Lifestyle Spending Account: What It Covers and the December 31 Cutoff
A lifestyle spending account is money your employer gives you for wellness, like a gym, classes or gear. It is taxable, your employer sets what counts, and it has two dates: spend by year end, then submit receipts by the claims deadline.
A lifestyle spending account, or LSA, is money your employer sets aside for you to spend on things like a gym membership, fitness classes, workout gear or other wellness costs. Your employer decides how much you get and what counts. Unlike an FSA or HSA, the money is taxable when you use it. And most plans have two dates that matter at the end of the year: the last day to spend the money, often December 31, and a later deadline to send in the receipts.
What a lifestyle spending account is
Most pages about LSAs are written for HR teams choosing a vendor. This one is for the person who has the account and a balance they have not touched.
An LSA is a benefit your employer funds and designs. There is no IRS rule that sets how much goes in, so amounts vary a lot: HRMorning gives examples of $250, $1,000 and $2,500 a year at different companies. Some employers load the full amount on January 1, often on a benefits debit card. Others reimburse you after you send a receipt.
What it covers is up to your employer. SHRM lists typical expenses such as gym memberships, yoga classes, athletic wear, nutrition counseling and life coaching. Some plans add things like financial coaching or home office gear. The only list that counts is the one in your plan.
LSA vs FSA vs HSA
These three get mixed up because they all sound like spending accounts. They work very differently.
In plain words:
| LSA | Health FSA | HSA | |
|---|---|---|---|
| Who funds it | Employer | You, pre-tax | You, sometimes employer |
| Covers | Wellness list set by employer | Medical costs | Medical costs |
| Taxed when used | Yes | No | No |
| Unused money | Employer's rule | Usually lost after grace period or carryover | Stays in your account |
If you also have a health FSA with money left, it has its own deadline. Our guide to the FSA deadline covers it; do not mix the two up: the lists are different, and a gym membership usually is not an FSA expense.
Why the money is taxable
SHRM puts it simply: LSA money is taxable as income to employees when they spend it, unlike FSAs, HSAs and HRAs. In practice your employer adds the amount you were reimbursed to your wages, so it shows up on your pay stub and your W-2, with tax withheld. Money you do not spend is not taxed. So a $500 LSA is worth less than $500 after tax, but it is still money you would not otherwise have.
The two dates before the cutoff
Most LSAs run on a plan year, often the calendar year. Look for two dates in your plan documents.
The last day to spend. Purchases have to happen within the plan year. For a calendar-year plan that is December 31.
The claims deadline. After the year ends, many plans give you a few weeks to send in receipts for purchases you already made. Every plan sets its own. One example: Forvis Mazars' LSA gives employees until January 31 to submit claims for the year before.
What happens to money left after that is also your employer's call. HRMorning notes that some plans forfeit unused funds. If yours does, December is the month to use it.
How to use what is left before December 31
- Find your balance and your plan's list. Both are usually on the vendor's site or app. Check the exact wording: "fitness equipment" may or may not include a smartwatch.
- Find both dates. The last day to spend and the claims deadline, from the plan documents or the vendor's FAQ.
- Spend on things on the list that you would buy anyway. A few months of a gym or class pass, running shoes, a bike repair. Not something you will not use.
- Keep every receipt. Even with a debit card, many plans ask for a receipt to show what you bought.
- Submit claims as you go, not all at once in January.
For more on keeping receipts in one place, see how to keep receipts for reimbursement.
Let Tracy keep the receipts and the deadline
LSA money gets lost in the small steps: the receipt you meant to upload, the claims deadline nobody reminded you about. Tracy, the assistant in dEssence, can carry those for you.
Send Tracy the plan PDF or a screenshot of the plan page in Telegram, Chrome or on the web. She reads both dates and keeps them. Then send each receipt as you buy: a photo, a PDF, or an order confirmation. She keeps them together with the amount and the store. Ask her to remind you before the claims deadline, and she comes back with the receipts you saved. Ask "what did I buy with my LSA this year?" and she answers from what you sent.
She does not log into your benefits vendor or submit claims. You upload them; she makes sure you have everything, and that you remember to do it.
Frequently asked questions
What is a lifestyle spending account?
A lifestyle spending account is employer-funded money for wellness costs, such as gym memberships, fitness classes, workout gear or nutrition counseling. Your employer sets the amount and the list of what counts.
Is a lifestyle spending account taxable?
Yes. Unlike an FSA or HSA, what you spend from an LSA is taxable income. Your employer usually adds it to your wages and withholds tax, so it shows on your pay stub and W-2. Money you do not spend is not taxed.
What happens to unused LSA money?
It depends on your plan. Some plans forfeit unused money at the end of the plan year. The rule is up to your employer and is written in your plan documents.
What is the difference between an LSA and an FSA?
An FSA is your own pre-tax money for medical costs. An LSA is your employer's money for wellness costs, and it is taxed. The lists of what each one covers are different, and so are the deadlines.
How long do I have to submit LSA receipts?
Each plan sets its own claims deadline, usually some weeks after the plan year ends. One employer plan gives until January 31 for the year before. Check your plan documents for yours.