Lifestyle Spending Account (LSA) overview
A Lifestyle Spending Account (LSA) provides employees with flexible, non-medical expense coverage to support their personal well-being and development. LSAs allow employers to help employees with approved expenses across a range of lifestyle categories. As an HR administrator, you play a key role in helping employees understand and utilize this benefit. Here’s an overview of how LSAs work and what to keep in mind for your team.
What’s covered?
LSA coverage is flexible and tailored to your company’s policy. Common categories include:
- Fitness and wellness: Gym memberships, fitness classes, sports equipment.
- Health and nutrition: Dietitian services, meal plans, supplements.
- Personal development: Courses, certifications, language learning.
- Mental health: Stress management programs, wellness retreats, massage therapy.
- Lifestyle and recreation: Hobbies, travel, outdoor activities.
Level provides an intake form during onboarding for your selected plans, which include an exhaustive list of all eligible coverage categories for the selected plan. Please feel free to reach out to your account manager or success@level.com to request our intake form for your review and plan configuration.
Employee eligibility
Employee eligibility can be configured based on your company’s policy. Common factors include:
- Employment status: Employers can indicate whether the benefit is eligible for full-time only, or also inclusive of part-time or contract employees.
- Waiting periods: Employers can set a waiting period for new hires before they are eligible for the benefit.
- Enrollment periods: Employers can tie eligibility to specific enrollment periods (e.g. open enrollment).
Auto-enrollment
Automatically enrolls members based on plan enrollment criteria (e.g. employee type, status, location) without a required election by the employee.
This enrollment type is most popular for Lifestyle Spending Accounts, but check out our Enrollment Article for more options.
Tax information
Since LSAs are considered taxable benefits, here are some key points to communicate:
- Employer’s responsibility: The benefit is usually reported on employees' pay stubs or tax forms, per tax regulations.
- Employee’s responsibility: Employees are typically responsible for any income tax on the LSA benefit, which may be deducted from their paycheck.
For further clarity on the tax implications, you may want to connect with your company’s payroll or finance department.
Termination
When an employee leaves the company, their remaining LSA balance will be handled according to your company’s termination policy. The specific treatment may vary, so it’s essential to confirm the company’s stance and communicate it to departing employees if needed. All terminated employees will continue to have access to their Level account only to review past transactions and expenses.
Additional details
For the most accurate and detailed information, employees can refer to their LSA plan directly in the Level app. This will include any updates to eligible expenses or policy changes.
If you need further assistance or have questions regarding your company’s LSA policies, please contact support@level.com.