As our lives become more complex, we all want to make life easier for our people. Free coffee and snacks are no longer enough. But how do you please every employee without blowing your people budget?
Large corporations with big budgets can attract talent with luxury lifestyle benefits. But today’s LBAs put all companies on the same playing field. The future of lifestyle benefits gives you the ability to give every employee exactly what they want without a huge benefits budget.
Lifestyle Benefit Accounts (LBAs)
Lifestyle Benefit Accounts (LBAs) are a relatively new benefit that is paving the way for the future of employer benefits. An LSA is like an HSA or FSA (flexible or health spending accounts). An LBA provides your employee’s funds to spend on whatever benefits they choose. These employee benefits are designed to help make workers’ lives better by going above and beyond standard medical, dental and vision benefits.
Need a massage? Use your LBA.
Looking for marriage counseling? LBA funds cover that too.
Want to get your truck detailed or have a cleaning service come to your house? LBA can do that too.
An LBA is perfect for small and medium-sized businesses to give them the option of providing elite-level benefits at a cost-effective level.
How HSAs and LSAs Differ
An LBA is a means for you to help employees support the health and wellness of your employees. But LBAs are significantly different from other spending accounts in two key ways:
- LBAs don’t carry the same tax advantages as HSAs, FSAs and HRAs.
- Employers decide how employees can spend their LSA funds, and acceptable products and services are managed through the vendor system.
- Unlike funds contributed to an HSA, employers pay for only the amounts employees actually spend
|Health Spending Accounts||Lifestyle Benefits Accounts|
|A flexible benefit that provides funds to pay for medical expenses.
Typical expenses can include:- Medical, dental and vision care.- Prescription Drugs – Physical and occupational therapy.
Withdrawn funds are not taxable. Both employee and employee contribute to the fund monthly. Fixed contribution amount
|A flexible benefit that provides funds for lifestyle benefits Typical expenses can include:- Gym memberships- Yoga classes- Counseling – Home Services – Travel Discounts – Life Coaching – Child Care Taxable benefit for employees. Employees don’t contribute funds. Avoids many of the legal or regulatory constraints of non-taxable funds. Employer provides funds at will and only pays for what the employee actually uses|
The New Normal
Today’s younger employees, like Millennials, don’t have the company loyalty that older baby boomers did. They don’t pride themselves in staying with the same company for 10-15 years. Instead, they are going to change companies if they are dissatisfied with the benefits offered to them. In fact, 60% of employees say employee benefits significantly impact their decision to take a new job or not, according to a Glassdoor survey.
Another survey by the Society for Human Resources Management said that 92% of workers agree benefits are key to their overall satisfaction. Lifestyle Benefit accounts have been popular in Canada and other countries for years, but they are still a newcomer in the United States. The focus on lifestyle benefits is only getting stronger and employers who don’t catch on are in danger of being left behind by top talent.
- Employers are finding that by adopting an LBA for their employees, they are reaping several positive benefits.
- An LBA shows employees truly care about them and take an interest in their lives outside of work.
- Happy and physically and mentally healthy employees are more productive, which is better for the bottom line.
- LBA accounts allow to you stay true to yourself and your core values
- Improved recruiting, retention, and employee engagement
- Employees with an LBA feel more satisfied with their job.
- 1 in 3 workers found money worries to be a distraction at work, an LBA can alleviate some of this financial stress.
- Lifestyle benefits promote an inclusive company culture by addressing all of the needs of your diverse workforce.
- Your LBA can not only benefit employees but their spouses and families as well.
- Vendors do a great job at offering all kinds of benefits allowing people to pick and choose services for their own current needs.
- Simple LBA platforms reduce the administrative burden.
Establishing an LSA
Because an LSA doesn’t carry the same legal or regulatory constrains as other accounts, they are relatively easy to set up.
- Set a budget. Decide how much you will contribute to each employee’s account, when and how to manage those funds. Monthly? Annually? As an earned reward or bonus? For example, if an employer offers $500 in an LBAs, the employer could deposit the full amount on Jan. 1 of each year and allow employees to spend that full amount immediately or make LBA deposits throughout the year, such as on a monthly or quarterly basis.
- Define the Account: Some LBAs are very specific, limiting the funds to expenses directly related to physical fitness and wellness. Others are wide-reaching to provide hundreds of different benefits. You’ll have to decide whether you want to limit the benefit offering or offer more options to your employees.
- Start Small: When you are incorporating an LBA, start small as your employees learn to use it and grow to love it. Chances are, it won’t take long for them to see the enormous benefits now offered to them, but it’s a good idea to start small. This way, employees have time to understand how they work and how to claim their funds.
- Communicate: Let your employees know what is available to them and how they can use their LBA. Most vendors will provide an app that your employees can use. Give them all the information about allowable spending and how to submit LBA claims using the app. Encourage them to use the funds available to them to benefit themselves and their families.
Get Out What You Put In
If you want your employees to give 100 percent every day they’re at work, you must give them the best as well. When your employees care deeply about the success of your business, and it’s important to show you care about them as well. An LBA is the best way to do that. Now you can encourage your career-oriented employees to use their LBA to cover the cost of conference tickets, professional development classes or motivational speaker events. Support your new parents with LBA benefits to cover the cost of childcare, meal delivery, or housecleaning. Encourage your young employees to travel, explore, and volunteer their time with LBAs to support their lifestyle. Now you can support each employee on an individual basis with one common system.