Weekly Health Compliance Briefing

March 11, 2026

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Aon Publications

Employers Should Avoid Forming Non-Compliant Group Health Plans When Using LSAs
Lifestyle spending accounts (LSAs) are after-tax employer benefits that reimburse employees for lifestyle-related expenses but are not typically designed to qualify as Internal Revenue Service-recognized tax-advantaged accounts. Employers must carefully design LSAs to avoid reimbursing medical expenses (including, for example, GLP-1 prescription drugs), which could inadvertently create a non-compliant group health plan (GHP) and trigger multiple federal regulations (and associated penalties). Reimbursement of medical expenses (including prescription drugs) should be made through an account that permits such reimbursement on a tax-favored basis (i.e., an account that is integrated with a compliant GHP or through an excepted benefit health reimbursement arrangement). 

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