As employers search for new, sustainable ways to attract talent, the concept of lifestyle spending accounts (LSAs) is gaining serious traction. This new benefit aims to elevate wellness in the workplace.
In this guide, we’ll discuss the purpose of LSAs, how they work, and the ways in which they can take your employee motivation efforts to the next level.
Let’s get started!
What are Lifestyle Spending Accounts?
Lifestyle Spending Accounts (LSAs) are company-sponsored accounts that fund employee wellness expenses not covered by traditional healthcare plans. The great thing about LSAs is that you don’t necessarily have to deal with reimbursements.
With LSAs, you can offer funds that directly promote workplace health and well-being.
The Impact of LSAs on Engagement
The main purpose of the LSA model is to promote well-being and preventive healthcare. Employees who feel cared for tend to be more engaged – and engagement is a powerful source of productivity at any company, regardless of size.
In fact, when Gallup researchers studied performance levels at different companies across the U.S., they discovered clear links between employee engagement and business outcomes.
The data shows that businesses with a highly motivated workforce have:
81% lower absenteeism
18% increase in productivity
23% higher profitability
The Importance of Wellness in the Workplace
When you look at the indices related to workplace wellness, it’s as clear as a summer’s day that happy workers are the fuel that keeps corporate engines running. It’s that simple and that complex. Because how do you keep a workforce happy all the time?
LSAs provide part of the answer.
This type of employee wellness fund helps employees cover health-related costs as long as these fall within the realm of what the company considers to be an eligible expense.
According to Gallup, as much as 75% of medical costs accrued by companies come from preventable conditions. And over $300 billion is lost globally each year due to employee burnout. Incorporating an LSA into your current employee motivation strategy can help you build a stronger and healthier work culture.
If you want to learn about other key strategies to building a thriving workplace, we've made a guide you can access here.
What Can LSAs Be Used For?
LSAs cover a wide range of expenses, including home office equipment, childcare, fitness classes, and other self-care expenses. Depending on the parameters of the account, they can also fund certain lifestyle expenses such as professional training, food delivery programs, and convenience services.
The nature of the LSA really depends on where you want to focus your funding. But to ensure its impact, the LSA should cover expenses not typically included in a traditional healthcare plan.
Here are a few examples:
Streaming services
Physical health and mental health services
Fitness equipment
Nutritional supplements
Gym memberships
Groceries and food delivery
Auto maintenance
Financial services
Pet care
How Do LSAs Work?
LSA funds are tied to specific company spending. The employer decides how much money can be allocated and what the parameters for funding should be. In turn, employees are offered a stipend to cover a series of wellness expenses.
The idea is to allow employees to decide what benefits are best suited for their unique lifestyles.
As a manager, you can draw tons of value from the use of LSAs. Aside from being a powerful tool to promote work-life balance, LSAs can also attract fresh new talent while keeping your top performers happy!
There are two ways for employees to access LSA funds:
Through a virtual account: Employees can access LSA funds via an online platform or mobile application. A virtual account allows them to track available funds and make purchases directly from approved vendors.
Through reimbursement: Employees can access LSA funds by paying for eligible expenses out of pocket and then submitting a reimbursement claim to the employer. Once the expense is verified and approved, the employer reimburses the employee.
LSA Benefits for Companies
LSAs offer plenty of benefits for employees, but they can also do wonders for employers. Some of the advantages of having an LSA are:
It gives the company a competitive edge. Companies that offer LSAs can boost their (benefits) game in a competitive job market, attracting top talent.
Offering LSA funds sets the company apart from others who don’t, retaining talent.
It can lead to increased job satisfaction, which will automatically generate more engagement and productivity.
It helps build a positive and inclusive work culture – one that is sensitive to every employee’s wellness needs.
It takes your recognition efforts to a new level. Beyond the traditional pay raise, LSAs add to other corporate regards like cash bonuses and gift cards.
Here you can learn more about the impact of rewards in fueling employee motivation.
LSA, FSA, or HSA?
Maybe you’ve heard about Health Savings Accounts (HSAs) and wonder if this is the same thing. Maybe you’ve also heard of Flexible Spending Accounts (FSAs).
Unlike LSAs, HSAs and FSAs are tax-deductible personal accounts used for medical expenses and other costs. They’re not funded by the employer. To have an HSA or FSA, you need to set up the account yourself. Once you do, it can help cover medical expenses and other out-of-pocket costs with untaxed dollars.
Building an LSA-driven Engagement Strategy
A growing number of employees are demanding flexible benefits. And some employers have decided to do something about it. In 2022, 9% of companies had introduced LSAs as an added benefit. In 2023, 13% had an LSA in place. Another 35% were considering doing so in 2024. By 2025, 43% of employers are expected to offer them.
The trend is clear. Incorporate LSAs to build a stronger employee recognition strategy.
Reduce turnover costs and retain your most valuable talent. That way, you create a corporate culture that thrives on engagement and productivity!
About GoGift
GoGift, a leading global provider of gift card solutions, specializes in offering innovative and versatile gift card services to over 15.000 corporate clients worldwide. With a commitment to simplifying the gift-giving process, GoGift provides a broad range of gift card options from numerous popular brands, catering to a diverse array of tastes and preferences. Their services are designed to enhance the gifting experience, making it more convenient, personal, and enjoyable for both the giver and the recipient.
For more detailed information about GoGift, please visit their official website: https://www.global.gogift.com/