Caring in your health and well-being is so far more than simply seeing your doctor. Perhaps you’re employed out in a gym commonly to maintain your body healthy, otherwise you prefer to take a yoga class to clear your mind. Often, some of these expenses aren’t covered by your medical insurance, and you will have to pay for them yourself. That is where a life-style spending account (LSA) may have the option to assist.
Below, we’ll go over lifestyle spending accounts – how they work, the expenses they cover, how they differ from a versatile spending account (FSA) and far more.
You may be accustomed to other employer-sponsored accounts, like flexible spending accounts (FSAs), health savings accounts (HSAs) and health reimbursement accounts (HRAs). In some ways, LSAs are similar, but what you should utilize them for is exclusive.
LSAs address your well-being beyond the doctor’s office or pharmacy by providing money you should utilize on things that help improve your physical, mental and financial health. In this manner, they complement other accounts in addition to your medical insurance plan advantages.
LSAs are 100% funded by your employer. Generally, your employer determines the quantity they’re going to contribute to your LSA. There’s no limit to what they’ll contribute, and the quantity varies from employer to employer. But on average, most employers contribute from $500 to $2,000 every yr.
Your employer also defines eligible expenses. This implies they’ll determine what you may spend your LSA funds on and what you may’t. Typically, eligible expenses include categories not covered by your medical insurance or other employer-sponsored spending accounts.
For instance, in case you see a therapist since you’ve been diagnosed with depression, you most likely wouldn’t have the option to make use of your LSA to cover your copay. But it’s possible you’ll have the option to make use of your LSA to reimburse the price of a mindfulness app that helps with mental well-being. Other categories that an LSA covers may include health and well-being, nutrition, and fitness. But since LSAs are so flexible, there could possibly be many more categories included.
One vital note: Unlike other special reimbursement accounts, LSA money is taken into account taxable. You’ll pay taxes either when the funds in your LSA change into available to you or whenever you actually use them – check along with your employer to see how your LSA will probably be taxed. Regardless that the cash is taxable, you’ll still pay less whenever you use your LSA than you’ll pay out of pocket.
Lifestyle spending accounts can assist you have a greater work-life balance, help improve your mental and physical health, and more. Other advantages of an LSA include:
- LSAs are typically flexible – With an LSA, you may deal with the things that matter most to your personal health and well-being. For instance, you may determine if you desire to use your funds for a fitness class one month, after which take a cooking class the following month. Inside your employer’s spending categories, how you employ your funds is as much as you.
- LSAs are easy to grasp and use – Lifestyle spending accounts are frequently straightforward regarding what you should utilize funds for and tips on how to get reimbursed. So it’s easy to make use of this employer profit to its full advantage.
- LSAs can balance out your insurance coverage – A way of life spending account complements your insurance, since not all expenses related to your health are typically covered by your health plan. Which means LSAs will help reimburse more of your well-being expenses than insurance alone.
LSA-eligible expenses vary from employer to employer but often include things like:
- Physical well-being – Gym memberships; fitness classes; exercise equipment; fitness trackers; race entry fees; and ski, golf and other activity passes
- Financial well-being – Financial planning services, financial seminars and identity theft services
- Emotional well-being – Nonmedical counseling; spiritual retreats; well-being classes corresponding to art and cooking; annual local, state and national park passes; and sporting licenses
Other things that could be covered include home office equipment, grocery and meal delivery, charitable donations, and more. As traditional medical insurance rarely covers some of these things, an LSA will help fill within the gaps.
Lifestyle spending account (LSA) vs. flexible spending account (FSA)
LSAs and FSAs generally have a lot of differences. For instance, FSAs are limited to specific medical expense categories, while LSAs are likely to allow for more selection. Here’s an outline of key LSA and FSA differences:
LSA | FSA | |
---|---|---|
What’s covered | Nonmedical activities that help improve your physical, financial and emotional well-being. Eligibility determined by your employer. | Qualified medical expenses (PDF). Eligibility determined by the IRS. |
Funded by | Your employer | You |
Tax treatment | Taxable | Not taxable |
Contribution limits | None – your employer can contribute as much or as little as they need | Annual limits set by the IRS |
Annual rollover | Varies by employer | Varies by employer, as much as an IRS-defined limit |
Learn how to submit claims along with your LSA
Often, reimbursement along with your LSA account is pretty straightforward. You’ll likely have the option to submit a claim online or through an app, depending in your employer or who’s administering your LSA.
You’ll fill out a form with details about your expenses, provide receipts for the services or products purchased, after which submit every part for reimbursement. HealthPartners members with LSAs can submit a claim online or use the HealthPartners mobile app for Android and iOS.
In case your claim is approved, reimbursement funds are sent on to your bank account in case you’ve signed up for direct deposit, or by check. Some LSAs may charge fees for check reimbursements.