Launching a Lifestyle Spending Account (LSA)

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In today's dynamic workforce, the quest for innovative and flexible employee benefits is more pronounced than ever. LSAs provide employees with a designated fund for a wide range of lifestyle benefits, from wellness and education to remote work setups and beyond. This concept not only enhances job satisfaction, but also fosters a deep sense of loyalty and connection between employees and their employers.

As organizations strive to attract and retain top talent, understanding and implementing LSAs can significantly elevate their benefits offerings. This article delves into the essence of LSAs, highlighting their growing popularity and the pivotal role they play in modern employment landscapes; particularly, for HR professionals and benefits brokers seeking to position themselves as leaders in innovative workplace solutions.

How LSAs Work: The Basics

At their core, LSAs provide a straightforward, yet flexible, framework for employee benefits. Unlike traditional benefits that often come with strict guidelines and limited scopes, LSAs offer a broad spectrum of potential uses, catering to the diverse lifestyle needs of employees. Essentially, an LSA is an employer-funded account from which employees can draw funds to spend on approved lifestyle expenses. These can range from health and wellness, professional development, to remote work setups and family care, offering a personalized benefits experience that traditional packages rarely match.

One of the key features of LSAs is their flexibility.Employers can set up these accounts with various spending categories, allowing employees to allocate funds in ways that best support their individual and family needs. This autonomy not only empowers employees, but also increases their engagement and satisfaction with the benefits program. Additionally, LSAs are designed to be inclusive, providing benefits that are accessible and relevant to employees at different life stages and with varying interests.

For employers, the process is streamlined and burden-free. The administrative load is significantly reduced compared to managing traditional benefits, as LSAs typically require less ongoing oversight. Employers simply contribute a set amount to each employee's account, which can be used within the defined expense categories. This setup ensures LSAs are both cost-effective and a highly valued component of an organization's overall benefits strategy.

Do LSAs really SaveEmployers Time, Money, AND Increase Employee Loyalty?

LSAs simplify logistical tasks and budgeting for expenses because they “have a fixed cost, so employers are well aware of their financial liability in offering this benefit, which makes budgeting for it easier”1. Even prior to the days where “12.7% of full-time employees work from home and 28.2% work a hybrid model” in 20242, time spent on managing expenses; chasing down employees for receipts, reviewing expenses, requesting compliant documentation, approving and paying out expense reimbursements via payroll or off-cycle – it’s always been a dominating part of the Human Resource’s Team responsibilities if not that of a single administrative full-time employee. Not to mention the rework required from the manual efforts from expense management. Did you know that “the average cost of filing/managing expense reports $38-$58 per report with error rate of 19%”4.Turning to the use of LSAs for standard expenses; training, tools (think software) and supplies (hardware), removes this from Human Resource’s long list of tasks and eliminates spend outside of the designated budget. Let’s dive into how best to set up an LSA, then we can explore more tangible examples of howLSAs can save employers time and money – including time spent on new employee onboarding.

Setting Up an LSAProgram: Steps and Considerations

Implementing an LSA program requires thoughtful planning and execution. Here’s a step-by-step guide to ensure a smooth rollout and maximized impact:

  1. Define Your Objectives:  Begin by clarifying what you aim to achieve with your LSA program - as each purpose will tie to one or more spending categories within the LSA that keeps employee-spending in line with the objective of the account. Whether it's enhancing employee well-being, attracting top talent, or improving retention rates, your goals will guide the structure of your LSA. There’s no shortage of categories, as it is not limited like a pre-tax account (e.g., FSA, HSA, HRA). It’s best to start with a baseline objective (e.g., Mental Health, Financial Wellbeing, Personal Development, etc.).
  2. Determine Budget and Allocation:  Establish how much the company can afford to allocate towards LSAs and decide on the amount each employee will receive. This will depend on your financial resources, the size of your workforce, and the competitive landscape in your industry. ThrivePass can assist you with redirecting your current budget towards an LSA.

Knowing the many categories and purposes the LSA can support, it may seem hard to determine the stipend amounts that would result in getting the most value out of the LSA. Surprisingly, the stipend doesn’t have to be incredibly high to have a meaningful impact on your administration, or your employees’ satisfaction and loyalty. We’ve found that the average stipend amount to see an increase in employee engagement ranges between $25-$50 per month, which is only $300-$600 per year per employee; minimal when compared to the cost of managing expenses or dealing with turnover.

