A compensation package is about more than just salary. In today’s employee-driven market, benefits and perks have taken on a whole new significance. Lifestyle benefits and perks go beyond health insurance and a 401(k) and speak to your company’s culture. In fact, 78 percent of employees in a recent survey said they were likely to stay with their employer because of their benefits. But what exactly does that mean? What is the difference between a lifestyle benefit and a perk, and do you really need to offer both?

What’s the Difference?

Lifestyle benefits and perks are often used interchangeably, but here is a helpful distinction between the two:

  • Benefits are non-wage compensation to help pay for expenses that an employee would otherwise cover with their income.
    • Examples of Lifestyle Benefits:
      • Transportation Costs
      • Childcare
      • Wellness Programs
      • Coaching or Counseling
      • Personal services (massage, haircuts, manicure, etc.)
  • Perks are extra rewards and are typically enjoyed at the office.
    • Examples of Perks:
      • Game room at the office
      • Long lunch breaks or “naptime”
      • Employee recognition programs
      • Free food or snacks at the office

Sometimes perks and lifestyle benefits can overlap. For example, a perk may be employee recognition, which may be rewarded in extra lifestyle benefit account (LBA) funds. Approximately 97 percent of CEOs, HR pros, and employees agree that benefits are a good way for an organization to demonstrate empathy, which is why LBAs are one of the fastest growing sectors of employee benefits.

Which one is better? 

Both lifestyle benefits and perks can help you to attract top talent and keep your valued employees happy. So which one is better?

Lifestyle Benefits Pros and Cons: 

Lifestyle benefits support your employee and their families by covering the cost of basic lifestyle expenses.


  • Creates and fosters a relationship of appreciation
  • Cost is based on what the employee actually uses
  • Flexibility to cater to each individual needs
  • Can be used as a motivational reward or recognition system
  • Easy to implement for in-office or remote workers alike


  • Is considered taxable income for the employee

Perks Pros and Cons: 

Many great work perks are things people want and make the environment more inviting for employees.


  • Perks are relatively low cost and simple to implement
  • Easy to cut when budgets get tight
  • Can be used as a motivational reward or recognition system


  • Don’t support the employee outside of the office
  • Can be quickly taken advantage of and create “entitled” employees
  • Doesn’t support an ongoing relationship or appreciation
  • Nearly impossible to implement in a remote work or hybrid office

If you imagine a car, lifestyle benefits would be things like a GPS system, lane departure warning, and hands-free parking. These keep your employee and their family safe and taken care of. Perks would be shiny rims and a powerful stereo. They are nice, but not necessarily considered beneficial.

Benefits vs. Lifestyle Benefits vs. Perks 

In years past, basic benefits like health insurance, paid time off and retirement. Employees were satisfied with a low deductible and a contribution-match. These basic benefits that companies have been offering aren’t cutting it anymore. What used to be unique lifestyle benefits are now referred to as perks. These are things like unlimited coffee, free food and the ability to work remote. Again, these are now so standard that employees usually only notice if they aren’t available and don’t appreciate them when they are.  Lifestyle benefits gives your company a competitive advantage by creating a truly personalized experience for your employees’ diverse needs. Lifestyle benefits are the one area where your employees feel supported and happy to be working at your company. Best of all, lifestyle perks are effective whether your team is fully remote, in a hybrid model, or going back to the office.

10 Advantages of Lifestyle Benefits

Lifestyle benefits or a Lifestyle Benefit Account (LBAs) are rapidly becoming the future of employee benefits for several reasons:

  1. An LBA gives your company a competitive edge among current and future talent
  2. LBA accounts allow to you stay true to yourself and your core values
  3. Happy and physically and mentally healthy employees are more productive.
  4. Research shows offering an LBA directly impacts employee engagement and retention.
  5. LBAs are customized to your people’s unique needs
  6. Lifestyle benefits promote an inclusive company culture by addressing all of the needs of your diverse workforce.
  7. Lifestyle benefits are relatively inexpensive compared to salary or other benefits.
  8. Your LBA can not only benefit employees but their spouses and families as well.
  9. Meaningful benefits help your employees to feel supported
  10. Simple LBA platforms reduce the administrative burden.

This trend towards perks and benefits – and away from the cookie-cutter basic benefits has been a long time in coming. The next step will be away from everyday perks and towards personalized lifestyle benefits.

Two Ways to Implement Lifestyle Benefits

If you’re not already offering lifestyle benefits, here are two ways to get started:

1. Focus on one area at a time

Sometimes the best way to start a Lifestyle Benefit Program is just to offer one area at a time. For example, Starbucks offers a tuition reimbursement program, or some companies will offer a health and wellness stipend. You can identify specific categories you’d like to build benefits around and focus there.

2. Offer all-encompassing stipends 

If you have several areas of employee needs, and you’d like to further personalize your offerings. You want to set up an all-encompassing stipend. This type of account offers products and services from multiple vendors in the area that apply to all of the categories that matter to you. That could include anything health and wellness to family, pets, charitable giving, travel, internet / cellphone, work-from-home equipment and more. This method allows you to cover the gamut of needs, situations, and preferences of your people and allows your lifestyle benefits to evolve.

If you’re hoping to recruit top talent, they will be asking about your benefits and perks package during the interview process. The types of perks and benefits you offer play a huge role in determining the type of company culture you want to promote. Your lifestyle benefits and perks show employees what truly matters to you and what your company values. Perks can be nice – but lifestyle benefits make a true difference. No matter how you slice it, benefits and perks matter to your employees while making your organization stronger and more cutting-edge. So choose wisely.