Understanding what counts as eligible expenses in a lifestyle spending account

What is a lifestyle spending account and why does it matter for the future of work

Why Lifestyle Spending Accounts Are Gaining Attention

The way we work is changing fast. Employees are looking for more than just a paycheck—they want benefits that support their whole lifestyle, not just their health insurance. That’s where lifestyle spending accounts (LSAs) come in. These flexible accounts let employees use funds for a wide range of eligible expenses, from gym memberships to mental health services, and even student loan repayments. The goal is to help employees feel supported in all areas of their lives, not just at work.

Employers are starting to see that traditional benefits might not be enough to attract and retain talent, especially as work life and personal life blend together. LSAs offer a way to give employees more choice and control over their benefits. This flexibility is becoming a key part of future benefits programs, as companies look for ways to support employees’ wellness, mental health, and financial stability.

• LSA programs can cover a variety of expenses, including wellness programs, fitness classes, and even some pre tax eligible expenses.
• Employees can access LSA funds throughout the quarter and submit claims for reimbursement on eligible expenses.
• Employers decide what counts as eligible, which means LSA programs can be tailored to fit the unique needs of their workforce.

As more companies explore these accounts, the definition of what’s eligible continues to evolve. This shift is part of a broader trend toward more personalized, flexible benefits that support employees both at work and in their personal lives. For a deeper dive into why some organizations are rethinking their approach to office work and benefits, check out this analysis on the reasons behind choosing office work.

Types of expenses typically covered by lifestyle spending accounts

Common categories of lifestyle spending account expenses

Lifestyle spending accounts (LSAs) are designed to give employees more flexibility in how they use their benefits. These accounts typically cover a broad range of expenses that support overall well-being, going beyond traditional health benefits. Understanding what counts as eligible expenses is key for employees who want to maximize their account and for employers aiming to offer competitive benefits.

• Wellness and fitness: Gym memberships, fitness classes, and personal training sessions are some of the most common eligible expenses. Many LSAs also cover at-home fitness equipment, yoga, and meditation apps.
• Mental health support: Counseling services, therapy sessions, and mental health apps are increasingly included in LSA programs. These services help employees manage stress and maintain work life balance.
• Health and nutrition: Nutritionist consultations, weight management programs, and even healthy meal delivery services can be eligible. Some accounts also reimburse for smoking cessation or other wellness programs.
• Family and lifestyle support: Childcare, eldercare, and pet care services are sometimes eligible, reflecting the diverse needs of today’s workforce. This category may also include student loan repayment assistance, which is gaining traction as a future benefit.
• Professional development: Courses, workshops, and certifications that support career growth may be covered, especially as employers look to support employees’ long-term success.

Some LSAs allow for pre tax spending, while others require employees to submit a claim for reimbursement. The specific eligible expenses can vary widely between employers and account LSA providers. It’s important for employees to review their LSA program details each quarter to understand what is covered and how to access LSA funds.

As the boundaries between work and personal life continue to blur, the list of eligible expenses is evolving. Employers are increasingly recognizing the value of supporting employees’ holistic well-being through flexible spending accounts. For more on how communication tools are shaping this shift, check out the evolution of text messaging in the workplace.

In the next section, we’ll explore how new types of expenses are emerging as work and life become more integrated, and how LSA programs are adapting to these changes.

Emerging eligible expenses as work and life blend

New Categories of Eligible Expenses

As the boundaries between work and life continue to blur, lifestyle spending accounts (LSAs) are evolving to cover a wider range of eligible expenses. Employees are no longer just seeking traditional wellness benefits like gym memberships or fitness classes. Instead, there is growing demand for support that reflects the realities of modern work life, including mental health services, student loan repayment, and even home office equipment.

• Mental health and wellness: Many LSA programs now reimburse for therapy, meditation apps, and online counseling. This shift recognizes that supporting employees’ mental health is as important as physical wellness.
• Financial well-being: Eligible expenses increasingly include financial planning services, student loan repayment support, and access to financial wellness programs. These benefits help employees manage stress related to money and debt.
• Remote work support: With more employees working from home, LSAs may cover ergonomic chairs, standing desks, or high-speed internet. This ensures employees have a productive and healthy work environment.
• Family and caregiving: Some employers are expanding eligible expenses to include backup childcare, eldercare services, or even pet care, recognizing the diverse needs of their workforce.

These changes reflect a broader understanding of what it means to support employees in a holistic way. As LSAs adapt, employers are also considering how to make these programs inclusive and equitable. For example, offering pre tax reimbursement options or allowing employees to submit claims for a variety of services ensures more people can access LSA funds.

Case studies show that when employees will receive support for both their professional and personal lives, engagement and retention improve. This trend is likely to continue as organizations look for future benefits that align with evolving employee expectations. For a deeper dive into how embracing diversity is shaping the future of work and influencing LSA eligible expenses, read this perspective on diversity in the future of work.