  1. Select Eligible Expenses:  Decide which categories of expenses will be covered by your LSA. You might include wellness, education, home office setup, or family care. This selection should reflect your company values and the needs and preferences of your employees.

Once the categories are chosen, you’ll confirm the permitted stipend amount and funding cadence. If you’re aiming to use an LSA for work-related expenses and permitted personal expenses (e.g., wellbeing, household services, etc.), you have the option to break those into two LSA wallets ensuring adherence to each individual spending limit. The LSA administrator would include reimbursement processing and, if they’re a leading LSA provider, employees would be able to use their LSA funds in a Marketplace – which would include products and services based on those spending categories.

  • Average Costs of Common and Impactful Employee Expenses:5 6 7 8 9
  • Business Trip; $1,400
  • Remote Work Supplies; $194
  • Mental Health apps; $20/month
  • House Cleaning; $100-$300/month
  • Cell Phone Bill; $144/month
  1. Choose a Vendor:  Partner with a vendor that specializes in managing LSAs, like ThrivePass, to streamline the process. Look for vendors that offer flexible solutions, easy management, and comprehensive support.
  2. Communicate with Employees:  Develop a clear communication plan to introduce the LSA to your team. Highlight the benefits, how it works, and the types of expenses that are eligible. Ensure employees understand the value of the program and how to submit claims.
  3. Implement and Monitor: Roll out your LSA program and monitor its usage and impact through reporting features. Gather feedback from employees to understand what's working well and what could be improved. This will help you fine-tune the program over time.
  4. Evaluate and Adapt: Regularly review the program’s effectiveness against your initial objectives. Consider adjustments to the budget, eligible expenses, or vendor partnership based on employee feedback and changing needs.

Setting up an LSA program is not just about adding another benefit; it's about strategically investing in your employees' happiness and well-being. A well-planned LSA program can significantly enhance your employer brand, making your company a more attractive place to work. By following these steps and considerations, you can create a program that not only meets the diverse needs of your workforce, but also aligns with your organizational goals and values.

Why LSAs Are Gaining Popularity …

Employee benefits are evolving with a clear shift towards personalized and flexible offerings that cater to individual needs and preferences. This shift is largely driven by the changing expectations of the workforce, especially in the wake of global challenges that have reshaped our daily lives and work environments. LSAs stand out as a versatile solution, offering a range of advantages attracting both employers and employees alike.

Firstly, LSAs address a crucial aspect of workplace satisfaction—personalization. They empower employees to allocate funds towards benefits that truly matter to them, from health and wellness initiatives to professional development and family support. This level of autonomy enhances employee engagement and satisfaction, as it demonstrates an employer's commitment to supporting their individual well-being and aspirations.

Moreover, LSAs serve as a strategic tool for talent attraction and retention. In a competitive job market, offering unique and meaningful benefits can set an organization apart. LSAs provide a compelling reason for top talent to join and stay with a company, as they directly contribute to a positive and supportive work culture.

Additionally, LSAs alleviate the administrative burden often associated with managing traditional benefits programs. By simplifying the benefits administration process, Human Resource departments can focus on strategic initiatives that drive growth and employee well-being, further enhancing the organization's attractiveness as an employer.

Lastly, the flexibility of LSAs extends beyond the variety of benefits they cover. It also encompasses their adaptability to changing employee needs and preferences over time. This future-proofs an organization's benefits package, ensuring it remains relevant and valuable to the workforce.

LSAs in Action: Costs Covered and Employee Impact

The impact of LSAs on employees extends beyond the financial savings. These accounts contribute to a more engaged, productive, and satisfied workforce. A recent survey indicates that 70% of companies are now considering adding LSAs to their benefits package, a testament to the growing recognition of their value in recruitment and retention strategies10. The inclusion of LSAs signifies an employer's commitment to the well-being of their staff, a factor becoming increasingly critical in today's work environment. According to Gallup's findings, a mere 25% of employees felt their employer genuinely cared about their well-being, a perception that drastically impacts job search behavior, burnout rates, and advocacy for the company11. Employees who feel their employer is genuinely concerned about their well-being are 69% less inclined to look for new employment opportunities, 71% less prone to suffer from burnout, and are five times more likely to support and promote their company11. By implementing LSAs, employers can dramatically shift this perception, fostering a culture of care and support.

