Can I use a Lifestyle Spending Account (LSA) for skincare products?

Are you curious about using your Lifestyle Spending Account (LSA) for skincare products?

With the growing focus on employee wellness, many employers are offering LSAs as part of their benefits package.

But what exactly is an LSA, and can you use it to purchase your favorite skincare items?

What is a Lifestyle Spending Account (LSA)?

An LSA is an employer-funded account designed to support your overall well-being. Unlike traditional benefits like health insurance or retirement plans, LSAs provide you with more flexibility to spend on wellness-related expenses that matter most to you.

Your employer determines the eligible expenses for your LSA, which typically focus on three key areas: physical, financial, and emotional well-being. This means you can use your LSA funds on a wide range of items and services that contribute to your health and happiness.

Examples of LSA-eligible expenses

So, what kind of expenses can you cover with your LSA? Here are some common examples:

• Gym memberships and fitness classes to help you stay physically active
• Wellness apps and wearable devices to track your health goals
• Financial planning services and educational courses to improve your money management skills
• Stress management programs and mental health resources to support your emotional well-being

Can you use an LSA for skincare products?

The short answer is: it depends on your employer's specific LSA guidelines. While LSAs offer more flexibility than traditional benefits, the eligibility of skincare products varies from one company to another.

Some employers may include skincare items under their physical wellness category, especially if the products have health-related benefits. For example, sunscreen with SPF protection or medicated lotions for skin conditions like eczema or psoriasis might be covered. However, everyday cosmetic skincare products, such as cleansers, toners, and anti-aging serums, are rarely eligible expenses under most LSA plans.

Contrast with HSAs/FSAs

It's important to note the difference between LSAs and other health-related accounts, such as Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs). HSAs and FSAs are regulated by the IRS and have strict rules on eligible expenses. They typically only cover skincare products if they are considered medically necessary and prescribed by a healthcare provider.

For instance, if you have a prescription for an acne treatment like tretinoin or a dermatologist recommends a specific sunscreen for a skin condition, you can use your HSA or FSA funds to purchase these items. However, over-the-counter cosmetic skincare products won't qualify under these accounts.

LSAs, on the other hand, are not subject to the same IRS regulations, giving employers more leeway in determining eligible expenses. This flexibility allows companies to tailor their LSA programs to their employees' unique needs and preferences. However, keep in mind that while LSAs offer more spending options, they don't provide the same tax advantages as HSAs or FSAs.

Key considerations for using an LSA on skincare

Before using your LSA funds on skincare products, there are a few important factors to keep in mind:

Check your plan's eligible expense list

Review your LSA policy documents or HR portal to see if skincare items are listed under approved categories. Some employers may include skincare as part of their physical wellness or wellness programs, especially if the products offer health benefits like sun protection or treatment for skin conditions. However, everyday cosmetic skincare products are rarely explicitly listed as eligible expenses.

Keep receipts and justifications

Even if your LSA plan covers skincare products, it's a good idea to retain receipts and document how your purchases relate to your overall wellness goals. For example, if you buy sunscreen to protect your skin during outdoor fitness activities or use a medicated lotion to manage a skin condition that affects your well-being, make sure to keep a record of these justifications.

Understand tax implications

Unlike HSA or FSA funds, which are tax-advantaged, LSA reimbursements are typically considered taxable income. This means that while you can use your LSA to cover a wider range of wellness expenses, including potentially skincare products, you'll still need to pay taxes on the money you receive from your employer. Keep this in mind when planning your LSA spending and budgeting for your skincare needs.

If you're unsure whether a specific skincare product qualifies under your LSA plan, don't hesitate to reach out to your HR department or LSA provider for clarification. They can help you navigate the eligible expense categories and make the most of your wellness benefits.

Ultimately, while LSAs offer more flexibility than traditional health accounts, the eligibility of skincare products depends on your employer's specific guidelines. By reviewing your plan documents, keeping proper records, and understanding the tax implications, you can make informed decisions about using your LSA funds for skincare expenses that contribute to your overall well-being.

