How Employees Can Use LSAs to Pay for Groceries and Other Basic Needs

Why It Matters

Flexible LSAs directly address financial stress, boosting employee retention while maximizing the return on benefits spend for employers.

Key Takeaways

• 64% employers adopt all‑inclusive LSAs as primary benefit
• Employee participation hits 93% with LSA programs
• Utilization exceeds 80% of allocated LSA funds
• Flexible LSAs reduce turnover and improve benefit ROI
• One in ten workers spend benefits on groceries

Pulse Analysis

Rising inflation and the lingering effects of the pandemic have left many workers scrambling to cover basic expenses. While traditional stipends target narrow categories such as commuting or gym memberships, Lifestyle Spending Accounts offer a tax‑treated pool of funds that employees can allocate to any need—from groceries and childcare to mental‑health services. By treating the allowance as taxable income, LSAs remain compliant while delivering the autonomy that modern talent expects, positioning employers as proactive partners in financial wellbeing.

Compt’s platform data underscores the business case: 64% of its client companies now run an all‑inclusive LSA as the core benefit, achieving a 93% employee participation rate and more than 80% utilization of the available budget. Those figures translate into tangible cost savings, because unused, narrowly‑defined benefits often sit idle and inflate the overall benefits spend. When employees can apply funds to real‑world needs, they are more likely to engage, reducing turnover risk and delivering a higher return on investment for HR budgets.

To unlock these gains, benefit leaders should start with a thorough needs assessment, leveraging pulse surveys and usage analytics to pinpoint the categories that matter most to their workforce. Designing a simple enrollment process and communicating the flexibility of LSAs are critical to driving adoption. As the labor market continues to prioritize holistic wellbeing, companies that embed LSAs into their total rewards strategy will not only improve employee satisfaction but also future‑proof their benefits programs against evolving economic pressures.