Can I use a Lifestyle Spending Account (LSA) for group fitness programs?

Are you curious about using a Lifestyle Spending Account (LSA) to pay for your group fitness classes? You're not alone. Many employees are exploring this option to support their well-being goals.

LSAs offer a flexible way to spend on a variety of wellness expenses, including group fitness programs. However, it's important to understand how these accounts work and what expenses are eligible.

In this article, we'll dive into the details of LSAs and explore how you can use them to cover the costs of your favorite group fitness activities.

What is a Lifestyle Spending Account (LSA)?

A Lifestyle Spending Account (LSA) is an employer-funded, post-tax spending account designed to support employee well-being. Unlike traditional benefits such as health insurance or retirement plans, LSAs provide employees with more flexibility and choice in how they spend their wellness dollars.

LSAs allow employees to spend on a wide range of wellness expenses, including group fitness programs. Employers set the parameters for eligible expenses and contribution amounts, which can vary depending on the company's budget and priorities.

Examples of LSA-eligible expenses

LSAs can cover a broad spectrum of wellness activities and products. Here are some examples of expenses that may be eligible under an LSA, depending on your employer's plan:

Gym memberships and classes: Many LSAs cover the cost of gym memberships, as well as individual classes such as yoga, Pilates, spin, and dance.

Sports leagues and clubs: If you enjoy team sports or competitive activities, your LSA may cover the cost of joining a local sports league or club, such as soccer, hockey, climbing, or pickleball.

Specialized fitness programs: LSAs can also support participation in specialized fitness events or programs, such as marathons, triathlons, and ski or golf passes.

Digital fitness subscriptions: With the rise of at-home fitness, some LSAs now cover the cost of digital fitness subscriptions, such as Peloton or Beachbody on Demand.

How do Lifestyle Spending Accounts work?

LSAs are relatively straightforward to use once you understand the basic process. Here's a breakdown of how LSAs typically work:

Employer sets eligibility rules and contribution amounts

Your employer determines which expenses are eligible for reimbursement under the LSA and how much they will contribute to your account. Contribution amounts can vary widely, with some employers offering $500-$850 annually per employee for physical wellness expenses.

Employees submit claims for reimbursement

When you incur an eligible expense, such as paying for a group fitness class, you submit a claim for reimbursement. This usually involves providing a receipt or proof of payment, either through a direct debit card payment, mobile app claim with a photo of the receipt, or a traditional claim submission process.

LSA funds are considered taxable income

It's important to note that unlike some other employee benefits, LSA funds are typically considered taxable income. This means that any reimbursements you receive may be subject to income tax withholding and payroll taxes. However, the specific tax implications can vary depending on your employer's plan and your individual tax situation.

Benefits of using an LSA for group fitness

Using an LSA to pay for group fitness programs offers several advantages:

Flexibility: LSAs allow you to choose the activities that best align with your interests and goals, whether that's joining a local sports league, attending boutique fitness classes, or using an online fitness platform.

Cost savings: By using LSA funds to pay for group fitness expenses, you can reduce your out-of-pocket costs and make the most of your employee benefits.

Improved well-being: Participating in group fitness activities can have numerous benefits for your physical and mental health, including increased motivation, social connection, and overall well-being. LSAs make it easier to prioritize these activities as part of your wellness routine.

Tips for maximizing your LSA for group fitness

To get the most value from your LSA when it comes to group fitness expenses, consider these tips:

Review your plan's guidelines: Always check your employer's specific LSA plan details to confirm which expenses are eligible and any limits or restrictions that may apply.

Save your receipts: When submitting claims for reimbursement, be sure to keep itemized receipts that clearly show the purpose of the expense, such as "yoga class fees" or "sports league dues."

Explore alternative options: If your desired group fitness expense isn't covered under your LSA, check if your plan allows for related expenses, such as fitness equipment or wearable fitness trackers, that could support your participation in group activities.

