The Ultimate Guide to Wellness Lifestyle Spending Accounts (LSAs): The Future of Employee Benefits

Introduction: Why Employee Benefits Are Evolving

The landscape of employee benefits is shifting—fast. While traditional perks like healthcare, PTO, and commuter benefits still matter, they no longer meet the expectations of today’s workforce.

Employees want benefits that reflect the full scope of their lives—not just their work.

Enter the Wellness Lifestyle Spending Account (LSA). A modern, flexible, and employee-centric solution designed for the way we live, work, and take care of ourselves in 2025.

What Is a Wellness Lifestyle Spending Account (LSA)?

A Wellness Lifestyle Spending Account (LSA) is a taxable, employer-funded stipend that allows employees to spend on a wide variety of wellness-related products and services.

Think of it as a choose-your-own-adventure wellness benefit.

What Employees Can Use an LSA For:

• 🏋️‍♂️ Gym memberships, fitness classes, personal training

• 🧠 Therapy, mental health apps, life coaching

• 🥗 Nutritionists, healthy meal services, supplements

• 🧘‍♀️ Meditation apps, yoga retreats, mindfulness classes

• 🍼 Childcare or elder care support

• 🎨 Creative hobbies like painting or music lessons

• ✈️ Travel, nature retreats, digital detoxes

• 💻 Financial wellness or personal development courses

✅ Important Note: LSAs are taxable benefits, which makes them far more flexible than HSAs or FSAs. They’re not subject to IRS restrictions and can be tailored to your company’s goals.

Why Are Companies Offering LSAs?

The top-performing organizations in the world recognize that benefits aren’t just a cost center—they’re a talent magnet, a culture builder, and a retention tool.

LSAs align with several key trends:

1. Demand for Personalization

Employees want more than one-size-fits-all benefits. LSAs let them choose what’s meaningful—whether that’s a ClassPass membership or a meditation app.

2. Focus on Mental Health & Burnout

Burnout is at an all-time high. LSAs allow employers to invest directly in employee mental wellness—beyond EAPs.

3. Rise of Remote & Hybrid Work

With distributed teams, location-based perks (e.g., on-site gyms or lunch stipends) no longer make sense. LSAs work anywhere.

4. Inclusion and Equity

Not everyone needs the same type of support. LSAs are inherently inclusive—empowering employees of all backgrounds to access wellness on their terms.

Companies Leading the Way with LSAs

These companies are ahead of the curve—and it’s paying off:

Company	How They Use LSAs
Shopify	Offers $5,000 in annual wellness and personal development stipends.
Notion	Reimburses for mental health, fitness, and learning platforms.
Salesforce	Rolled out remote wellness stipends during COVID-19, continuing today.
Sephora	Uses lifestyle reimbursements to increase benefit accessibility across store teams.
Thousands of small to mid-sized companies (10-999 employees)	Offer $50-$100 per month in flexible wellness stipends.

These companies use LSAs not as a perk, but as a pillar of culture and people strategy.

LSA vs FSA vs HSA: What’s the Difference?

One of the most common questions we hear: “Isn’t this just another version of a Flexible Spending Account?”

Nope—and here’s why:

Feature	LSA	FSA	HSA
Tax-advantaged?	❌ No (taxable benefit)	✅ Yes	✅ Yes
Employee ownership?	🚫 Employer-defined	🚫 Employer-owned	✅ Employee-owned
Roll over allowed?	✅ Flexible policies	🚫 Limited	✅ Yes
Qualified expenses	🌱 Wellness, lifestyle, travel, hobbies	🏥 Medical, dental, vision	🏥 Medical (must pair with HDHP)
Accessibility	🌍 Inclusive for all	🛑 Must have qualifying insurance	🛑 Must have HDHP plan

TL;DR:  LSAs are more flexible, easier to implement, and designed for employee well-being — not just medical expenses.

