When it comes to keeping your employees satisfied with employer-sponsored plans and benefits, there’s one thing for certain: you can’t please everyone. But instead of trying to squeeze each member of your staff into one catch-all benefits plan, there’s a more individualized approach you may want to consider. Lifestyle Spending Accounts (or LSAs) are a newer trend in HR and for good reason - they offer flexibility, easy manageability and serve as a more holistic offering for employees.
What Are Lifestyle Spending Accounts?
LSAs are employer-sponsored accounts designed to help employees meet their personal health and wellness goals or seek out self-care. Employees are free to use these funds for things such as gym memberships, yoga classes, supplements, books and more. The point of this perk is to offer flexibility for employees to spend it how they wish (within reason). Employees are not limited to doctors appointments or healthcare expenses, they can use the money where and when they want in a way that promotes wellness within their lives.
Benefits For Employers
LSAs offer advantages to both employees and employers: it provides flexibility in benefit offerings and works to combat employee stress. With an LSA, an employer has the ability to create parameters in terms of acceptable activities, products and services that the account money can be used for. Whatever money hasn’t been utilized by the employee, the employer gets to keep. This can make LSAs an especially appealing option for employers looking to offer flexible options for their employees while still staying conscious of their bottom line.
Benefits For Employees
According to The American Institute of Stress, job stress is a leading cause of health complaints, above financial concerns and family issues. In fact, 80 percent of surveyed participants said they felt stressed while on the job.1 As an employee, you want to make sure your workers are healthy, happy and taking care of themselves. While offering employees an incentive to participate in self-care can come with a monthly price tag, but you may find yourself reaping the financial benefits of more satisfied workers. It’s estimated that 1 million employees are absent from work every day due to stress, with unanticipated absenteeism costing companies in America around $602 per employee every year.1 Promoting wellness for your employees upfront is one way you can help combat the stress and anxiety many workers in America are feeling about their job.
How Do Lifestyle Spending Accounts Work?
An employer funds the LSA, which is taxable as income to an employee when they choose to spend it.2 The employer chooses how much to put in each account, as well as how often the account is filled. For example, an employer could choose to deposit an amount each month, quarterly or yearly for employees to use. It is then up to the employee to decide how and when they’d like to use the money.
While they’ve been growing in popularity over the years, it’s important to do some research before setting up an LSA at your company. You may want to gauge employee interest, talk to others who have utilized these accounts and work with your trusted financial partner to see how this will impact your company’s financials.
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