What’s a Lifestyle Spending Account?
If you’re a small business trying to improve employee engagement, attraction, and retention, offering a Lifestyle Spending Account (LSA) is a great first step for success. A Lifestyle Spending Account is a taxable benefit that gives employees the flexibility to spend funds on wellness activities however they so choose. An LSA is like a bank account, where employers deposit a fixed amount of money every month. Employees can then spend the funds in their account on approved wellness items and services as they wish.
For example, imagine a company wants to offer employees $200 a month to help subsidize the cost of pet care. First, they would identify the allowable pet care expenses that the account can be used for. Let’s say pet insurance, pet day care, and pet grooming are all acceptable, but not pet food. From there, employees who draw funds on those allowable expenses can submit their claim online and be reimbursed from the allowance in their LSA.
Why Should You Offer a Lifestyle Spending Account?
According to recent studies:
- 49% of employees are likely to seek new opportunities in a year because of confusion or dissatisfaction about benefit schemes.
- 78% of employees reported being more likely to stay in their current roles if the benefits are attractive.
- 75% of employees stressed not only the importance of employee benefits, but expressed a desire for more variety.
- 40% of employees said a company becomes more attractive if their benefits packages are tailored to them.
These are just a handful of research studies that highlight the need to place importance on the unique employee benefits your business offers. In all these statistics, the general theme of “variety” and “attractive benefits” is strongly apparent. After all, variety and customization increase the attractiveness of employee benefits, which in turn, improves employee attraction and retention. Which employer wouldn’t like that? For this reason, employers are now beginning to value customized benefit plans as a way to encourage employees’ work/life balance and foster a strong workplace culture.
What Categories Do Lifestyle Spending Accounts Cover?
Employers have the final say in what wellness activities and services are covered under an employee’s LSA. When deciding what expense categories you want to include, always choose the areas that are of the greatest interest to you and your employees. A great way to approach this decision is to conduct an employee survey to see which wellness benefits are the most valued among your workforce. Without a survey, you would be blindly selecting categories that could possibly reverse the main reason for offering a LSA in the first place. Below, you’ll find a list of categories that could be covered under a Lifestyle Spending Account.
1. Wellness
- Nutritionist
- Cosmetic Dentistry
- Life Coaching
- Osteopathy
- Meditation
- Vitamins and Nutritional Supplements
- Weight Loss Programs
- Midwife
- Family and Marriage
- Therapist
2. Fitness
- Gym Membership
- Gym Equipment
- Bicycles
- Fitness Classes
- Personal Training
- Pilates
- Yoga
- Outdoor Activity Passes
- Athletic Apparel
- Athletic Footwear
3. Travel and Entertainment
- Meal Delivery Services
- Movie Theater Tickets
- Team Meals
- Music Lessons
- Sporting Events
- Concerts
- Hotels
- Art Lessons
4. Financial Services
- Tax Free Spending Account (TFSA)
- RRSP Contribution
- RESP Contribution
- Student Loan Repayment
- Financial Planning
5. Transportation
- Public Transit
- Uber and Lyft
- Car Share Service
- Bike Share Service
- Taxi
- Gas
- Parking
6. Education
- Conferences and Seminars
- Training and Course Fees
- Continuing Education
- Tuition Reimbursement
- Language Lessons
- Student Loans
7. Kids and Pets
- Pet Insurance
- Pet Day Care
- Pet Grooming
- Pet Food
- Child Care Services
- Child Activities and
- Programs
- Baby Sitting
Lifestyle Spending Account Solutions
The CloudAdvisors’ benefits marketplace provides open access to browse employee benefit solutions. Explore Lifestyle Spending Account vendor options, quotes, and so much more. Start by browsing some of our top recommendations below.
Wellness or Lifestyle Spending Account
National HealthClaim’s Wellness or Lifestyle Spending Account allows custom reimbursement categories unique to your workplace. What do employees need? Remote office supplies, safety equipment, digital subscriptions to mental health resources, student loan repayment program, family care, fitness related services… and more. Curate your company culture by adding new unique-to-you categories at no extra cost.
Taxable Spending Account / Lifestyle Spending Account (LSA)
Simply Benefits offers Lifestyle Spending Accounts and makes it easy for employers to give members the flexibility to choose how they want to allocate their spending account funds. If an employer provides $1000 to the member’s spending account, the member can choose to allocate $500 to their HSA and $500 to their LSA. Employers can also select what expenses they want to enable members to submit through their LSA.
myFlexplan
Flex plans allow an employee to select from the list of available options (selected by the employer) that best suit their needs based on the stage of life they’re in and allocate accordingly. Employees have a 30-day window to login and allocate from the time they are added to the plan, or upon yearly plan renewal. The allocation must be made at the beginning of the benefit year (as per CRA required element of risk). When the amount is allocated, the credits are locked in for the plan year and cannot be changed. Income tax considerations are an integral part of the design of flexible employee benefit programs and an important aspect of the selection of benefits by the employee.
Employee Social Wellness
Strong social connections make people happier and physically healthier, which can translate into improved work performance. In this new remote working environment, employers need to consider new ways to encourage employee socialization. Many companies are trying to create virtual events every month for their employees to have a social outlet, but it is challenging to find one single event that all employees are interested in. With Cyno, employees have many virtual events to choose from every week and can invite co-workers to participate in the event that they’re most interested in!
