Lifestyle Savings Accounts (LSAs) are a new employee benefit strategy gaining popularity among employers. LSAs are designed to help employees save money on everyday expenses such as groceries, gas, and healthcare costs. These accounts are similar to Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), but they offer more flexibility and can be used for a wider range of expenses.
How LSAs Work
LSAs are funded by employees through payroll deductions. Employers can also choose to contribute to the accounts as part of their benefits package. Employees can use the money in their LSA to pay for qualifying expenses, such as gym memberships, child care, and transportation costs. LSAs can also be used to pay for medical and dental expenses that are not covered by insurance.
Unlike HSAs and FSAs, there are no restrictions on when employees can use the funds in their LSA. The money can be used immediately, and there is no requirement to spend it within a specific time period. Additionally, employees can roll over unused funds from year to year, which makes LSAs a more flexible and convenient option for employees.
Benefits of LSAs for Employers
LSAs offer several benefits for employers. First, they can be used to attract and retain top talent. Employees are looking for employers that offer benefits that fit their lifestyle and provide financial security. LSAs can be a valuable tool in recruiting and retaining employees.
Second, LSAs can help reduce healthcare costs for employers. By encouraging employees to use their LSA funds to pay for medical expenses, preventative healthcare, and complementary and alternative medicine services (CAM), employers can reduce the amount of money they spend on healthcare benefits. This can help lower overall healthcare costs and improve the bottom line for employers.
LSAs can help improve employee morale and productivity. By giving employees more control over their finances and providing a convenient way to save money on everyday expenses, employers can create a more positive work environment. This can lead to higher job satisfaction and increased productivity among employees. Progressive employers are using this mechanism as a tangible way to empower employees to make decisions based on personal criteria, at a time when employees are becoming increasingly interested in personalized benefit options and overall flexibility.
Benefits of LSAs for Employees
LSAs offer several benefits for employees as well. First, they provide a convenient way to save money on everyday expenses. By setting aside money in their LSA, employees can leverage tax incentives and save money on groceries, gas, and other expenses that they would normally have to pay for out of pocket.
Second, LSAs can help employees save money on healthcare costs. By using their LSA funds to pay for medical expenses and complementary and alternative medicine services (CAM) employees can reduce their out-of-pocket costs and save money on healthcare. Employers on the cutting edge of benefit innovation are pairing LSA contributions ($50-$100/month on average) with vetted networks of CAM providers to encourage employees to participate in preventative health services or manage chronic conditions in a cost effective way for both employer and employee.
Finally, LSAs can help employees manage their finances more effectively. By providing a convenient way to save money and reduce expenses, employees can improve their financial situation and reduce financial stress.
Good for Everyone?
LSAs are a valuable tool for employers and employees alike. They provide a convenient way to save money on everyday expenses and can help reduce healthcare costs for employers, while making preventative healthcare and complementary and alternative medicine services (CAM) more financially accessible for employees. LSAs are also a valuable tool for attracting and retaining top talent and can help improve employee morale and productivity. As more employers look for innovative ways to provide employee benefits, LSAs are likely to continue on their trajectory to becoming an increasingly popular option.