The Future of Health and Wellness Benefits: LSAs
For years, Canadian companies have been providing employees with Lifestyle Spending Accounts (LSA) in addition to traditional benefits and the trend is catching on in the U.S. Studies show that providing employees with LSAs improves satisfaction and productivity. They empower employees to take control of their well-being, while providing employers a way to positively contribute to and increase organizational productivity.
LSAs encourage employees to live healthier, more active lives, while still retaining some control over what funds can be used for. Similar to a Health Savings Account (HSA) or Flexible Spending Account (FSA), LSAs are employer-sponsored accounts offered in addition to health insurance and other benefits. Employers can set a contribution and schedule disbursements; giving employees one lump sum or spreading out payment over the course of a year.
LSAs differ from HSAs and FSAs in two key ways. While they are similar in that they are employer-sponsored, they have different advantages and disadvantages. Traditionally, HSAs and FSAs are funds provided for health, dental, and vision costs not covered by their health insurance. LSAs allow more flexibility with spending but allow employers to maintain control over what the money can be spent on. Employers are able to determine what is an acceptable health-related cost prior to distribution of funds to employees. The second key difference is that LSAs are taxable as income, unlike HSAs and FSAs which are not taxable when money is withdrawn.
Setting up an LSA for your employees is relatively simple and can often be done through the same vendor that provides current employee benefits. The employer sets the standards for the account, determining how much funding employees get, when the funds are distributed, and what the money can be spent on. The spending of LSA funds can be as flexible or strict as you like. You can choose to include anything from life coaching to exercise equipment, or limit spending strictly to specific things like gym memberships and yoga classes. The flexibility allows employers to ensure the money is being used for the well-being of the employee, while maintaining the employee’s freedom to choose.
One of the most positive aspects of an LSA for employers is that you are only required to pay what your employees use and allowing funds to roll over is optional. Unlike HSAs and FSAs, where funds are distributed and left, if you choose not to allow LSA funds to roll over the unspent money will be returned to the company at the end of the year. This can help to keep costs low, but also encourages employees to use funds in a way that makes them healthier, happier, and more productive employees.
In the end, providing LSAs to employees enables you to show your concern for your employees’ physical and mental well-being. Ultimately, this will have a positive impact on recruitment, retention, and employee satisfaction. Providing an LSA alongside more traditional benefits not only empowers your employees to live more healthy and active lives but also increases employee morale, loyalty, and productivity.