Only the employer can put money into an LSA

Employees do not contribute from their paychecks. Importantly, LSA reimbursements are generally treated as taxable income to the employee, because the IRS does not consider most LSA expenses to be tax-free benefits. In other words, an LSA is post-tax: you might see the reimbursement added to your paycheck (or W-2) and taxed, or the employer might gross up the amount. (A few specific types of expenses, like education assistance or certain transportation benefits, could qualify for existing tax exemptions – but in most cases, expect LSA funds to be taxable.) Even if it’s taxable, it’s still extra compensation earmarked for your personal development and wellness, which you wouldn’t otherwise receive. On average, companies that offer LSAs have provided around $500 to $1,000 per employee per year (one study cited $850 as an average), but this amount varies widely by employer and budget.

#