Can I use a Lifestyle Spending Account (LSA) for sleep improvement programs?

Can you use a Lifestyle Spending Account (LSA) to cover the cost of sleep improvement programs? The answer is yes, in many cases.

LSAs are employer-funded accounts that reimburse employees for expenses that promote their overall well-being, including physical, mental, and financial health.

While the specific eligible expenses vary by employer, sleep improvement programs often fall under the umbrella of wellness benefits covered by LSAs.

What is a Lifestyle Spending Account (LSA)?

A Lifestyle Spending Account (LSA) is an employer-funded account designed to support employees' overall well-being by covering non-medical expenses that promote physical and mental health and financial wellness. Employers set aside a specific amount of money for each employee to use towards eligible expenses.

LSAs offer flexibility and personalization in benefits, allowing employees to choose the wellness activities that best suit their needs and interests. This approach recognizes that well-being encompasses more than just physical health and that supporting employees holistically can lead to increased job satisfaction, productivity, and retention.

Examples of LSA-eligible expenses

LSAs typically cover a wide range of expenses related to personal and family assistance, career development, physical fitness, financial planning, and emotional wellness. Some common examples include:

• Childcare, tutoring, and home services like meal delivery or cleaning
• Professional coaching, home office supplies, and work-related technology
• Gym memberships, fitness classes, personal training sessions, and wellness apps
• Student loan reimbursement, financial planning sessions, and money management tools
• Meditation classes, non-medical counseling, stress reduction programs, and personal development courses

The specific eligible expenses and reimbursement amounts are determined by the employer. However, the goal is to provide resources that help employees thrive both in and out of the workplace.

When it comes to sleep improvement, many LSAs will cover expenses such as:

• Sleep tracking devices and apps
• Mattresses, pillows, and other sleep-enhancing products
• Sleep coaching or therapy sessions
• Meditation or relaxation programs designed to improve sleep quality
• Sleep disorder treatments prescribed by a medical professional

To determine if your specific sleep improvement program is eligible for reimbursement, check your employer's LSA guidelines or contact your HR department. Keep in mind that you may need to provide documentation, such as receipts or a letter of medical necessity, to substantiate your claim.

Are sleep improvement programs eligible for LSA reimbursement?

Most employers include sleep-related expenses under broader wellness categories in their LSA plans. Here's a detailed breakdown of how sleep improvement programs fit into common LSA categories:

Wellness Programs

Many LSA plans explicitly list sleep coaching, consulting, assessments, and corporate sleep wellness programs as eligible expenses. This means you can use your LSA funds to work with a sleep coach or participate in a company-sponsored sleep wellness initiative. These programs often focus on developing healthy sleep habits, creating an optimal sleep environment, and addressing specific sleep challenges.

Mental Health Services

Some LSAs cover sleep apps, such as Sleep Reset, which offers cognitive behavioral therapy for insomnia (CBT-I) based programs, under their mental health benefits. CBT-I is a proven treatment for insomnia that helps individuals identify and change thoughts and behaviors that interfere with sleep. If your LSA includes mental health benefits, you may be able to use your funds for these types of sleep improvement apps.

Fitness/Wellness Tech

Sleep-tracking devices, such as Fitbit and SleepScore, are eligible expenses in many LSA plans. These devices monitor your sleep patterns, duration, and quality, providing valuable insights into your sleep habits. By using your LSA to purchase a sleep-tracking device, you can better understand your sleep and make data-driven decisions to improve it. Some plans may require a letter of medical necessity from your healthcare provider to approve reimbursement for these devices.

When using your LSA for sleep improvement programs, keep in mind that you may need to submit receipts or proof of program participation to your plan administrator for reimbursement. It's also important to note that while many sleep improvement expenses are eligible, some plans may have specific exclusions or requirements. Always review your employer's LSA guidelines and consult with your HR department or plan administrator if you have questions about a particular expense.

Benefits of using LSAs for sleep improvement

Utilizing your Lifestyle Spending Account (LSA) for sleep improvement programs can have a significant impact on your overall well-being and work performance. Quality sleep plays a vital role in maintaining physical and mental health, cognitive function, and emotional well-being. When you prioritize sleep through the use of LSA-eligible programs and products, you're investing in your health and happiness.

Well-rested employees are more focused, creative, and efficient at work. By using your LSA to address sleep issues and develop healthy sleep habits, you can boost your productivity and performance on the job. This not only benefits you personally but also contributes to the success of your organization.

Offering unique benefits like sleep improvement programs can also help companies attract and retain top talent. When employers demonstrate a commitment to employee well-being through comprehensive LSA offerings, it sets them apart in a competitive job market. By taking advantage of these benefits, you're not only improving your own health but also showing your appreciation for your employer's investment in your well-being.

Another advantage of using LSAs for sleep improvement is the potential for cost savings. LSAs allow you to use pre-tax dollars for eligible expenses, which can reduce your taxable income. This means you can stretch your benefits further and potentially save money on sleep-related products and services that you would have purchased anyway.