Examples of group fitness programs covered by LSAs

LSAs can cover a wide variety of group fitness programs, giving you the flexibility to choose activities that align with your interests and wellness goals. Here are some examples of group fitness expenses that may be eligible under your LSA:

Gym memberships and classes: Many LSAs cover the cost of gym memberships, as well as group classes such as yoga, Zumba, Pilates, and dance.

Sports leagues: If you enjoy team sports, your LSA may cover the cost of joining a local sports league, such as soccer, hockey, pickleball, or climbing.

Specialized fitness programs: LSAs can also support participation in specialized group fitness programs, such as marathon training, triathlon clubs, swim lessons, or personal training sessions.

Digital fitness subscriptions: With the growing popularity of online fitness communities, some LSAs now cover the cost of digital group fitness subscriptions, such as Peloton classes or Beachbody on Demand.

How to use your LSA for group fitness expenses

Using your LSA to pay for group fitness programs is a straightforward process:

1. Verify eligibility: Confirm with your HR team or LSA plan administrator that your desired group fitness expense is covered under your plan. For example, Dartmouth College's LSA reimburses employees for "exercise classes" and "sports leagues," while KeyBank's LSA includes "fitness classes" and "yoga/tai chi sessions."
2. Submit claims: When you incur an eligible expense, such as paying for a fitness class or sports league membership, submit a claim for reimbursement. Most LSAs require receipts or proof of payment, which can be submitted through various methods, such as direct debit card payments, mobile app claims with photo receipts, or traditional claim forms.
3. Understand tax implications: Keep in mind that LSA funds are typically considered taxable income, which means that any reimbursements you receive may be subject to income tax withholding and payroll taxes. However, the specific tax implications can vary depending on your employer's plan and your individual tax situation.

Maximizing your LSA for group fitness

To get the most value from your LSA when it comes to group fitness expenses, consider these strategies:

Review your plan's guidelines: Always check your employer's specific LSA plan details to confirm which expenses are eligible and any limits or restrictions that may apply. Some plans may have broad coverage for any fitness-related expense, while others may cap certain categories or exclude specific types of expenses.

Save your receipts: When submitting claims for reimbursement, be sure to keep itemized receipts that clearly show the purpose of the expense, such as "yoga class fees" or "sports league dues."

Explore alternative options: If your desired group fitness expense isn't covered under your LSA, check if your plan allows for related expenses that could support your participation in group activities, such as fitness equipment or wearable fitness trackers.

Are group fitness programs eligible for LSA reimbursement?

Most LSAs explicitly include group fitness programs as eligible expenses, though coverage depends on your employer's specific plan. Examples from major providers include:

• Gym memberships and classes: Yoga, Pilates, spin/cycle, dance, swimming, and tennis lessons.
• Sports leagues and clubs: Soccer, hockey, climbing, hiking, and pickleball.
• Specialized programs: Marathons, triathlons, and ski/golf passes.
• Digital fitness: Apps like Peloton or Beachbody on Demand.

Employers often categorize these under "physical wellness," with some programs allowing up to $500–$850 annually per employee.

To use your LSA for group fitness:

1. Verify eligibility: Confirm with your HR team whether group fitness is covered under your LSA plan. For example, Dartmouth College's LSA reimburses for "exercise classes" and "sports leagues," while KeyBank's LSA includes "fitness classes" and "yoga/tai chi sessions."
2. Submit claims: Most LSAs require receipts or proof of payment. Reimbursement methods vary, including direct debit card payments, mobile app claims with photo receipts, or traditional claim forms.
3. Understand tax implications: LSA funds are typically post-tax employer contributions, and reimbursements may count as taxable income.

Employers can define eligible expenses broadly or narrowly:

• Broad coverage: Some plans allow any fitness-related expense (e.g., equipment, race fees).
• Specific limits: Others cap certain categories (e.g., $500 for gym memberships).
• Exclusions: Medical expenses (e.g., physical therapy) or non-wellness costs (e.g., social club dues) are often ineligible.

