Last summer, professional services firm Deloitte made headlines for including LEGO® sets as an allowable purchase through an employee well-being program.

Deloitte reportedly provides employees with up to $1,000 in their lifestyle spending accounts (LSAs) to make purchases to pursue hobbies and wellness and recently updated the program to include “[LEGO® sets] and puzzles” as a reimbursable expense, according to an Inc. Magazine article.

While LEGO® sets may be among the more unusual allowed expenses for LSAs, the accounts themselves are expected to become more popular. The 2024 Employee Benefits Survey from the International Foundation of Employee Benefit Plans found that nearly 6% of corporate employers and about 2% of public employers offer LSAs. However, interest appears to be on the rise. In a 2024 survey from Gallagher, 66% of employers said they were considering offering LSAs in the future as a creative attraction/retention tool and/or as an alternative to their well-being program.

What Are LSAs?

LSAs are reimbursement-based accounts funded by employers that employees can use to buy a wide range of items or services. They are most commonly provided as an after-tax benefit.

How Can LSAs Be Used?

Examples of typical LSA categories as well as some of the expenses in those categories  include the following, according to Tom Kelly, who is a principal in the health and national voluntary benefits practice at Gallagher.

• Physical well-being: Gym memberships, sports equipment, fitness trackers, menopause-related services and nutrition coaching

• Financial well-being: Financial advisor fees, emergency savings, retirement planning and student loans

• Social well-being: First aid classes, charity donations and social club dues

• Emotional well-being: Mental health coaching/apps, meditation, spa services, hobbies and games

• Family support: Child care, summer camps and tutoring

• Work–life balance: Dry cleaning, housekeeping, sports league fees and meal delivery

• Work/productivity: Parking, public transportation, internet services and smartphones

• Education: Professional development, tuition and conference fees

“We’ve seen LSAs that cover [LEGO® sets], pet insurance, pet adoption, kids’ summer camps, adoption/fertility, greens fees for golfers, gas, lift tickets for skiers, nonbusiness travel to decompress, and beginning- and end-of-life doulas,” Kelly commented.

“Supporting holistic well-being tends to be the most popular LSA use case, although groups can get extremely creative and create a use case specific to their organization, culture or workforce,” Kelly added. The accounts also can provide “support for work–life balance, education, family, lifestyle, and even productivity/work support needs such as home office ergonomics or personal protective gear.”

Administering an LSA

LSA budgets vary, with employer contributions generally ranging from $250 to $2,000, according to a Mercer article. Some go up to $3,500 but are typically for big-ticket items such as surrogacy, the article said.

In a September/October 2022 Benefits Magazine article about LSAs, Kelly wrote that employers typically use one of two models to deliver LSA funds:

• Under the transaction model, participants are required to submit receipts to get reimbursed. This gives the employer more control over how the money is used.

• Under the debit card model, participants can receive immediate reimbursement for their purchase once money is loaded on the card.

Employers may need to consider outsourcing LSA administration to a third-party account vendor, Kelly wrote.

The Mercer article said that employers can design a single LSA or multiple LSAs: “Some employers allocate set dollar amounts to be used only for specific and limited expenses . . . For example, consider an LSA benefit—whether structured as a single LSA or multiple LSAs —that provides $500 for gym memberships, $3,000 for surrogacy expenses, and $200 for home office equipment, and those dollars can’t be used for any other expenses.”

There are challenges associated with offering LSAs, Kelly said, including the following.

• Compliance issues: Because most LSAs are after-tax benefits, medical expenses should be excluded from eligibility to avoid triggering group health plan laws and the Employee Retirement Income Security Act (ERISA).

• Employer expense: These benefits are exclusively employer-funded. Ending them could be perceived as a takeaway.

About Those LEGO® Sets . . .

Is there a well-being justification for spending hundreds of dollars on a kit to build a replica of the Eiffel Tower or Hogwarts Castle? Probably, according to the Inc. Magazine article: It suggests that the hours spent snapping those plastic bricks together can help workers improve brain flexibility, relieve stress and improve creativity.

As more employers consider offering LSAs, you might see longer lines at the LEGO® Store.