Setting up a lifestyle spending account (LSA) for your employees is a relatively straightforward process compared to tax-advantaged accounts such as health savings accounts (HSAs) and flexible spending accounts (FSAs). Still, navigating the ins and outs of setting up an LSA program can be daunting when you are starting from scratch. How do you create a program that meets your organizational goals and encourages high employee engagement?
Here are four things to think about when putting together an LSA program that can increase your success:
1. Budget
First, you’ll want to budget how much you would like to contribute to the account for each employee, the cadence at which you’ll contribute funds, and what happens to unspent funds. The answers to these questions are all up to the employer. Some employers choose to offer $500 right at the beginning of the year, while others may allocate $50 per month to each employee. Employers can also choose whether to roll over unused funds or allow the funds to expire in a specific timeframe.
2. Tailoring your LSA
Next, you’ll want to determine the lifestyle categories and wellness areas in which the funds can be spent. What matters most to your employees? There are several key strategies that you can take to learn more about your employee base. The first is the good old-fashioned employee survey. Building and designing a survey is complex, and a focus group can help develop the line of questioning. Stay and exit interviews can also provide anecdotal data that highlight employee needs and what is motivating them to stay or leave.
You can fully customize their LSA design, including:
- Name of the benefit (if something other than “Lifestyle Spending Account”)
- Contribution amount (e.g., $100)
- Contribution cadence (e.g., per week, month, quarter, year)
- Eligibility (e.g., full-time, part-time, remote)
- Unspent funds policy
- Spending restrictions
3. Selecting an LSA partner
After making the decision to build an LSA, the next step is choosing the right partner to help you deploy and administer your program. Key factors to consider include:
- Program design capabilities: Does the LSA vendor have the infrastructure and product features that will allow you to build a program that meets the unique needs of your organization? For example, many vendors have a limited marketplace that restrict employees to a small selection of places they can spend their funds. If you want to build a program that encompasses a wide definition of wellness, this might not be your best your best option.
- Payroll integration: Can the vendor integrate with your current payroll system? This ensures that the vendor always has an up-to-date directory of employees, including new hires, terminations, and eligibility (e.g., full-time vs. part-time). The alternative to this is a manual process that takes more time and leaves more room for error.
- Employee experience: What will the employee experience be like? Is the vendor’s technology intuitive and easy to use? Is it easy for employees to understand how and where they can spend their funds? Is the process for spending their funds relatively frictionless? For example, some vendors rely solely on reimbursements and don’t offer employees a way to use their benefits without first having to reach into their own pocket. This doesn’t provide the best experience, as employees must keep receipts, spend time uploading them, and wait possibly weeks to be reimbursed. With a card-first vendor that can also handle reimbursements, employees can spend their funds more easily while also having the option to be reimbursed if they choose to use their personal card.
- Customer support: How accessible is customer support for both you and your employees? You should know the hours of support, methods of communication, and service-level agreements for response times. Also check if there is a mechanism for employees to provide feedback on the support they receive. This shows that the vendor prioritizes the user experience and is dedicated to continuous improvement. If you’ll have a dedicated account manager, how will they help ensure the success of your program?
- Implementation and IT: Understand what the implementation process will look like for you and your employees. How long does implementation take, and will you have an implementation manager to help you throughout the process? What are the steps involved and what is needed from your organization? The vendor should have a thorough onboarding process that provides a high level of training and support.
- Ongoing partnership: A vendor should be just as invested in your program’s success a year in as they are at the beginning. Ensure that you understand the company’s values and how they play into the customer relationship. The right vendor will view your success as their own and provide expert guidance as you craft all aspects of your LSA program.
Ultimately, you should view your LSA provider as not just a vendor, but a key partner to your benefits program. With a well-deployed program, you can engage 80-90% of your employees and delight them with flexible benefits designed to meet their individual needs.
4. Employee education and experience
Once the program is designed, education is key so that current and prospective employees are aware of the benefit, how it can be used, and what happens to unspent funds. Make sure that employees detailed communication about the platform. A lunch n’ learn is a helpful tool to get the conversation going while boosting engagement. Reducing the number of steps for employees to sign up can also increase engagement. If you can automate enrollment and eliminate account creation, your employees can start using their benefits in just a few clicks.
If you have employees in countries outside of HQ, you’ll want to consider their experience as well, particularly if your company plans to scale teams in those geographies. With your potential technology partners, you should explore global capabilities, including language, currency, cost of living adjustments, and platform feature parity, such as cards and reimbursements.
A better benefits experience
Designing an LSA program can be tricky, but it’s worth the investment. The benefits include increased recruitment and retention, greater flexibility for your employees, and cost savings. By paying attention to these considerations, you can create a program that your employees will love and engage with.
Have more questions about what it takes to craft a thoughtful LSA program? Reach out at sales@getbenepass.com.
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