses. Here are some common eligible categories:

• Mental & Emotional Wellness: Therapy, meditation apps, retreats, life coaching
• Physical Fitness: Gym memberships, fitness classes, wearables, sports fees
• Financial Wellness: Budgeting tools, financial planning services
• Professional Growth: Online courses, certifications, skill-building programs
• Lifestyle & Home: Pet care, home office setup, commuting support, meal kits
• Employers choose which categories to include based on employee needs.

Yes. Since LSA benefits are post-tax, employees will see the reimbursed amount included in their taxable income. This allows LSAs to remain highly flexible with fewer IRS restrictions.

It’s up to the employer. LSAs can be designed with rollover options, grace periods, or a “use-it-or-lose-it” model depending on program strategy.

LSAs are not subject to IRS enrollment restrictions. Employers can allow enrollment during open enrollment, on a rolling basis, or at any time that fits the organization’s benefits calendar.

With Espresa, employers can tailor LSAs by setting eligibility rules, customizing spending categories, automating reimbursements, issuing debit cards, and accessing real-time analytics and insights.

• Define custom eligibility rules and expense categories
• Offer a seamless employee experience with digital reimbursement or debit card options
• Track engagement with up-to-date analytics and clear insights
• Ensure compliance and ease of management via our intuitive platform

Great benefits show employees you care–about their health, happiness, and growth. LSAs offer something different: choice. They meet people where they are, and they make your company stand out in a crowded talent market. LSAs offer a differentiated approach to benefits by:

• Supporting employee autonomy and personal goals
• Promoting inclusion and equity across diverse lifestyles
• Helping attract and retain top talent
• Encouraging healthy, fulfilled, and productive teams

A Lifestyle Spending Account (LSA) is customizable within employer-defined categories–enabling support for what matters most to your people, from fitness to financial wellbeing. Eligible expenses are defined by each employer–commonly included categories:

• Personal Development: Invest in self-improvement through language learning platforms, creative writing workshops, or public speaking training.
• Community Engagement: Support local initiatives, such as volunteering program fees, donations to nonprofit organizations, or participation in community clean-up events.
• Environmental Sustainability: Fund eco-friendly choices like electric vehicle charging subscriptions, reusable product kits, or carbon offset programs.
• Cultural Exploration: Enrich your life with museum memberships, theater tickets, or virtual tours of global landmarks.

Through the Espresa platform, companies can craft an LSA that champions individuality, promotes societal impact, and aligns with organizational priorities, creating a dynamic and inclusive benefits program.

Employers fund each employee’s Lifestyle Spending Account with a set amount (whether on a quarterly, annual, or one-time lifetime basis). Employees can then use those funds for eligible lifestyle and wellness expenses that support their personal wellbeing.

With Espresa, it’s simple: employees submit claims through an easy-to-use mobile or web platform. Claims are reviewed quickly–often in real time–and funds can be reimbursed or delivered through a prepaid benefits card or via payroll. It’s a smooth, flexible process that’s hassle-free for employees and easy for HR to manage.

Lifestyle Spending Accounts offer a modern approach to employee wellness by giving employees choice and control over how they invest in their health, happiness, and productivity.

Key benefits include:

• Flexibility: Employees choose what matters most to them
• Inclusivity: Supports diverse lifestyles, cultures, and family structures
• Attraction & Retention: Boosts employee satisfaction and employer brand appeal
• Because LSAs are post-tax, they offer greater flexibility than traditional benefits–but they must still be reported as taxable income

Pros:

Easy to tailor to your culture and goals

Supports holistic wellbeing and inclusion

Reduced administrative effort when powered by a platform like Espresa, which streamlines expense reviews, reporting, and tax compliance

Boosts morale and shows you care

Cons:

Funds are considered taxable as income for employees

No pre-tax savings for employers

Undersized contributions can reduce perceived impact

Specialty Allowances, or Niche Benefits, are fully customizable employer-funded programs offered through Lifestyle Spending Accounts (LSA). They give companies the flexibility to support diverse employee needs–from pet care and elder care to medical travel benefits, tuition reimbursement, and beyond–while supporting global and region-specific compliance. With Espresa, companies can easily configure and deliver localized benefits that align with cultural norms, legal requirements, and organizational wellbeing across geographies.

Specialty Allowances show that you recognize and support the whole person, beyond the employee. They improve employee engagement, promote diversity and inclusion, and help your company stand out in a competitive talent market.