How to maximize your LSA for wellness

While navigating the eligibility of skincare products under your LSA can be tricky, there are several strategies you can employ to make the most of your wellness benefits.

Combine accounts strategically

If you have access to multiple health-related accounts, such as an HSA or FSA, alongside your LSA, consider using them strategically to cover different aspects of your wellness needs. Use your HSA or FSA funds for medically necessary skincare products, such as prescription acne treatments or dermatologist-recommended sunscreens, while reserving your LSA for more general wellness expenses like gym memberships, stress management programs, or wellness apps.

This approach allows you to maximize the tax advantages of your HSA/FSA for qualified medical expenses while still tapping into the flexibility of your LSA for a broader range of wellness items and services.

Advocate for expanded coverage

If your current LSA plan doesn't cover skincare products, consider advocating for expanded coverage with your employer. Many companies are increasingly recognizing the importance of holistic wellness and may be open to including skincare as part of their LSA eligible expenses, especially if you can demonstrate how these products contribute to your overall physical and mental well-being.

Engage with your HR department or benefits provider to discuss the potential of adding skincare to your LSA plan, emphasizing the role that healthy skin plays in boosting self-confidence, reducing stress, and promoting a positive self-image. You can also highlight industry trends and examples of other companies that have successfully incorporated skincare into their wellness initiatives.

Prioritize high-impact expenses

When deciding how to allocate your LSA funds, prioritize expenses that have the greatest impact on your physical and mental well-being. While skincare products can certainly contribute to your overall wellness, they may not always be the most effective use of your limited LSA dollars.

Consider focusing your LSA spending on items and services that directly support your health goals, such as fitness classes to improve your physical strength and endurance, stress-reducing activities like yoga or meditation, or educational resources to help you manage your finances and reduce money-related anxiety.

By prioritizing high-impact wellness expenses, you can ensure that you're making the most of your LSA benefits and investing in your long-term health and happiness.

Is an LSA right for your skincare needs?

While LSAs can be a valuable addition to your employee benefits package, their coverage for skincare products may be limited. These accounts are designed to support a wide range of wellness expenses, but they typically focus on items and services that directly contribute to your physical, mental, and financial well-being.

For everyday skincare products like cleansers, moisturizers, and anti-aging serums, LSAs may not be the most suitable option. These items are often considered cosmetic and may not qualify under your employer's LSA guidelines. However, if you have specific skincare needs that tie into your overall health and wellness, such as sun protection or medicated products for skin conditions, your LSA might offer some coverage.

When evaluating whether an LSA is right for your skincare needs, consider the following factors:

1. Your employer's plan specifics: Review your LSA policy documents to understand which expenses are eligible and whether skincare products are included.
2. The nature of your skincare needs: If you require skincare products for medical reasons or to support your overall wellness, you may have a stronger case for LSA coverage than if you're seeking purely cosmetic items.
3. Alternative funding options: If your LSA doesn't cover your desired skincare products, explore other funding sources like HSAs, FSAs, or your regular health insurance. These options may provide more comprehensive coverage for medically necessary skincare expenses.
4. Your personal priorities: Consider how skincare fits into your overall wellness goals and whether using your LSA funds for these products aligns with your individual needs and values.

Ultimately, an LSA can be a valuable tool for supporting your skincare needs, but its effectiveness depends on your specific situation. If your employer offers a broad LSA plan that includes wellness-oriented skincare products, it could be a great way to offset some of your expenses. However, if your LSA has limited coverage for skincare or your needs are primarily cosmetic, you may want to explore alternative funding options or prioritize other wellness expenses.

Whether you can use an LSA for skincare products depends on your employer’s specific plan, but understanding your options ensures you make the most of your benefits. Forma simplifies lifestyle benefits by offering flexible, easy-to-manage LSAs that align with your wellness needs. Schedule a consultation with one of our experts today.