Health Spending Accounts vs. Lifestyle Accounts: What’s the Difference?

When it comes to employee benefits, many businesses are exploring ways to add flexibility and value beyond traditional health insurance. Health Spending Accounts (HSAs) and Lifestyle Accounts are two popular options that provide employees with discretionary funds for specific types of expenses. But what’s the difference between them, and how can they add value to your benefits plan? Here’s a closer look.

What is a Health Spending Account?

A Health Spending Account (HSA) is a flexible benefit that gives employees access to funds for health-related expenses not covered by their core benefit plan. HSAs are especially helpful for covering costs that might otherwise come out of an employee’s pocket. For example, if an employee has a dental bill or prescription expense that’s only partially covered by their main health plan, they can use their HSA to cover the remaining cost. In Canada, HSAs are eligible for tax-free reimbursements, as long as the expenses qualify under the Canada Revenue Agency (CRA) guidelines.

The key advantage of an HSA is its flexibility. Employees can choose how to use their HSA funds, giving them the option to address healthcare costs based on their unique needs. These accounts not only add value to your benefits plan by covering more out-of-pocket costs but also empower employees to make choices that best support their health.

What is a Lifestyle Account?

While HSAs are focused on medical expenses, Lifestyle Accounts offer funds for a broader range of lifestyle-related expenses. Lifestyle Accounts provide employees with discretionary dollars to improve or maintain their quality of life. The expenses covered can be highly personalized and reflect each employee’s individual goals or challenges.

For instance, a Lifestyle Account might cover fitness-related costs such as gym memberships, fitness classes, or even home workout equipment. It could also support family-oriented activities, such as after-school programs for children, or home improvement projects that enhance their living environment. Unlike HSAs, Lifestyle Accounts are generally not tied to CRA guidelines, allowing more freedom in spending.

Lifestyle Accounts are a great way to support employees in areas that matter most to them, which can vary widely. By offering funds that aren’t restricted to medical expenses, employers can make a positive impact on their employees’ overall well-being, both physical and mental. This kind of flexibility can lead to increased satisfaction and loyalty within your team.

How Do These Accounts Add Value to Your Benefits Plan?

Providing HSAs and Lifestyle Accounts as part of your benefits plan sends a clear message: you’re invested in supporting both the health and lifestyle goals of your employees. HSAs address the immediate need for healthcare support, especially in areas that core plans might overlook, while Lifestyle Accounts offer the chance to make meaningful, personal improvements in quality of life.

These accounts can also reduce financial stress, as employees have funds to address specific needs without using personal savings. Additionally, the flexibility of these accounts can make your benefits plan more attractive to current employees and new hires, as it shows a commitment to supporting a balanced, healthy lifestyle.

Ready to Make an Impact?

If you’re looking to enhance your benefits plan with options that support your employees’ health and lifestyle, consider adding Health Spending and Lifestyle Accounts. Both options offer flexibility, choice, and a meaningful way to show employees you value their well-being. Contact us to learn more about how these accounts can work for your business.