How to Use Lifestyle Spending Accounts to Create Agile Employee Benefits
Employee benefits should be flexible enough to help employees cope with modern stressors. Here's how LSAs can help.
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Over the last few years, we’ve experienced some pretty massive changes: From the impacts of COVID-19 to the rapid shift to hybrid and remote work to rising inflation and economic uncertainty, the one constant has been change.
Companies arguably have an imperative to respond to these types of societal pressures. According to one survey, 77% of Gen Zers say it’s important for an organization’s values to align with their own. In response to these pressures, many companies have designed initatives or taken public stances that highlight their commitment to certain values and employee experiences. For example, companies like Comcast, Disney, Netflix, and Dick’s Sporting Goods responded to the overturning of Roe v. Wade by offering their employees healthcare travel benefits so they could access out-of-state care.
Employees today expect this kind of care and responsiveness from their employers. To compete for top talent, companies need to offer benefits that are agile enough to easily adapt to current events and new employee needs. Lifestyle spending accounts (LSAs) and flexible benefits programs are empowering companies to do this. Because of their inherent flexibility, companies can easily adjust these programs to encompass new spending categories or cover new items.
Below are a few examples of how flexible benefits accounts are enabling companies to respond to current events, live out their company values, and compete for today’s talent.
Hybrid models are likely to be the new norm: According to a WFH Research survey of nearly 33,000 workers across 25 countries, most employees would trade a 5% pay raise to have hybrid flexibility. Creating an equitable hybrid work or work-from-home policy requires employers to develop fair and transparent policies around office requirements and build benefits plans that support employees wherever they are.
Employers should examine how their benefits for areas such as professional development, commuting, wellness, food, and childcare are supporting the different populations of their workforce. For example, professional development programs that only take place at the office aren’t inclusive of remote employees. But using a lifestyle spending account to provide flexible professional development benefits allows all employees to choose the continued learning options that best fit their individual preferences and learning styles.
Companies can also LSAs to provide flexible work from home benefits that employees can use to purchase desks, office chairs, computer monitors, and anything else they need to be productive at home. The flexibility of an LSA means companies can continue to add new eligible expenses as employees’ WFH needs change over time.
Jamf, a technology organization that provides management and security solutions for companies using Apple products, carefully thought through what employees needed at home and expanded their WFH account to include items such as tea and coffee equipment, under-the-desk treadmills, and mug warmers.
“Benepass helped Jamf employees transform their homes into functional and productive offices. By partnering with Benepass, we engaged 98% of our employees worldwide! We’ve extended this benefit to all new hires, and they love it too!” said Allen Houchins, VP of IT & Facilities.
LSA programs can also be a great way to incentivize employees to return to the office. With a flexible LSA, companies can experiment with the types of programs they offer employees as part of their RTO plans and add new eligible expenses that help employees with the costs associated with in-office work.
For example, many companies will immediately think of providing commuter benefits to employees. While offering these benefits on a pre-tax basis is an option, choosing to use an LSA to provide commuter benefits gives employees more freedom over their travel. Employees can use the LSA to pay for public transportation, carpooling, and parking, along with expenses that may not be eligible for pre-tax savings, such as tolls, gas, rideshares, and car or bike maintenance.
A return to office also means loss of time and an increase in other types of living expenses. Employees may need to pay for additional childcare hours or pet care, and LSAs are a benefit option that can help employees cover these costs to ease the burdens of returning to the office. Companies can even add home services as an eligible expense to help employees pay for cleaning services since they may have less time to dedicate to chores.
Check out our blog on 6 Flexible Benefits to Consider for a Smooth RTO Transition for more ideas.
Current research shows that 72% of employees are stressed about their finances during this time of volatility and high inflation. Some organizations have shifted around their benefits to offer an “inflation bonus,” with 73% of HR professionals indicating that inflation is a concern at their organization. Lowe’s even recently pledged $55 million in paycheck bonuses to hourly workers.
Not every organization may be able to offer a huge salary increase or bonus, but they support the financial health of their employees through creative flexible benefits programs.
Many Millennials face higher than-ever childcare costs and would value stipends from their employers that help with these expenses. Research by The Penny Hoarder found that 84% of parents feel overwhelmed by the cost of childcare. Almost 28% of parents have had to choose between paying for childcare or paying their rent or mortgage on time, while about 35% have had to choose between paying for childcare or paying credit card bills on time. Flexible childcare benefits could provide some relief for the parents at your company during record inflation.
Because LSAs are so flexible, companies can monitor the impacts of inflation and adjust their program to cover expenses that are becoming more expensive. For example, The Community Group added gas as an eligible spending category to their LSA program to help employees offset rising gas costs.
““We want to show that we are aware of current issues,” said Katie Graham, Chief Strategy Officer. “It’s easy to call Benepass and ask, ‘Can we make sure that is covered?’”
COVID, changing WFH policies, global events, and inflation all have the potential to negatively impact your employees’ mental health. Responding to current events means looking at the whole picture of the individual and their well-being, which includes mental health.
A flexible LSA can help employees support their mental health in the way that makes the most sense for them. While yoga classes may improve one person’s mental health, another person may feel more supported by a massage. To ensure your benefits are providing value, you can run frequent employee benefits surveys and assess whether there are additional spending categories or eligible expenses you can add to your LSA program. With an LSA, it’s easy to iterate your program over time so it’s always optimized for employee engagement and satisfaction.
Mindbody provides cloud-based online scheduling and other business management software for the wellness services industry. They implemented a Be Well initiative for their employees, and today employees use their Benepass funds on items such as individual therapy and counseling, relationship therapy, life coaching, meditation apps, acupuncture, and spa days.
“Benepass allowed us to close the gap between ‘meat and potatoes’ benefits like health insurance and offer a new self-care component,” said Benefits Manager Mia Valunte.
The task list for HR teams is long, and it’s difficult to accomplish alone. Whether your organization is evaluating new software, employee tools, or flexible benefits providers, vendors must meet your team’s complex needs.
Ask your vendors about areas such as program design capabilities, user experience, and customer support. The right vendors will act as strategic partners to your organization and help scale your programs.