List of Eligible Expenses With a Personal Spending Account (PSA)
By: Benefits by Design | Tuesday February 5, 2019Updated : Tuesday December 15, 2020
Personal Spending Accounts (PSA)s have a virtually unlimited number of eligible expenses available for claims, making providing a list of eligible expenses an endless exercise.
Unlimited, you say?
Yes, indeed! Employers are the ones who decide exactly what is eligible under their PSA, so the only “limit” is an employer’s imagination!
What is a Personal Spending Account?
Personal Spending Accounts (PSA)s, sometimes known as Wellness Spending Accounts (WSA)s, are a great addition to a benefits plan! Employers allocate a set amount of money to each employee for use on eligible items, as determined by the employer. PSAs are a taxable benefit to the employee.
Through a PSA, employees are provided additional health and well-being options beyond what is typically covered under a traditional benefits plan.
For example, PSAs work well for employers looking to offer additional perks to their employees aimed at keeping them happy and healthy.
List of PSA Examples and Eligible Expenses
When it comes to what’s covered under a PSA, employers are limited only by their creativity and imagination! Here’s a list of some eligible PSA expenses:
- Fitness expenses, like gym membership fees or equipment costs;
- Education and/or personal and professional development, such as online courses, workshops, and more;
- The pursuit of hobbies, whether that be the purchase of a new kayaking paddle or some new hiking shoes;
- Smoking Cessation Programs, to help employees quit smoking and maintain healthier lifestyles;
- Education fees, tuition, and books, to help employees continue their education (ultimately making them better employees!);
- Childcare expenses, such as daycare services or summer camps;
- Eldercare expenses, such as companionship services or certain activities;
- Alternative transportation, including bus passes, bicycles, etc., to make the world and your workplace a greener place;
- Green initiatives, including energy-efficient appliances or solar and wind energy products;
- And much, much more — pretty much whatever you want!
This list is not complete and reflects only some of the most common examples of PSA eligible expenses. It’s important to remember that it is ultimately the employer who determines what is eligible, and plan members looking to make claims should confirm their individual coverage.
Personal Spending Account vs. Health Care Spending Account
If you’re thinking that a PSA and a Health Care Spending Account (HCSA) are starting to sound a lot alike, you’d be right!
Your Guide to Health Care Spending Accounts (HCSA)s
A Health Care Spending Account (HCSA) is similar to a PSA in function but offers different coverage. In both cases, the employer determines a set amount of money to offer employees. However, differences in coverage and regulations make them very different, yet complimentary — like two sides of the same coin!