LSAs for group fitness offer several benefits:

• Flexibility: Employees choose activities aligned with their interests, from boutique studios to online platforms.
• Cost savings: Reduces out-of-pocket spending on wellness.
• Improved well-being: Employers see improved morale and reduced absenteeism by supporting active lifestyles.

How to claim LSA reimbursement for group fitness expenses

Claiming reimbursement for your group fitness expenses through your LSA is a simple process. Here's what you need to do:

Verify eligibility with HR or benefits provider

Before incurring any expenses, check with your HR team or benefits provider to confirm that your desired group fitness activity is eligible for reimbursement under your LSA plan. Eligibility can vary depending on your employer's specific plan, so it's important to verify coverage before making any purchases.

Submit receipts or proof of payment via mobile app or web portal

Once you've incurred an eligible expense, such as paying for a fitness class or sports league membership, you'll need to submit a claim for reimbursement. Most LSA providers offer a mobile app or web portal where you can easily submit your receipts or proof of payment.

To submit a claim, simply take a photo of your receipt or upload a digital copy, and provide any necessary details about the expense, such as the date, amount, and purpose. Some providers may also require additional documentation, such as a class schedule or membership agreement.

Receive reimbursement as taxable income

After submitting your claim, your LSA provider will review the expense to ensure it meets the eligibility requirements of your plan. If approved, you'll receive reimbursement for the expense, typically within a few weeks.

It's important to keep in mind that LSA reimbursements are considered taxable income, which means you may be subject to income tax withholding and payroll taxes on the amount you receive. However, the specific tax implications can vary depending on your employer's plan and your individual tax situation.

To make the most of your LSA for group fitness expenses, consider setting a budget for your wellness activities and planning ahead to ensure you have the necessary funds available when you need them. You can also explore ways to maximize your LSA funds, such as taking advantage of early bird discounts, bundling services, or using pre-tax dollars from a Flexible Spending Account (FSA) or Health Savings Account (HSA) to cover any expenses that exceed your LSA balance.

By understanding the reimbursement process and making the most of your LSA funds, you can enjoy the many benefits of participating in group fitness activities without breaking the bank. Whether you're looking to join a local sports league, attend a yoga retreat, or stream live fitness classes from home, your LSA can help you prioritize your well-being and achieve your fitness goals.

What are the tax implications of LSA reimbursements?

When you receive reimbursements from your Lifestyle Spending Account (LSA) for eligible expenses like group fitness programs, it's important to understand the potential tax implications. LSA funds are generally considered taxable income to the employee, which means you may be subject to income tax withholding and payroll taxes on the amount you receive.

Your employer will likely report any LSA reimbursements on your annual W-2 form, which shows your total earnings and deductions for the year. This means that the amount you receive from your LSA will be added to your taxable income, and you may owe additional taxes as a result.

However, the specific tax implications of LSA reimbursements can vary depending on your employer's plan design and your individual tax situation. Some employers may choose to structure their LSA program in a way that minimizes the tax impact on employees, such as by offering a flat stipend amount rather than reimbursing specific expenses.

If you have questions about how your LSA reimbursements will be taxed, it's a good idea to consult with a tax professional or your HR representative. They can provide guidance on how to report your LSA income on your tax return and help you understand any potential tax liabilities.

Despite the potential tax implications, using your LSA to pay for group fitness programs can still be a valuable way to support your health and well-being. By taking advantage of your employer's LSA program, you can offset the cost of your favorite fitness activities and prioritize your physical and mental health.

To make the most of your LSA funds, be sure to review your plan's guidelines carefully and keep detailed records of your eligible expenses. This will help ensure that you receive the maximum reimbursement possible and avoid any surprises come tax time.

Best practices for implementing an LSA that covers group fitness

When designing an LSA program that includes group fitness expenses, there are several best practices to keep in mind to ensure a successful and valuable benefit for your employees.

