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Your Guide to Employee Lifestyle Benefits: What to Offer and How

Considering offering lifestyle benefits for employees? This guide covers their pros and processes to follow.

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Lifestyle benefits are increasingly popular with employers who need to attract and retain talent, improve employee engagement, and support their workers in every aspect of their lives. A Mercer report reveals that 70% of employers are considering adding a lifestyle spending account—a particular way to distribute lifestyle perks—to their overall benefits package. 

But what do they include, and how can employers set them up? 

What counts as a lifestyle benefit?

Lifestyle benefits are non-salaried benefits provided to employees to support their personal and professional experiences. Going beyond standard health insurance and gym memberships, lifestyle benefits aim to support the “whole” employee, including all aspects of their physical, mental, and financial health and their aspirations within and beyond the workplace. 

Employers can offer truly creative lifestyle benefits, which might fit broadly into the following categories: 

Why do employees want lifestyle benefits?

Employers may be on the fence about offering employee lifestyle perks if they’re already supporting their workers with generous base salaries and traditional benefits like 401(k) plans or health savings accounts. Here are some compelling reasons why your employees would love you to add them to their benefits mix: 

Support their work-life balance 

73% of workers believe work-life balance is a top consideration when choosing a job, second only to salary, according to HubStaff research. Employees don’t want to burn the candle at both ends; they need to balance the time spent working with the time they spend outside of work with their friends and family and pursuing the things they love.

Lifestyle benefits can help them reduce stress, improve their overall well-being, and feel enriched in both their personal and professional lives. 

Boost their health and wellness 

From rising cases of employee burnout to the health risks of a sedentary lifestyle for desk workers, it’s easy for your people to let their physical and mental health slide. 

Wellness benefits demonstrate your commitment to employees’ health and make it easier for them to prioritize activities like exercise, mindfulness training, and healthy eating.

Offer greater flexibility 

One-size-fits-none employee benefits are outdated. Employees now crave benefits they can tailor to their specific situation. 

Example: Petra, aged 36, is a single working parent who needs support paying for her twins’ daycare. George, aged 62, has no need for childcare assistance but wants to improve his fitness following a heart procedure. Flexible lifestyle benefits allow individual employees to select the benefits that best suit their life situation. 

Embrace DEIB 

57% of C-suite executives have grown their diversity initiatives over the past 12 months, according to a Littler Study. Offering inclusive lifestyle benefits is just one way to support a diverse workforce by offering services that cater to the unique needs of different demographics or people at various life stages. 

Simplify reimbursement 

Traditional benefit reimbursement models have been flawed for employees. They must pay for a particular expense upfront, file a reimbursement claim with their benefits team, and wait for the claim to be processed and approved. Depending on the size of the claim and the length of time spent waiting to receive the money back, they can be left out of pocket for several weeks or months, potentially racking up debt in the meantime. 

Lifestyle benefits are often deployed using stipends or through a lifestyle spending account, where employers provide the funds upfront, and employees spend their allowance. Employees can access their benefits quickly, with no need for an admin-intensive process.

How to offer lifestyle benefits

There are two main routes to setting up lifestyle benefits: creating individual categories or using an all-encompassing lifestyle spending account. 

1. Setting up individual lifestyle benefits 

Employers can divide lifestyle benefits into various categories, such as health & wellness, family & childcare, remote working, etc. For each category, you’ll decide how to deliver the benefits, for example, using a stipend, allowance, or reimbursement model. Then, you’ll communicate to your employees how to access their perks or fringe benefits

Pros of using individual lifestyle benefits 

  • Employees can easily understand what they can gain from each benefit. 
  • Employers can target specific lifestyles, demographics, or health issues. 
  • Employers can make the most of existing vendor relationships and optimize their spend in each category.

Cons of using individual lifestyle benefits

  • Employers might need to manage multiple vendors and information sources, which adds time and complexity versus a single account on a single benefits platform.
  • Employees must juggle multiple accounts to access their benefits, which can lead to a drop in participation.
  • It’s harder for employers to track program engagement and measure ROI on their benefit spend when it’s spread far and wide. 