When considering using your LSA for sleep improvement programs, it's important to review your employer's specific guidelines and eligible expenses. Some programs may require a letter of medical necessity from your healthcare provider, while others may be automatically eligible under wellness or mental health categories. If you have questions about whether a particular sleep improvement expense is covered, don't hesitate to reach out to your HR department or LSA plan administrator for guidance.

Key limitations and considerations

While LSAs offer a flexible way to cover sleep improvement programs, there are some limitations and considerations to keep in mind.

Employer discretion

LSA plans vary by employer, and while some may explicitly cover sleep assessments or coaching, others might exclude apps that lack medical certification. Ohio State's LSA, for example, specifically includes sleep assessments, but your employer's plan may have different eligibility criteria. Always review your company's LSA guidelines or consult with your HR department to understand what sleep-related expenses are covered.

Documentation requirements

To receive reimbursement for sleep improvement programs through your LSA, you may need to provide receipts or proof of participation. Some employers have strict documentation requirements to ensure that funds are being used for their intended purpose. When participating in a sleep program or purchasing a sleep-related product, save your receipts and any other relevant documentation to submit with your reimbursement claim.

Tax implications

One key difference between LSAs and other health-related accounts like FSAs or HSAs is the tax treatment of reimbursements. While FSA and HSA funds are typically pre-tax, meaning they're not subject to income tax when used for eligible expenses, LSA reimbursements for non-medical sleep programs may be considered taxable income. This means that if your sleep improvement program doesn't have a medical necessity certification, the reimbursement amount could be added to your taxable wages. Be sure to consult with your HR department or a tax professional to understand the potential tax implications of using your LSA for sleep-related expenses.

How to use your LSA for sleep improvement programs

Review your LSA plan documents

Start by carefully reviewing your LSA plan documents for terms like "wellness," "mental health," or "fitness." These categories often encompass sleep-related expenses. Your plan may also have specific language about sleep assessments, coaching, or products. Familiarizing yourself with the eligible expense categories will help you determine if your desired sleep improvement program is likely to be covered.

Confirm eligibility with HR

Once you've reviewed your plan documents, reach out to your HR department to confirm the eligibility of specific sleep programs you're interested in, such as Sleep Reset or SleepScore. Your HR representative can provide guidance on whether these programs qualify for reimbursement under your company's LSA plan. They can also clarify any documentation requirements or limitations you should be aware of.

Submit claims for reimbursement

After participating in an eligible sleep improvement program or purchasing a covered sleep-related product, submit your claim for reimbursement promptly. Provide itemized receipts and any required documentation, such as a letter of medical necessity from your healthcare provider, within the specified deadlines. Lifestyle Spending Accounts streamline the reimbursement process for employees and HR teams, making it easier to manage claims and track expenses.

When submitting your claim, make sure to follow your employer's specific instructions for reimbursement. This may involve submitting a claim form, providing proof of payment, or using an online portal to upload documentation. If you have any questions about the reimbursement process, don't hesitate to contact your HR department for assistance.

By taking advantage of your LSA for sleep improvement programs, you're prioritizing your well-being and making the most of your employer-provided benefits. Quality sleep is vital for overall health, productivity, and job satisfaction, and your LSA can be a valuable resource in achieving better sleep. As you explore the options available through your LSA, remember to communicate with your HR team, keep detailed records, and prioritize the sleep improvement strategies that work best for you.

What are the latest employer trends in sleep wellness benefits?

As employers increasingly recognize the impact of sleep on employee well-being and productivity, more companies are incorporating sleep wellness programs into their benefits packages. In fact, 35% of employers added Lifestyle Spending Accounts (LSAs) in 2024 to attract talent, often including sleep wellness options.

LSAs provide a flexible way for employers to support their employees' overall well-being, allowing individuals to choose the benefits that best suit their needs. This personalized approach has led to higher engagement rates in sleep wellness programs compared to traditional one-size-fits-all offerings.

SleepScore's corporate program, for example, has seen 4-8 times higher employee adoption rates than typical wellness plans. This suggests that when given the choice, employees are more likely to participate in sleep improvement initiatives that resonate with their individual needs and preferences.

The rise of LSAs is transforming employee benefits, giving companies a powerful tool to support their workforce's sleep health and overall well-being. As more employers recognize the value of investing in their employees' sleep, we can expect to see continued growth in sleep wellness benefits offered through LSAs.

For personalized guidance on using your company's LSA for sleep improvement programs, consult your HR department or benefits administrator. They can help you navigate the specific options available to you and make the most of this valuable resource for enhancing your sleep and well-being.

If you’re looking to use your LSA for sleep improvement but aren’t sure what’s eligible or how to manage claims, Forma makes it simple. Our platform helps you easily access, track, and use your lifestyle benefits—all in one place.

Schedule a consultation with one of our experts today.