How Employees Can Use LSAs to Pay for Groceries and Other Basic Needs
•February 10, 2026
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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.
How employees can use LSAs to pay for groceries and other basic needs
What’s at Stake: Employers risk higher turnover and wasted benefits budgets if supports remain inflexible.
Supporting Data: 17 % of Americans can’t pay bills; 1‑in‑10 employees spend benefits on groceries.
Forward Look: Prepare to redesign benefits toward LSAs to retain staff and optimize utilization.
Source: Bullets generated by AI with editorial review
Employees are struggling to afford basic necessities, and they’re expecting more comprehensive support from their employers to help make ends meet.
Employers have traditionally offered stipends and reimbursements to help employees afford their commutes, office equipment and even gym memberships. But with the Federal Reserve reporting that 17 % of Americans can’t pay their bills, and new data from benefits‑reimbursement platform Compt finding that one in 10 employees are using their allotted funds at grocery stores, employees need more support than they may be letting on.
“With inflation and the rise of unexpected costs, some employees can’t make ends meet anymore,” says Mary Migiano, head of customer success at Compt. “Evolving your reimbursement approach to something more flexible like a Lifestyle Spending Account meets your employees where they are.”
Read more: Employees cite finances as leading barrier to workplace well‑being
Through traditional employer‑sponsored stipends and reimbursements, employees receive a fixed sum of money separate from their salary to spend or expense for a specific purpose. Lifestyle Spending Accounts (LSAs) function in much the same way, except the money is set aside as taxable income by the employer into an account employees can use freely and then be reimbursed later.
Common examples of an LSA in use include putting the benefit toward childcare services of an employee’s choosing, mental‑health support, professional‑development opportunities like conferences and courses, cellphone bills, fertility treatments or even everyday household costs such as groceries.
“These benefits enable employees to do something they typically wouldn’t do,” Migiano says. “If you add even $50 to an employee’s paycheck or salary a month, they might get the facial, or massage, self‑care procedure they wouldn’t otherwise get, … or it could even be the reason they can feed themselves for two weeks. It allows employees to take care of themselves better.”
Better access to funds boosts business
Compt has already seen tangible results. Sixty‑four percent of employers that partner with the company use an all‑inclusive LSA as their primary lifestyle benefits program, according to platform data, and participating companies report employee participation rates of 93 % and utilization rates exceeding 80 % of available funds. Keeping reimbursement parameters narrow may seem like a way to control costs, Migiano says, but it often has the opposite effect. If employees can’t use a benefit to meet real‑life needs, they won’t use it at all — ultimately costing organizations more in the long run.
Read more: Americans are more worried about healthcare costs than gas or groceries
“Benefit leaders are already under a lot of scrutiny to prove that their benefit budgets work,” Migiano says. “But when you figure out what your employees need and they begin to really take advantage of your offerings that stops being an issue.”
The first step for leaders looking to build an effective LSA is to understand where support is needed by listening to employees or reviewing survey feedback. By doing so and by prioritizing a new approach, leaders can drastically improve retention, Migiano says, and send a powerful message to employees that their voices are being heard.
“There needs to be further connection between you and your employees if you want them to stay,” Migiano says. “This is giving employees the support they need and that they care about, but most importantly it gives them autonomy to make the best decisions for themselves.”
Associate Editor, Employee Benefit News
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