Ford Motor Company recently announced a $500 annual Wellness Lifestyle Spending Account (LSA) for wellness-related expenses.
The new benefit follows a Forbes article earlier this year that pointed out that internal employee well-being programs don't usually improve employee mental health but that giving employees a way to pay for care and services elsewhere can make a difference. Also according to a wellness survey, 49% of employees report feeling financial stress and spend 3-4 working hours each week dealing with related issues. LSAs give employers a tool they can use to support the financial needs of their employees.
The Ford LSA program will be accessible starting Spring 2025 and will payout $125 per quarter to eligible employees. This benefit will replace Castlight effective January 1, 2025 which will no longer be available to Ford employees and their families. If you have earned any points through Castlight, you should redeem them for gift cards or sweepstake entries before December 31st.
What are LSAs
LSAs are a relatively newer benefit option that companies are beginning to offer. Unlike traditional spending accounts such as Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), LSAs do not come with tax advantages. Employees can only access reimbursements after making qualifying purchases. Unlike FSAs, LSA funds aren’t deposited into an account that must be used by the end of the year, nor are they portable like HSAs, which allow employees to retain their funds when leaving the company.
A big appeal of LSAs is their broad range of wellness expenses covered ranging from fitness classes, gym memberships, work-from-home expenses, childcare services,food delivery programs, pet expenses, education, home office equipment, or other related items that promote both physical health and mental health.
Below are the common LSA categories that employers build into their LSA plans, including allowances and reimbursement for expenses related to:
- Physical health: gym memberships, virtual fitness subscriptions, personal trainers, home exercise equipment, nutritional counseling and cooking classes
- Mental health: subscriptions and services involving mindfulness, meditation, personal growth and life coaching
- Family-related services: child and elder care, adoption, surrogacy and infertility resources
- Financial needs: student loan assistance, financial planning services, income tax preparation, estate planning and utility payment assistance
- Catch-all categories: various interests (e.g., charitable giving) and incidentals (e.g., commuting costs)
These are only some examples of how employers are using LSAs to support employees' needs, and they're constantly evolving.
Taxation of LSA Benefits
LSAs are post-tax benefits for employees and tax-deductible business expenses for employers, so they will affect each party’s taxes differently. Employees must pay income taxes on their LSAs, but employers can choose how these taxes are calculated. Employers can choose to withhold taxes based on the total amount available via the LSA even if employees don’t use it all, or they can withhold based on the amounts employees actually reimburse.
Feel free to reach out to myself and the team at Savvy for any questions.
Meet
Alex Austin
Hello there 👋🏼 I’m Alex Austin a CERTIFIED FINANCIAL PLANNER™ at Savvy, specializing in financial planning. I like to consider myself to be the GPS in a client’s financial life so they can reach their financial and retirement destination with the most efficient and optimal route.
New Benefit for Ford Employees
Ford Motor Company recently announced a $500 annual Wellness Lifestyle Spending Account (LSA) for wellness-related expenses.
The new benefit follows a Forbes article earlier this year that pointed out that internal employee well-being programs don't usually improve employee mental health but that giving employees a way to pay for care and services elsewhere can make a difference. Also according to a wellness survey, 49% of employees report feeling financial stress and spend 3-4 working hours each week dealing with related issues. LSAs give employers a tool they can use to support the financial needs of their employees.
The Ford LSA program will be accessible starting Spring 2025 and will payout $125 per quarter to eligible employees. This benefit will replace Castlight effective January 1, 2025 which will no longer be available to Ford employees and their families. If you have earned any points through Castlight, you should redeem them for gift cards or sweepstake entries before December 31st.
What are LSAs
LSAs are a relatively newer benefit option that companies are beginning to offer. Unlike traditional spending accounts such as Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), LSAs do not come with tax advantages. Employees can only access reimbursements after making qualifying purchases. Unlike FSAs, LSA funds aren’t deposited into an account that must be used by the end of the year, nor are they portable like HSAs, which allow employees to retain their funds when leaving the company.
A big appeal of LSAs is their broad range of wellness expenses covered ranging from fitness classes, gym memberships, work-from-home expenses, childcare services,food delivery programs, pet expenses, education, home office equipment, or other related items that promote both physical health and mental health.
Below are the common LSA categories that employers build into their LSA plans, including allowances and reimbursement for expenses related to:
- Physical health: gym memberships, virtual fitness subscriptions, personal trainers, home exercise equipment, nutritional counseling and cooking classes
- Mental health: subscriptions and services involving mindfulness, meditation, personal growth and life coaching
- Family-related services: child and elder care, adoption, surrogacy and infertility resources
- Financial needs: student loan assistance, financial planning services, income tax preparation, estate planning and utility payment assistance
- Catch-all categories: various interests (e.g., charitable giving) and incidentals (e.g., commuting costs)
These are only some examples of how employers are using LSAs to support employees' needs, and they're constantly evolving.
Taxation of LSA Benefits
LSAs are post-tax benefits for employees and tax-deductible business expenses for employers, so they will affect each party’s taxes differently. Employees must pay income taxes on their LSAs, but employers can choose how these taxes are calculated. Employers can choose to withhold taxes based on the total amount available via the LSA even if employees don’t use it all, or they can withhold based on the amounts employees actually reimburse.
Feel free to reach out to myself and the team at Savvy for any questions.
Meet
Alex Austin
Hello there 👋🏼 I’m Alex Austin a CERTIFIED FINANCIAL PLANNER™ at Savvy, specializing in financial planning. I like to consider myself to be the GPS in a client’s financial life so they can reach their financial and retirement destination with the most efficient and optimal route.
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