How employers decide what is eligible

How Companies Shape Lifestyle Spending Account Eligibility

Employers play a central role in determining what counts as eligible expenses within a lifestyle spending account (LSA) program. Their decisions reflect company culture, business goals, and the evolving needs of employees. As the future of work shifts toward more personalized benefits, understanding how these choices are made is key for both employers and employees. Key Factors Influencing Eligibility Decisions

• Company Values and Culture: Organizations often align LSA eligible expenses with their core values. For example, a company prioritizing wellness may include gym memberships, mental health services, or wellness programs as eligible for reimbursement.
• Employee Demographics and Feedback: Employers review employee feedback and demographic data to identify which benefits will support employees best. If a workforce includes many young professionals, student loan repayment might become an eligible expense.
• Budget and Tax Considerations: The amount of LSA funds allocated per employee and whether the account is pre tax or post tax can influence what expenses are covered. Some companies may limit eligible expenses to those that are easier to administer or have clear tax guidance.
• Industry Trends and Compliance: As work life boundaries blur, employers look at what competitors offer and ensure their programs comply with legal requirements. This can lead to the inclusion of new eligible expenses, such as remote work support or mental health services.

How the Process Works

• Employers typically set guidelines for their LSA program each quarter or annually, outlining what employees can spend their account on.
• Employees will receive a list of eligible expenses and instructions on how to submit a claim for reimbursement.
• Some companies use third-party administrators to review claims and ensure expenses meet the LSA eligible criteria.

Case Study: Evolving LSA Programs

Consider a tech company that initially offered only gym memberships and wellness programs in its LSA. After surveying employees, it expanded the account to cover mental health services, home office equipment, and even student loan payments. This shift not only improved employee satisfaction but also aligned the LSA program with the changing nature of work and employee needs.

Balancing Flexibility and Structure

Employers must strike a balance between offering enough flexibility to support diverse lifestyles and maintaining clear guidelines to avoid confusion. As more companies adopt LSAs, the process of defining eligible expenses will continue to evolve, reflecting broader changes in how we work and what we value in employee benefits.

Challenges and gray areas in defining eligible expenses

Where the Lines Get Blurry: Defining Eligible Expenses

As lifestyle spending accounts (LSAs) become more popular in employee benefits programs, the question of what counts as an eligible expense is not always clear cut. While some expenses like gym memberships or wellness apps are widely accepted, others fall into gray areas that can create confusion for both employees and employers.

• Wellness vs. Medical: Many LSAs support wellness, but not all health-related expenses are eligible. For example, a fitness tracker might be covered, but prescription medication usually is not, as that falls under traditional health benefits.
• Work-Life Balance: As work and life blend, new expenses like home office equipment or mental health services are being considered. However, deciding if a standing desk or meditation app qualifies can depend on the specific LSA program.
• Education and Financial Support: Some LSAs now include student loan reimbursement or financial wellness programs. Yet, not all employers agree on whether these should be eligible, especially when considering pre tax implications and overall benefits strategy.

Case Studies: Real-World Challenges

In practice, employees often submit claims for expenses that test the boundaries of their account. For example, one company found that employees were requesting reimbursement for pet wellness services, arguing that pets support mental health. Another case involved requests for travel expenses tied to wellness retreats. These examples show how the definition of eligible expenses can shift as employee needs evolve and as LSAs are used to support employees in more holistic ways.

Employer Dilemmas and Compliance

Employers face the challenge of balancing flexibility with compliance. They must ensure that their LSA programs meet legal requirements and align with company culture, while also providing meaningful support. Regular reviews of eligible expenses, clear communication, and consistent guidelines help reduce confusion. However, as new wellness trends emerge each quarter, what is considered eligible can change, requiring ongoing attention from HR teams.

Ultimately, the evolving nature of work life and benefits means that defining eligible expenses in a lifestyle spending account will remain a dynamic process. Both employees and employers need to stay informed and adaptable as LSAs continue to shape the future of work.

Tips for maximizing your lifestyle spending account

Practical ways to make the most of your LSA

Lifestyle spending accounts (LSAs) are becoming a popular benefit as employers look for flexible ways to support employees’ well-being and work life balance. To truly maximize your LSA funds and eligible expenses, a thoughtful approach is essential.

• Understand your plan: Each LSA program is unique. Review your employer’s guidelines to know which expenses are eligible, from gym memberships to mental health services, wellness programs, or even student loan support. Knowing what’s covered helps you avoid denied claims and ensures you use your account efficiently.
• Track your spending: Keep a record of your expenses throughout the quarter. Many LSAs operate on a use-it-or-lose-it basis, so monitoring your spending account helps you avoid missing out on benefits.
• Submit claims promptly: Most LSAs require you to submit a claim with receipts for reimbursement. Delays can lead to missed deadlines and lost funds. Set reminders to submit claims regularly, especially for recurring expenses like wellness or health services.
• Explore all eligible options: As the definition of eligible expenses expands, look beyond traditional benefits. Some LSAs now cover mental health apps, nutrition counseling, or even remote work support. Check your plan for new or emerging eligible expenses that align with your lifestyle and work needs.
• Coordinate with other benefits: If you have access to multiple accounts, such as pre tax health spending accounts and your LSA, plan your spending to maximize reimbursement. For example, use your LSA for expenses not covered by traditional health plans.
• Ask questions: If you’re unsure whether an expense is eligible, reach out to your HR or benefits team. Employers want employees to use these programs well, and they can clarify gray areas or provide examples and case studies from your organization.

LSA programs are designed to support employees’ diverse needs as work and life blend. By staying informed and proactive, you will receive the full value of your lifestyle spending account and contribute to your overall wellness and future benefits.