A lifestyle spending account is an innovative employee benefit that allows employees to choose how to spend an annual or monthly stipend provided by their employer. Lifestyle spending accounts are a key component of employee benefits platforms and are becoming an increasingly popular way for organizations to enhance their employee benefits packages. The goal of a lifestyle account is to improve employee satisfaction, retention and engagement by empowering employees to select benefits that align with their personal needs and preferences.
Lifestyle spending accounts provide a win-win for both employers and employees. For employers, these accounts can help attract and retain top talent by providing desired flexibility and choices in benefits. They also allow organizations to align their benefits offerings with core company values around employee health, wellbeing, growth and happiness. For employees, lifestyle accounts provide the ability to spend on a range of options such as gym memberships, pet care, entertainment, travel and more based on what matters most to them. Any unused funds can roll over month after month, helping employees maximize these workplace benefits.
The key for human resource professionals is designing a lifestyle spending account plan that works best for their unique organization. This involves understanding the demographics and desires of their workforce, benchmarking against industry trends, and utilizing HR management strategies to create a compelling yet fiscally responsible program. By leveraging insights in this article, HR professionals can feel equipped to provide impactful lifestyle account benefits that will resonate with employees. The end result is higher engagement levels that promote recruitment, satisfaction, and retention within the modern workforce.
Key Factors to Consider
When designing a lifestyle spending account plan, there are several important factors for HR professionals to consider:
- Employee desires - The most critical starting point is surveying employees on what benefits they value most. Gathering input on their wants and needs for financial, health, family, and other benefits allows employers to tailor offerings accordingly. This direct engagement also helps employees feel heard.
- Company culture and values - The benefits package should connect to the organization's core values and culture. For example, a company focused on employee growth could offer tuition reimbursement. A fitness-oriented company could provide gym discounts. This alignment reinforces the company mission.
- Industry trends - Review typical stipend amounts and popular benefits by industry. For instance, technology companies often provide higher stipends ($2,100+), while industries like education offer lower amounts around $700. Benchmarking against peers helps guide appropriate offerings.
- Inclusive options - Ensure choices meet the needs of diverse employees, regardless of life stage. Offerings like pet insurance won't resonate with every worker. Provide an array of voluntary benefits to provide something for everyone.
- Fund usage - Allow flexibility in how the stipend is used, within program guidelines. Giving employees autonomy over their benefits dollars increases satisfaction and perceived value.
- Administration - A streamlined employee benefits platform simplifies benefits management for HR. It centralizes enrollment, tracking, disbursements, and other administration for lifestyle accounts.
Considering these factors will ensure you design comprehensive lifestyle spending accounts tailored to your workforce demographics, company culture and industry norms. This thoughtful approach leads to improved employee engagement within the benefits program.
Best Practices for Designing a Lifestyle Plan
Based on our experience administering lifestyle spending accounts, here are some top recommendations for HR professionals:
- Offer an annual stipend for employees to spend based on their individual preferences. Typical stipends range from $200 for government roles to over $3,000 for pharmaceutical companies.
- Include a diverse mix of benefit options like pet care, gym and fitness reimbursements, entertainment, travel, technology, student loan assistance, etc. Employees appreciate variety and choices.
- Allow unused stipend funds to roll over year after year. This incentive helps increase engagement and lets employees save for bigger purchases.
- Consider tiered stipend amounts based on tenure, performance or position level. For instance, provide higher amounts for managers or long-tenured employees.
- Alongside the LSA, offer complementary pre-tax accounts like HSAs, FSAs, and commuter benefits. These save employees money on eligible healthcare and transportation expenses.
- Utilize an employee benefits platform to seamlessly manage enrollment, track fund usage, process claims and other administration. This simplifies HR's workload.
- Promote the program through a robust employee education campaign. Clearly communicate details and empower employees to maximize their benefits.
- Conduct periodic surveys to gather feedback on the program and evolve offerings as needs change. This ties back to direct employee engagement.
Following modern best practices for lifestyle spending accounts ensures HR provides the most compelling, personalized and valued benefits options within their available budget. Employees will appreciate the choices and flexibility.
Some key takeaways for HR professionals designing lifestyle spending account plans include:
- Avoid a one-size-fits-all approach. Survey employees and extensively customize offerings based on their diverse needs and preferences. This level of personalization boosts engagement.
- Align benefits with company culture and values around wellness, growth, work-life balance and more. Employees appreciate continuity between their workplace culture and benefits.
- Provide ample flexibility and choices in how funds are used - whether for pets, fitness, student loans or other options. Employee autonomy increases satisfaction.
- Benchmark stipend amounts and offerings against industry data to remain competitive. However, also focus on your unique employee demographics and desires.
- A thoughtfully designed lifestyle spending account plan, backed by an effective benefits platform, can significantly boost recruitment, retention and satisfaction. It shows employees they are valued.
- Periodically survey employees, even after launch, to adapt the program as needs change over time. Continual evolution is key and will increase engagement.
By following modern best practices around choice, flexibility, customization and leveraging technology, HR professionals can craft lifestyle spending accounts that delight employees and provide strong ROI for the organization.
In today's competitive talent landscape, organizations must continually evolve their benefits offerings to attract, retain and engage top employees. Lifestyle spending accounts provide a powerful tool to increase satisfaction by letting employees choose benefits tailored to their needs.
When designing a lifestyle account plan, avoid a one-size-fits-all approach. Survey employees and conduct extensive research to provide the most resonant, customized program. Ensure offerings align with company values around wellbeing, growth and work-life balance. Provide ample flexibility in how stipends can be used while leveraging a streamlined benefits administration platform.
Follow personalization, variety, and autonomy, while simplifying HR administration. Benchmark against industry data to remain competitive, but keep a laser focus on your employees' needs and preferences.
With a thoughtful approach backed by a scalable benefits technology solution, lifestyle spending accounts can become the crown jewel of your rewards program. Employees will feel valued, empowered and appreciative of the choices available to address their diverse needs. The result is a more engaged, productive workforce that recruits talent, boosts retention and fuels your organization's continued success.
If you are looking for a tailored solution like this for your organization, give us a call.