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Lifestyle Spending Accounts
Support for your employees so they can proactively and holistically manage their personal health and well-being.
What is Lifestyle Spending Account?
A Lifestyle Spending Account (LSA) in Canada is a versatile and employee-centric benefit designed to enhance health and wellness. It empowers employees with the freedom to allocate funds towards a wide range of health and wellness-related expenses, according to their individual needs and preferences.
LSAs cover a diverse array of services and products. This includes, but is not limited to, fitness memberships and equipment, nutritional supplements, activities promoting family leisure and well-being, personal and professional development courses, and services aimed at improving work-life balance. The goal is to support a holistic approach to an employee's health and wellness journey.
Known by various names, including Wellness Spending Account and Personal Spending Account (PSA), LSAs are a testament to an evolving workplace culture that values the overall well-being of its workforce. It's important to note that while LSAs offer considerable flexibility, they are considered a taxable benefit in Canada, which may affect an employee's taxable income.
Flexible Spending
Enable employees to tailor health and wellness spending to their personal needs.
Improved Well-being
Contribute to better physical, mental, and emotional health for employees.
Easy Online Management
Modern LSAs are user-friendly with minimal paperwork, easing management for businesses.
Workforce Appeal
Offering LSAs can boost employee satisfaction and loyalty, aiding in workforce retention.
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Speak with a professional advisor who can help.
Ideal Candidates for a Lifestyle Spending Account
Health-Conscious Employers: Ideal for businesses aiming to cultivate a holistic approach to employee health and wellness.
Seeking to Attract and Retain Talent: An effective tool for attracting new talent and retaining current employees by offering a unique and desirable benefit.
- Seeking to Boost Productivity and Engagement: Supports a healthier, happier workforce, which naturally leads to increased productivity and engagement.
- Seeking to Offer Unmatched Flexibility: Provides a flexible and adaptable benefit, allowing employees to tailor it to their individual health and wellness needs.
- Seeking to Offer Enhanced Benefit Packages: Elevates your benefits offering beyond standard options, adding value to your overall employee compensation package.
- Alternative to Cash Compensation: Perfect for employers comfortable with offering LSAs as part of compensation, especially in workplaces where employees value health benefits over direct cash incentives.
Types of Eligible Expenses Covered by a Lifestyle Spending Account (LSA)
A Lifestyle Spending Account (LSA) offers a broad spectrum of possibilities for enhancing your overall well-being and personal development. While the following categories are popular, remember that LSAs can be tailored with custom categories to meet diverse needs.
Fitness and Recreation: This includes gym memberships, various fitness classes, and recreational activities. It also covers sports equipment for those looking to stay active and engaged in physical activities.
Family Leisure: LSAs can fund family-oriented leisure activities, such as visits to zoos, amusement parks, museums, and engaging in family-friendly activities like bowling.
Extended Health: These accounts support a range of health-related services, including weight loss programs, consultations with alternative health practitioners (like Shiatsu therapists or herbalists), and purchasing health monitoring devices such as blood pressure monitors. They also encompass holistic healing approaches.
- Transportation: LSAs can cover daily commuting expenses, including public transit passes and parking fees, easing the financial burden of getting to and from work.
- Professional Development: Invest in your career and personal interests through continuous learning. This can include educational courses, hobby classes, attending conferences, and covering tuition fees (along with necessary books and supplies).
HSA vs LSA - what's the difference?
Health Spending Accounts (HSA) and Lifestyle Spending Accounts (LSA) offer complementary benefits to employees. HSAs provide tax-free coverage for traditional health expenses, while LSAs, though taxable, support a wide range of lifestyle and well-being activities. Together, they create a holistic employee benefits package, addressing immediate health needs and promoting long-term wellness, benefiting both employees and employers.
Health Spending Account (HSA)
A Health Spending Account (HSA) is a strategic tool for businesses to support their employees' health and dental costs. Primarily, HSAs focus on covering expenses related to services provided by licensed healthcare practitioners and pharmacies.
For businesses, HSA expenses are tax-deductible, while for employees, they represent a tax-free benefit, making them financially advantageous for both parties.
Lifestyle Spending Account (LSA)
A Lifestyle Spending Account (LSA), as the name suggests, is designed to assist employees with expenses that enhance their lifestyle and promote proactive well-being. This includes a broader range of activities and services not strictly limited to healthcare.
From a fiscal standpoint, LSA expenses are tax-deductible for the corporation, similar to HSAs. However, for employees, these expenses are treated as a taxable benefit, akin to receiving additional income.
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Frequently asked questions
Answers to key questions about Lifestyle Spending Accounts
LSAs are gaining popularity due to their flexibility in addressing diverse employee needs and lifestyles. They offer a way for employers to enhance compensation without permanently increasing base pay, and they can be tailored to support specific groups, such as those with unique family or health needs.
Employers have discretion over the expenses covered, which can range widely. Categories may include wellness, fitness, travel, entertainment, financial services, transportation, education, and expenses related to kids and pets. The specific inclusions are often based on employee interests and needs.
Yes, LSAs are generally considered a taxable benefit. The taxation may occur when the funds are first available to the employee or upon actual reimbursement for eligible expenses, depending on the structure of the LSA and tax regulations.
The contribution varies based on the employer's goals and budget, typically ranging from $500 to $2,000 annually. Some employers may offer higher amounts for specific, less utilized expenses like adoption or surrogacy support.
LSAs are more flexible than traditional health benefits, allowing for a broader range of wellness-related expenses. Unlike health benefits that typically cover specific medical and dental expenses, LSAs can include costs like gym memberships, educational courses, or even pet care, depending on the employer's chosen coverage.
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