Establishing an LSA
LSA funds, while not tax-advantaged, will avoid the normal constraints imposed by tax-advantaged accounts such as an HSA or FSA. Because of this, LSA is both easy to set up and offers a wide variety of uses beyond the typical medical and dental expenses. Here is a quick overview of what it takes to set one up.
Employer Established Budget and Plan Design. The first decision is how much the company has budgeted for this benefit by employee class. A general rule of thumb is to always offer the same benefit to each worker in a particular class. The second decision is to determine when the monies will be available for reimbursement.
- How soon will my employees have access to their LSA contributions?
If $250 is the annual employer contribution towards their LSAs, the entire amount could be available to employees immediately.
Or, if you prefer the contribution to be distributed over the year you can spread the contributions out on a scheduled basis. i.e., per payroll, monthly, etc.
- Do my employees lose unused funds at the end of the year, or do they roll over?
Employers have the choice as to whether they’ll allow the funds to roll over to the next year or not. If you are not sure which is the best option, contact Flyte today and our team will gladly assist you with the setup process.
Tailor To Their Needs. Now that you have a budget and a plan for the money, now it’s time to tailor the funds to the needs of your staff. Some employers have a broad view of how that money can be used, and others have a very specific view.
Some employers will choose specific expenses such as fitness or nutrition expenses as the only expenses eligible under the benefit, while others believe the money is best spent on whatever the larger menu of benefits (fitness class, student loads, home expenses, or a leadership class). In any of these scenarios, employers have the flexibility to point that money in the direction they believe to be of the best impact on their employees’ lives.
Communicate. LSAs are an emerging employee benefit, so it’s safe to say that many employees have no clue what they are, or how they work. And if you’ve been around benefits for any amount of time, you know full well how challenging it can be to communicate timeless benefits like a medical or dental plan. We have found that the simpler the better when it comes to benefits, so make sure your plan design is simple and the information used to describe the benefit is even simpler.
Flyte offers the tools, resources, and support to provide a simple and easy-to-use benefit like a Lifestyle Spending Account. The Flyte Benefits App, for example, is a great tool that employees use to discover how their LSA works, file their claims, and chat with a member service specialist 24/7.