You’ve done the open-enrollment scramble. Sat through renewal meetings trying to make the math work. Fielded the same questions from employees about why the benefits cost more, yet still fall short. For HR and Finance teams, balancing cost, compliance, and employee expectations often feels like a zero-sum game. 

This familiar story can feel quite different when you have the right tools in place. When Quickbase launched lifestyle benefits with Compt, they empowered employees to use their health and wellness stipend to get reimbursed for purchases across 1,300 vendors, including college loans, pet care, landscaping projects, running shoes, and even a PlayStation. Employees used the benefit in deeply personal ways, and the HR team reclaimed hours each week. 

“If you get your health and wellness from gardening, meditating, or hiking … this means different things to different people.”
— Kevin Sullivan, Global Benefits Manager, Quickbase

That kind of adaptability and efficiency is exactly why some companies are pairing Lifestyle Spending Accounts (LSAs) with Individual Coverage Health Reimbursement Arrangements (ICHRAs). Here’s how the two work together and why this combo could be your next best move in modernizing lifestyle benefits for your people. 

Understanding ICHRAs and LSAs

To appreciate the full power of this pairing, it helps to first understand each component on its own.

What are the benefits of an Individual Coverage Health Reimbursement Arrangement?

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an IRS-regulated health benefit that allows employers to reimburse employees, tax-free, for their personal health insurance and qualified medical expenses. In practice, an ICHRA is an alternative to a traditional group health insurance plan. The employer sets a monthly allowance, and employees then purchase their own health insurance from the ACA Marketplace or a private insurer. Then they submit proof of their premiums and other eligible healthcare costs for reimbursement. When approved, they receive the reimbursement tax-free, up to their allowance. 

What are the benefits of a Lifestyle Spending Account via Compt?

A Lifestyle Spending Account (LSA) is an employer-funded benefit that provides employees with a set amount of money (a stipend) to spend on a wide range of lifestyle and wellness expenses. Unlike traditional pre-tax benefits like FSAs and HSAs, LSAs are post-tax and highly customizable because you, the employer, decide which categories of expenses are eligible and how much money to allocate to them. Essentially, providing a Compt LSA gives each employee a personalized perk budget — with you setting the parameters. 

Why pair an ICHRA with an LSA?

There are clear employee advantages with either an ICHRA or an LSA. But together, they complement each other nicely to create a comprehensive and modern benefits package.

Enhanced employee well-being and satisfaction

Health insurance alone doesn’t guarantee holistic well-being. By pairing an ICHRA with an LSA, employers can support their people’s total wellness, both medical and nonmedical.

The ICHRA takes care of core health coverage, such as doctor visits, surgeries, and prescriptions, while the LSA picks up where traditional health benefits leave off. When employees can choose their own health plan and have money for their preferred fitness activities, stress relief, family support, personal growth, and other endeavors, they feel cared for in their daily quality of life. 

Think of an employee with a chronic condition. The ICHRA affords them a suitable insurance plan and medications, and they can lean on their LSA for yoga classes and healthy meal deliveries to improve their wellness. Another person might rarely need medical care, so they’re free to choose a minimalist health insurance plan and use the LSA for marathon-training expenses and paying down student loans.

When combined, these benefits showcase your commitment to employee well-being on all fronts, which can improve engagement and loyalty. 

Greater flexibility and personalization 

We know from the 2025 Annual Benchmark Report and 2025 Midyear Lifestyle Benefits Benchmark Report that flexible benefits are having their moment. Pairing an LSA with an ICHRA essentially gives employees two flexible accounts: one for their health coverage and one for their personal needs. 

The result is an extremely customizable benefits experience for each person. One employee’s package might look very different from their colleagues’ — and that’s a good thing! It means they’re each getting top value from their benefits, which will only increase their utilization. And actually using wellness benefits leads to better overall well-being, which studies show can positively impact business metrics like engagement and productivity. 

Simplified administration and budget control 

If you’re balking at the idea of administering two programs instead of one, take a deep breath. 

Each program is straightforward to manage, and together they can actually simplify your overall benefits administration. Both LSAs and ICHRAS run on a defined contribution model, which means there’s no ongoing claims management or complex vendor contracts like a traditional insurance plan. You set the budget; your people seek reimbursement within the rules. 

Think about it like this:

• With an ICHRA, you’re not responsible for negotiating health premiums annually or dealing with insurer paperwork. Employees make their insurance decision, and you just verify and reimburse expenses (often with help from HRA administration software).
• With an LSA, you consolidate potentially dozens of fringe benefits (and vendors!) into one stipend program managed through a single platform. Like Quickbase above, many benefits folks find LSAs cut down on HR workload compared to juggling multiple perk vendors.

There are financial wins, too. There are no open-ended liabilities, like premium increases or employees overspending on the company card. And whether you have 50 employees or 500, costs scale predictably. This makes it easier to plan and adjust benefits costs each year, as well as prove the ROI of your benefits spend. 

Built-in compliance

Finally, both LSAs and ICHRAs come with built-in compliance advantages. When designed correctly, ICHRAs help satisfy ACA requirements, and LSAs are taxable stipends, meaning they’re not subject to ERISA, COBRA, or complex IRS reporting requirements. 

Make it even easier: When you go with Compt, tax compliance is built right in. 

How to implement an ICHRA and LSA program

Implementing LSA and ICHRA programs together isn’t difficult, but it does require some thoughtful planning and communication. Here are some tips to help you design and roll out these benefits successfully:

• Identify business and employee needs to set your foundation. Start by clarifying what you and your employees want to achieve (for example, better health coverage? more flexible perks? tighter budget control?), then use surveys, focus groups, and/or historical data to identify related pain points. Align those insights with your business goals to decide on realistic parameters for both programs.
• Design a tailored benefits package. Next, define eligibility, reimbursement amounts, and covered expenses for each benefit. For LSAs, Compt can help you design the best stipend program for your people, and ICHRA classes can help you segment support by region, role, or schedule. 
• Tell your employees about the benefits and any changes. We all know benefits only work if people understand how and when to use them! Use info sessions, FAQs, and real-life examples to build confidence and excitement, and help employees avoid overwhelm with ongoing, accessible guidance and support — especially for ICHRAs, where they need to shop for their own health plan, possibly for the first time ever. 

With the right setup, this combination is often easier to administer than the programs it replaces. 

ICHRA + LSA = <3

Most employees don’t ask for perfect benefits. They simply want to feel like their choices reflect their day-to-day lives. An ICHRA and Compt LSA combo won’t fix everything overnight, but it will give your people more of a say — and reduce administrative complexity and liability. It’s a practical update with a long-term upside that provides a more holistic approach to lifestyle benefits and offers the type of support people need to stay, engage, and thrive.

Schedule a demo of Compt today.

Need buy-in first? Download our LSA + ICHRA one-pager to share with your team.