LSAs encourage a proactive stance towards health and well-being, empowering employees to invest in activities that enhance their physical health and emotional wellness, such as home gym equipment and mental health counseling. This not only boosts their productivity and happiness, but also aligns with Gallup's research, which suggests that teams feeling supported in their well-being report higher levels of engagement, profitability, and productivity, alongside lower turnover rates11.

The flexible and personalized nature of LSAs allows employees to tailor their benefits to meet their unique needs, promoting a healthier, more balanced lifestyle. This personalization is crucial for building loyalty and encouraging a long-term commitment to the company. By addressing the comprehensive spectrum of employee needs, LSAs not only contribute to financial savings, but also to amore engaged, productive, and satisfied workforce.

For the Greater Good (and the Employer Budget)

We’ve covered how LSAs can save time and money relative to administration costs and adhering to a designated budget, but how can they save employers money on employee retention efforts and optimizing the annual 2,080work hours? Simply put, providing LSAs for expenses attributed to their wellbeing shows employers care about their employees. Research shows “teams who are most likely to feel the organization cares about their wellbeing achieve higher customer engagement, profitability, productivity, lower turnover, and have fewer safety incidents”12. While work environments have changed and work-life-balance has become a focus; economic trends, among other personal pressures, lead to behavior that can condone burnout.

Standard Household Expenses:

Rent, travel, food, utilities, cell phone, childcare, pet, clothing, health insurance, monthly memberships, homeowners’ insurance, medical bills, student loans, credit card, retirement, car/transportation13

Looking at the long list of standard household expenses – it’s easy to understand how checking just one or two off this list can positively impact an employee’s wellbeing and provide peace of mind knowing they are being taken care of by their employer in more ways than with a standard salary. The average person spends at least one third of their life working – which also means a third of their life (or more) away from their family, friends or having self-care time. Employees “who believe their employer cares are 69% less likely to search for a new job, 71% less likely to experience burnout, and five times more likely to be a company advocate”13.This means less time recruiting, training or dealing with the incremental impacts of ‘quiet quitting’ due to disengagement. You may have recently seen the meme on LinkedIn how the Chief Experience Officer says ‘we can’t afford to’ and Human Resources responds, ‘we can’t afford not to’; that same concept applies to using LSAs to drive engagement given that the ‘reduction in turnover costs could more than make up for the costs of funding the LSA’3.

My Goodness! Why Isn’t Everyone Using LSAs?!

Many don’t understand the economics of offering and funding LSAs. As we say atThrivePass, the budget is already there, in fact, LSAs will reduce operating expenses and eliminate overflow of budgeted expenses. While this information walked through a few examples, at ThrivePass, we ensure your LSA setup aligns with your objectives. You can easily apply these concepts to your organization via the ThrivePass LSA Checklist. Start driving engagement, reducing costs and focusing time on your company goals!

Contact Us for the ThrivePass LSA Checklist!

To receive a copy of the ThrivePass LSA Checklist or learn more about Lifestyle Spending Accounts (LSAs), please contact


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Kawamoto,D. (2023, December 13). What the rise of lifestyle spending accounts means forHR. Human ResourceExecutive.

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2ForbesAdvisor – Online Article

Haan,K. (2023, June 12). Remote Work Statistics And Trends In 2024. Forbes Advisor.

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3Mercer- Website article

Domaszewicz,S., & Smith, D. (2022, May 18). Lifestylespending accounts: Your top questions answered.Https:// Retrieved March 25, 2024

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5TravelBank- Generative AI article

TravelBank.(2024). TravelBank.

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6SHRM –Website article

Miller,S., CEBS (2020, September 11). Is It Time for Employers to Reimburse RemoteWorkers' Expenses? SHRM.

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7CNBCselect – Website article

Holzhauer,B. (n.d.). Cut your cellphone bill up to 50% with these 4 tips. CNBC Select. Retrieved March 25, 2024  

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Ayer,H., & Biddle, A. (2024, February 22). How Much Does Professional House Cleaning Cost? Angi. Retrieved March 25, 2024

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9 CNET– Website article

T.L. (2024, January 1). Best Mental Health Apps of 2024. CNET.

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11, 12GALLUP Workplace –Website article

Harter,J. (2022, March 18). Percent Who Feel Employer Cares About Their WellbeingPlummets. 

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Quicken. (2024). Quicken.

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