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Study: 75% of large employers offer lifestyle spending accounts

Written on Aug 31, 2023

Amidst the ongoing challenge to attract and retain talent, employers are providing employees with increasingly flexible benefits. 

Traditional employee spending accounts, such as flexible spending accounts (FSAs) and health savings accounts (HSAs), remain prevalent. 

However, according to a study, a newer type of account — “lifestyle spending accounts,” or LSAs — has quickly become the most common employer-funded prerequisite. (Unlike FSAs and HSAs, LSAs are categorized as perks because they’re funded solely by employers and are considered taxable income for employees.) 

LSAs have been around for a few years, but the current low unemployment rates have focused attention on them as hiring and retention tools. 

LSAs differ from HSAs and FSAs in another key aspect — employees can use them for many types of spending needs, as determined by the employer. These could include health-related purchases such as gym memberships, nutritionists, and health-care coaching; as well as spending on, for example, learning and development, family activities, commuting, pets or even charitable giving. 

Benepass found that 51% of the studied employers offered LSAs this year. That was a steep uptick from 37% in 2022. 

The survey also revealed 51% of the studied employers offered LSAs this year. That was a steep uptick from 37% in 2022. (Among popular pre-tax spending programs, 86% of the employers offered health FSAs, 77% offered HSAs and 63% offered dependent care FSAs.) 

Last year’s most-offered perk category, fitness and wellness programs, also became more prevalent in 2023, but rose just four percentage points, to 45% of studied companies. Some companies have rolled their previous stand-alone fitness and wellness programs into their LSAs. 

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