We put together a guide to employee stipends to provide an overview of this popular employee benefit and offer inspiration as you design your individual stipend program. Download the guide to learn about the types of stipends available and how to design a successful program.

A Complete Guide to Employee Stipends: 14 Ideas With Tips and Best Practices

2. Using a lifestyle spending account (LSA)

A lifestyle spending account allows your employees to access their benefits in a single location. Employers add a set amount to the LSA, define eligible spending categories, and employees can pick and choose the benefits that are most relevant to them from one month to the next. 

Pros of using a lifestyle spending account 

  • Employees have the power of choice, selecting benefits that resonate with them and meet their specific lifestyle needs.
  • Employees can access all their benefits quickly and easily in one place, streamlining the process for both parties.
  • Employers save money by only paying for the benefits their employees use. 

Cons of using a lifestyle spending account

  • Employers must spend time deciding the types of eligible spending categories they want to offer. This is only a consideration when launching or reviewing an LSA. 

How to set up an LSA

A lifestyle spending account promises simplicity both for employees who access them, and benefits administrators who set them up. Here’s how easy it is to get started: 

Choose a provider

The first step is to shop around for benefits vendors that meet your needs. Look for: 

  • Pricing: How does the vendor’s pricing model work, and does it match your budget? 
  • Flexibility: How easy is it to change your arrangement, for example, if your headcount scales or if you identify new goals for your benefits package? 
  • Features: While most LSA accounts will have features in common, are there any distinctive elements that set one vendor apart from another? 
  • Customer service: Does the vendor offer phone, email, live chat, or community support? When can you access it? 
  • Customer reviews: How do existing customers experience a particular vendor? Check out customer success stories, user ratings, and real-life reviews from platforms like G2. For example, Benepass scores 4.8 out of 5 with 92% 5-star reviews.  

Determine what’s eligible 

A quality benefits provider will allow you to customize your lifestyle spending account according to your unique benefits strategy and requirements. To do so, define a selection of eligible spending categories for your lifestyle spending account, which might include: 

  • Financial wellness
  • Professional development 
  • Mental health counseling and support
  • Physical health and fitness 
  • Family formation 
  • Childcare 
  • Remote working
  • Food 
  • Personal and home care 
  • Social events and entertainment 
  • Transportation

Select your typical contributions 

The beauty of lifestyle spending accounts is they’re adaptable to your budget and any existing benefits arrangements you may have. To give you an idea, our 2023 Benepass Benefits Benchmarking Guide revealed that the average LSA perk amount per person is $169. 

To help you craft a standout lifestyle spending account, we put together a comprehensive guide to setting up an LSA that includes templates, ROI calculations, tips, and best practices. Download it here

Launching a Competitive LSA: 7 Steps for Success

How to offer lifestyle benefits with Benepass

Benepass offers a lifestyle spending account which is our most popular type of perk across our customers of all sizes. 

  • 75% of large companies offer an LSA with an average perk amount of $160 
  • 63% of medium companies offer an average perk amount of $143
  • 45% of small companies offer an average perk amount of $130 

Download the complete guide to learn more about how companies of various sizes and industries are designing their benefits programs. 

2023 Benepass Benefits Benchmarking Guide

Launching your own Benepass LSA is a simple four-step process: 

  1. You’ll define what qualifies under your lifestyle spending account, for example, wellness, professional development, etc. 
  2. We’ll implement your unique policy template and issue your Benepass Visa cards. 
  3. We’ll connect to your payroll system to automate enrollment for your employees. 
  4. You’ll invite your employees to Benepass, and they can start using their lifestyle benefits from day one. 

Ready to learn more? Request a free Benepass demo today or contact sales@getbenepass.com to connect with a benefits specialist. 

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Rebecca Noori

Rebecca Noori is a freelance HR Tech and SaaS writer who is obsessed with our world of work. She writes about everything from employee benefits and performance management to upskilling and productivity tips. When she's not writing, you'll find her grappling with phonics homework and football kits, looking after her three kids.

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