Frequently asked questions related to Lifestyle Spending Accounts

How do Lifestyle Spending Accounts (LSA's) differ from traditional health benefits?

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.

What is the typical amount employers contribute to Lifestyle Spending Accounts (LSA's)?

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.

Are Lifestyle Spending Account (LSA) funds taxable to the employee?

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.

What expenses can be covered under a Lifestyle Spending Account (LSA)?

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.

Why are Lifestyle Spending Accounts (LSA's) becoming popular in Canada?

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.

Still have questions?

Please contact our office and we'll be happy to address any questions you may have.

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