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Offering and providing flexible, customizable employee benefits can enhance employee satisfaction with your benefit plan, and allows employees to tailor their benefits so they can get the most out of your investment—which is great for both them and you. That's where Lifestyle Spending Accounts (LSAs) come in. LSAs help companies support employee wellness, work-life balance, and job satisfaction. Let's delve into the whats and whys of LSAs.
What are Lifestyle Spending Accounts?
An employer-funded LSA account supports employees' lifestyle and wellness needs. While LSAs sound similar to Health Spending Accounts (HSAs) or Flexible Spending Accounts (FSAs), they differ slightly. HSAs and FSAs are more focused on medical expenses, while LSAs are designed to cover non-medical lifestyle expenses.
Why LSAs are gaining popularity
With more than 43% of companies planning to offer LSAs by 2025, their popularity is no surprise. Here are a few reasons for their meteoric rise.
Personalization and flexibility
LSAs are versatile, and the options for using them are nearly limitless. This level of flexibility makes them a meaningful benefit; some common uses include:
- Health and wellness: Gym memberships, fitness classes, or personal trainers. Research and data show that most of the money is spent on health and wellness, which comprise nearly half of all LSA claims.
- Mental health support: Meditation apps, therapy, or wellness retreats.
- Productivity enhancements: Home office upgrades, tech gadgets, or ergonomic furniture.
- Financial wellness: Services like financial coaching or debt management tools.
Holistic focus
As work-life balance and wellness take center stage, employees want benefits that reflect these priorities. LSAs allow them to focus on their physical, mental, and financial well-being in ways that fit their lifestyle.
Inclusivity
If you want to champion diversity, equity, and inclusion (DEI) at your workplace, LSAs are a way to bridge benefit gaps for different groups, such as women, LGBTQ+ individuals, and neurodivergent employees. You'll foster a positive and inclusive work environment by tailoring your LSA to cater to your team and aligning it with your company's mission and vision.
How to set up an LSA for your employees
Setting up an LSA is simpler than you think but requires planning and execution. Here's how to do it:
Define your objectives
What do you want to achieve—enhancing employee well-being, attracting top talent, or improving retention rates? Your goals will determine the LSA's structure.
Decide on budget and allocation
You must decide how much to contribute annually or quarterly to each employee's LSA. This amount can vary depending on company size and financial resources.
Decide on eligible expenses and LSA type
Eligible expenses can be anything–wellness, education, home office supplies, or family care, as long as they reflect your company values and employee needs.
There are also various types of LSAs. Many companies choose reimbursement-based accounts, where employees pay for eligible expenses upfront and get reimbursed after submitting receipts. However, other options, like providing stipends through platform-based debit cards or apps, make it easy to get automatic reimbursements. Pick the option that suits your employees the best.
Give clear communication and guidelines
Develop a clear communication plan to introduce the LSA to your team, including how it works, its benefits, and what expenses are eligible for reimbursement. Communication is key to ensuring employees fully understand the LSA.
Implement, evaluate, and adapt
Implement the LSA and monitor its use. Gather employee feedback on what's working and what's not; this will help you fine-tune the program over time and adapt where necessary.
The future of employee benefits
By offering an LSA, you give your employees a benefit they can tailor to their changing needs and, thus, an invaluable resource. The flexibility to spend their stipend on family expenses, such as an unexpected bill, or health and wellness expenses, like a gym membership, allows them to focus on what’s important to them at the moment.
Benefits like these are vital in our busy, dynamic lives with ever-changing responsibilities. In an era where personalization and flexibility are essential, LSAs are shaping the future of employee benefits, creating a more engaged and satisfied workforce by aligning benefits with individual preferences. Talk to your broker or advisor to learn more.
Content provided by Q4intelligence
Photo by lightfieldstudios