Employers seek new ways to meet the needs of diverse workforces
Lifestyle spending accounts (LSAs) are the new kids on the benefit block and are fast becoming the popular kids as employers try to offer benefits that meet the changing needs of their diverse workforces. They are employer-funded accounts that employees use to support their individual needs. While only about 10% of employers have LSAs in place (2022 Mercer Insights Survey), 70% of employers are considering adding LSAs to their benefits package.
LSAs have been around for a few years, but there is renewed interest in them because of the flexibility they offer to both employers and employees. An LSA is offered as a flexible benefit to reduce absenteeism, retain top talent, and increase interest of potential employees. As well, employers can use LSAs to address employees’ desire for higher compensation without permanently increasing base pay. They are also a way to address point solution overload, says Mercer.
Rather than invest in another well-being initiative that employees may or may not use, employers can help subsidize a variety of services, products, or experiences to fit employees’ very different lifestyles.
Similar to HSAs
LSAs are similar to healthcare spending accounts (HSAs) in that they are flexible so the employee can choose how they will spend the money they are allotted. They can choose from a variety of lifestyle and wellness products and services that will help them live their healthiest life.
Eligible expenses in an LSA could include gym memberships, childcare or elderly care expenses, or public transit passes.
“LSAs are different from HSAs in that they can traditionally be used for more,” says Bronson Dameron, director of content with Awardco, an employee recognition and total rewards platform. “The parameters for LSAs can be opened up so the funds can be spent on a wider array of categories than HSAs normally can, which helps employers give more and better options for employee benefits.”
In fact, employers can customize the design of their LSAs to choose a program that groups benefits to align with the company’s values or that matter most to employees. Examples of LSA grouping programs could include wellness and fitness, mental health, family care, financial support, pet care, or home office upgrades.
Part of total rewards program
Awardco has launched LSAs as its newest feature, saying they are a great way to boost the reach and effectiveness of a total rewards program.
With Awardco’s LSAs, organizations can automate recurring employee allowances on a customized cadence. Employees can then spend their stipend on organization-curated approved expenses, such as wellness, home office, or personal care costs. This allows employees to spend their portion of the benefit budget on rewards most meaningful to them.
It says LSAs provide the flexibility to fit any organization while meeting diverse employee needs and cutting down on hassle. The LSA programs help administrators save time and effort while also spreading their benefits budget around to more employees, giving them more choice.
“With Awardco, employers can customize their LSAs by creating a unique redemption catalog that employees’ LSA points can be spent on, thus effectively customizing their own lifestyle spending account for their organization,” says Dameron.