Clearly define eligible expense categories

To avoid confusion and ensure that your employees can make the most of their LSA funds, clearly outline which group fitness expenses are eligible for reimbursement. This may include specifying types of classes, memberships, or events that qualify, as well as any exclusions or limitations.

Consider providing a comprehensive list of eligible expenses, along with examples and explanations, to help employees understand what is covered. You can also offer resources, such as an FAQ or decision tree, to guide employees through the process of determining whether an expense is eligible.

Communicate LSA benefits and claiming process to employees

Effective communication is key to ensuring that your employees are aware of and can take advantage of their LSA benefits. Provide clear, concise information about the program, including how it works, what expenses are eligible, and how to submit claims for reimbursement.

Consider using a variety of communication channels, such as email, intranet, or in-person meetings, to reach all employees and reinforce the value of the benefit. You can also offer training or educational sessions to help employees understand how to maximize their LSA funds and incorporate group fitness into their wellness routines.

Partner with a flexible LSA administrator to simplify program management

Administering an LSA program that covers group fitness expenses can be complex, with many moving parts and potential challenges. To streamline the process and ensure a positive experience for both employees and HR teams, consider partnering with a flexible LSA administrator like Forma.

Forma's platform offers a range of features and benefits to simplify LSA management, including:

• Customizable expense categories and eligibility rules
• Easy claims submission and reimbursement through a mobile app or web portal
• Automated compliance and tax reporting
• Comprehensive analytics and reporting to track program utilization and outcomes

By leveraging Forma's expertise and technology, you can design an LSA program that meets the unique needs of your organization and employees, while reducing administrative burden and ensuring a seamless experience for all stakeholders.

Incorporating group fitness expenses into your LSA program can be a powerful way to support employee well-being and drive engagement in wellness initiatives. By following these best practices and partnering with a trusted LSA administrator, you can create a valuable benefit that helps your employees prioritize their health and achieve their fitness goals.

Is an LSA that covers group fitness worth offering?

Offering an LSA that reimburses employees for group fitness expenses can be a smart move for employers looking to attract and retain top talent. In today's competitive job market, flexible wellness benefits like LSAs are increasingly expected by job seekers and valued by current employees.

LSAs that cover group fitness demonstrate a commitment to employee well-being and work-life balance. By supporting employees' fitness goals and interests, employers can boost morale, productivity, and overall job satisfaction. This can lead to lower turnover rates and a more engaged workforce.

Moreover, investing in employee wellness through LSAs can yield significant returns for employers. Healthy employees tend to have lower healthcare costs, fewer sick days, and higher performance levels. Lifestyle Spending Accounts that encourage regular physical activity and social connection through group fitness can play a key role in promoting a culture of wellness within your organization.

When designing an LSA program that includes group fitness reimbursement, consider the following factors:

1. Budget: Determine how much you can allocate per employee for wellness expenses, taking into account the potential ROI of improved health outcomes and engagement.
2. Eligibility: Clearly define which group fitness expenses qualify for reimbursement, such as gym memberships, fitness classes, sports leagues, or wellness retreats.
3. Customization: Allow employees to choose the activities that best align with their interests and goals, rather than limiting options to a single provider or type of exercise.
4. Communication: Regularly promote the LSA benefit to employees and provide resources to help them make the most of their wellness funds.
5. Feedback: Gather input from employees on their satisfaction with the LSA program and any desired changes or additions to eligible expenses.

An LSA that covers group fitness can be a powerful tool for promoting employee wellness, boosting engagement, and attracting top talent to your organization. By offering flexible, personalized wellness benefits, employers can demonstrate their commitment to supporting employees' physical and mental health both in and out of the workplace.

A Lifestyle Spending Account (LSA) offers a flexible way to cover group fitness expenses, but managing reimbursements and eligibility rules can be complex. Forma simplifies this process with an easy-to-use platform that streamlines claims, automates compliance, and gives employees more control over their wellness benefits. Schedule a consultation with one of our experts today.