For decades medical insurance was the norm, college tuition assistance was nice and free coffee and snacks were the perks. This “benefits package” is archaic and won’t cut it in today’s market. Today’s employees are much more vocal about what they need and how their jobs can support their personal lives. Millennials and Gen Z want to know what benefits the company offers and won’t think twice about leaving a job or turning down an offer when the benefits don’t align with their values.
To some employers, pacifying an entire workforce seems daunting and impossible. How can I possibly group together a benefits package that makes everyone happy? How can I balance what my people need with what they want? Luckily, I’ve got the golden ticket and I’ll tell you why.
Lifestyle Spending Accounts are the future of employee benefits. In fact, during a panel discussion hosted by Employee Benefit Adviser, experts agreed, “Lifestyle benefits are becoming just as standard as medical, dental and vision benefits,” and more notably, “Advisers who don’t direct their clients to benefits that can significantly improve employee’s quality of life are missing the mark.”
In a 2018 Glassdoor survey, 63% of workers said that, next to money, benefits are what they’re looking for most in a job. And 92% of workers in a survey by the Society for Human Resource Management said that benefits are key to their overall satisfaction.
This is where small and medium-sized businesses can gain the edge in competing for talent and satisfying employees. Where huge salaries aren’t an option, in-demand, and cost-effective lifestyle benefits are.
What is a Lifestyle Spending Account (LSAs)?
Just in case you’ve been living under a corporate rock for the last few years, let me catch you up. Lifestyle Spending Accounts act as part of your overall benefits package. The dollars in the LSA are entirely employer funded and are used to support the lives of your employees and their families. When one employee needs additional help at home with childcare or meal service, and another wants a subscription to a local fitness club, the LSA serves both equally. The fund is set up by the employer and the employee can use the funds any way they like. An LSA is one way to show that you care for your employees’ overall well-being. It has been shown to help current employees remain happy and attract new talent to join your company.
What are the benefits of an LSA?
There are two key (and somewhat obvious) benefits of an LSA. The first is a recruitment tool and the second is a retention tool.
- LSAs act as a key recruitment tool in today’s market. People are less inclined to work for a company that doesn’t support their lifestyle. The Great Resignation showed employers that they can’t offer the bare minimum and expect great people. LSAs offer employees something more than a mid-range salary and health insurance. It’s a lifestyle support that shows them you care and offers them additional benefits to support their families and personal life.
- An LSA can boost employee retention by supporting health and wellness at a level your employees won’t find anywhere else. According to a Mercer Insights survey, approximately 70% of companies are considering adding an LSA to their benefits package in an effort to keep their top talent.
But wait there’s more…the hidden benefits of LSAs:
Although LSAs have been on the scene for five or six years now, they have taken a huge uptake recently, and for good reason. These hidden benefits are valuable to both employers and employees.
- Address employees’ desire for higher compensation without permanently increasing base pay: This is perhaps one of the best benefits of an LSA. It can be used to increase compensation, provide a bonus, reward, or other incentives without a permanent increase in salary.
- Address point solution overload: Rather than invest in another well-being initiative that your people may or may not use, an LSA allows you to subsidize a variety of services, products, or experiences to fit employees’ very different lifestyles.
- LSAs support diversity, equity, and inclusion: The universal nature of an LSA allows you to address benefit gaps for female employees, specific racial/ethnic groups, LBGTQ+ individuals, or populations with special life needs, such as family building or emergency relief.
- The LSA benefits the entire family: The phrase, “happy wife, happy life” might be outdated but it doesn’t necessarily make it wrong. When things are well at home, you have happier employees at the office. An LSA can help out the stay-at-home spouse, children with extra needs, aging parents, mental health, and other sources of stress your employees deal with after hours.
- Increased Employee Engagement: Employee engagement rates for LSAs are typically substantially higher than traditional single-merchant programs. Why? Because employees know they are taken care of at home allowing them to focus at work. At the health insurance company Bright Health, 93% of employees participated in a new LSA program with an 85%+ employee satisfaction rate.
- An LSA frees up your time. You don’t have to spend hours pouring over benefits package options to make decisions for your employees. Instead, manage less and give them more. You don’t have to choose what you think they want, the decisions are entirely up to them and the process is extremely simplified for you.
- An LSA Gives More Flexibility to Employees. These programs are designed to fit the unique needs of your workforce on an individual level. They can streamline home life after a long workday (like grocery delivery), provide an allowance for daily at the office, or mental health resources for the employee and their family. This is about offering your employees more choice and flexibility in creating their own benefits and supporting their needs as an employer.
- An LSA supports a Hybrid Workforce. You can enjoy the same perks regardless of where you’re working because the benefits create an equitable experience. You can use your LSA dollars in Salt Lake City, Miami, or Portland all the exact same way.
- LSAs Save Company Dollars. With an LSA, you only pay for what you actually use. Unlike funds contributed to an HSA, where employers pay even if the employee doesn’t spend it. This can lead to significant cost savings at the end of the year. With their LSA program, Bright Health saved over $250,000 annually due to voluntary forfeiture. It’s a win-win.
Gen Z and Millennial respondents, Over 50% of Gen Z and millennial respondents cite benefits as a deciding factor when choosing a company to work for. Making a benefits package that benefits both management and employees is the best way to attract and retain top talent in today’s market. Now you have access to the only benefits program that allows you to help your employees to repay student debt, adopt a pet, make monthly charitable donations, take a personal development course, and cover the cost of piano lessons for children all at the same time.
Ready to move beyond one-size-fits-all benefits? If you are considering introducing an LSA to your employees, give Beny a call. We’ll be happy to share what options you have and how they can fundamentally transform your team. Give us a call today!