How LSAs Benefit HR and People Teams

If you’re managing HR at a growing company, you know how hard it is to scale personalized benefits while avoiding admin chaos.

Here’s how LSAs help:

✅ Streamlined Administration

Instead of juggling 10+ point solutions, you can consolidate wellness, fitness, and learning budgets into a single, unified stipend.

✅ Budget Predictability

LSAs are funded at a flat rate (e.g., $100/month per employee), helping you stay within budget and avoid unexpected overages.

✅ Measurable ROI

Platforms like Holisticly offer real-time dashboards showing usage, trends, and engagement—so you can track what’s working.

✅ DEI-Forward

LSAs promote equity by supporting diverse needs—whether someone is battling burnout, managing chronic illness, or prioritizing their health and wellness.

Why Employees Love LSAs

When you give employees freedom to choose how they invest in themselves, it builds trust, loyalty, and retention.

Top reasons employees value LSAs:

• Personal relevance: Spend on what matters to you, not what your company thinks you should want

• Wellness-focused: Encourages proactive care for body and mind

• No red tape: Clear guidelines and options, no confusing insurance rules

• Cultural alignment: Signals that your employer supports your whole self

In surveys from companies using LSAs, over 80% of employees report higher satisfaction and greater engagement with their benefits.

How to Launch an LSA Program in 3 Steps

Launching an LSA doesn’t require months of planning or complex benefit redesigns.

Here’s how most Holisticly clients get started:

Step 1: Define Your Strategy

Decide what you want your LSA to support. Examples:

• Wellness only

• Wellness + perks

• Everything except travel

• Fully open lifestyle allowance

Step 2: Set a Monthly or Annual Budget

Common plans:

• Monthly Stipend: $50–$100 per month

• Annual Stipends: $600-$1,200 per year

• Plus $100-$300 additional annually for rewards and recognition

Step 3: Use a Platform Like Holisticly

Holisticly lets you:

• Launch in <1 month

• Set eligibility, categories, and rules

• Integrate with your HRIS or payroll system

• Offer employees a user-friendly dashboard

• Get reporting and insights at your fingertips

Frequently Asked Questions (FAQ)

❓ Is an LSA a tax-free benefit?

No. LSAs are taxable income to employees, which is what allows them to be so flexible. You don’t have to limit them to IRS-approved medical expenses.

❓ Can I set limits on what employees spend their LSA on?

Yes! Employers have full control over:

• Eligible categories (wellness only, or broader)

• Month-to-month rollover rules

• Geographic or team-level access

❓ What’s the average LSA stipend amount?

We typically see:

• $50–$100/month per employee,

• Or $500–$1,200/year

• Higher stipends are often tied to tenure, role level, or performance incentives.

❓ Do LSAs replace our existing wellness programs?

They can—but don’t have to . Many companies consolidate vendors into an LSA, giving employees choice while reducing internal admin work.

❓ What happens to unused LSA funds?

Employers decide. Some:

• Allow rollovers to the next month or year

• Reset funds monthly to encourage regular use

❓ How does Holisticly support LSA administration?

Holisticly integrates with your HRIS or payroll system to automate eligibility, and:

• Automates program administration

• Tracks spending by category

• Provides employees a simple, easy to use experience

• Handles compliance and tax reporting

Final Thoughts: LSAs Are the Future of Employee Benefits

We’re living in a world where one-size-fits-all no longer fits anyone. Wellness LSAs offer a smarter, simpler, and more scalable way to show your employees you care.

They don’t just support well-being—they build culture, boost belonging, and increase retention.

If your benefits program is feeling outdated, inflexible, or underused, a Lifestyle Spending Account might be exactly what your team needs.

Want to Launch Your LSA program in Under a Month?

Holisticly makes it easy. With HRIS integrations, smart automation, and real-time insights, we help People teams create LSAs that employees actually use and love.

🎁 Get started with $250 in Credits 💬 Book a demo →

For more information on Holisticly, visit our website.