Why lifestyle spending accounts are taking off
As demand for broader, personalized health and well-being support grows, UnitedHealthcare is introducing an LSA that integrates with its UHC Store.
A playlist that matches the mood, a coffee order remembered without asking, a homepage that surfaces relevant content. Personalization has quietly become the baseline expectation of modern life.1
Today's workforce has taken notice. Employees are bringing those same expectations into the benefits conversation — and health and wellness are no longer exempt. What's more, the definition of "benefits" itself is evolving. Driven largely by younger generations who now represent a significant share of the workforce, employees are redefining what meaningful support looks like: less focused on traditional coverage alone, and increasingly oriented toward holistic lifestyle and well-being.2 The message is clear — meeting employees where they are means rethinking not just how benefits are delivered, but what benefits actually mean.
UHC Store supports these evolving expectations by expanding access to products that are designed to help support everyday health and wellness consumers value. UHC Store is a member-exclusive digital shop that offers a variety of offerings that members can purchase to support their well-being. UHC Store is designed to accommodate various employer-contribution models— including, where appropriate, health savings accounts (HSAs), flexible spending accounts (FSAs), lifestyle spending accounts (LSAs) and more — offering organizations flexibility in how they invest in employee health and wellness and support personalization.
Among these options, an LSA — defined as an employer-funded, post-tax account — addresses evolving expectations most effectively as the only financial health account that can be used for lifestyle and well-being needs (non 213d products) beyond traditional health care and coverage.
By fundamentally reshaping the wellness benefits structure, LSAs enable employers to provide meaningful choice and personalization without expanding costs. Rather than investing in broad programs that may not be relevant for every employee, organizations can invest in and empower their workforce with wellness dollars that they can direct toward what matters to them and what they value — creating both higher perceived value and measurable impact within existing budget constraints.
Introducing a new integrated LSA experience within UHC Store
Through UHC Store, employees can shop for a growing number of health, wellness and lifestyle offerings — most at a discount — that are meaningful to them to complement their employer-sponsored benefits. This approach is designed to give employees more choices to help meet their needs and preferences, at any time throughout the year.
To help drive increased value for employers and employees, UnitedHealthcare is now offering self-funded employers the ability to fund an integrated LSA that employees and/or their covered family members can use toward LSA-eligible offerings available within UHC Store — bringing choice and financial support toward non-traditional wellness and lifestyle options consumers increasingly value and expect.
An employer can determine their contribution amount, contribution frequency — whether annual or quarterly — and whether it is available to employees only or employees and their spouses.
Different from most LSAs, employees don’t have to wait to be reimbursed, because eligible funds are readily available within their individual UHC Store experience to be used toward program purchases.
Digging into the trends driving demand for LSAs
LSAs are rising in popularity among employers: 30–40% of employers plan to offer LSAs in the future,3 and 38% of employers currently offer employees moderate or high benefit choice.4 Within 3 years, that number is expected to double to 76%,4 underscoring a rapid industry shift toward flexible, employee-centric benefit solutions.
Employers are making this shift because of the added value LSAs can offer their organization and their employees:
- Expanded choice: An LSA helps empower employee choice when it comes to the health, wellness and lifestyle offerings available to them. Without an LSA, an employer would likely not have the financial ability to offer as diverse and as many relevant offerings to their full workforce.
- Breadth of valued well-being support: 85% of employees believe well-being is just as important as their salary, and 78% expect employers to support it.5 An LSA gives employers the ability to support well-being needs that employees value and aren’t typically covered by traditional health accounts. By adding an LSA, employers can support a wide range of well-being needs — from physical and emotional to social, financial and more.
- Improved engagement and retention: When an employee gets to choose their own wellness offerings, engagement with those offerings and their overall plan may also improve. Plus, when employees perceive greater value from the offerings their employer gives them access to, retention can improve, too. Studies show employers who prioritize well-being experience 10% higher retention rates.6
- Budget control and flexibility: With an LSA, employers can set the contribution amount and frequency — whether annual, quarterly or another cadence that aligns with financial planning. It may also allow organizations to shift or reduce what they’re spending on programs that are only getting utilized by a small portion of their workforce. Additionally, giving employees a set amount to purchase the offerings they individually see value in may help support them in leading healthier lifestyles, which may result in better outcomes and lower costs long term.
- Reduced administrative burden: What an employee purchases using their LSA does not create any additional administrative burden or costs for the employer. Rather, because offering an LSA may allow employers to divest from underutilized programs that employees may not value as much, it may also reduce the number of vendors an employer manages and contracts with. Less paperwork, more streamlined contracts and fewer vendor relationships to manage mean more time that can be focused on strategic priorities.
- Benefit modernization: LSAs help deliver benefit choice without the risk of major plan redesign. They're a scalable entry point for defined contribution strategies — laying the groundwork for long-term benefit modernization with immediate impact.
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