Unlocking Employee Happiness and Productivity: The Value of a Lifestyle Spending Account (LSA) in Employee Benefit Plans
Employee well-being plays a crucial role in organizational success. This is where Lifestyle Benefits can be a valuable tool.
In the competitive labor market, employers are constantly seeking innovative ways to enhance their benefit packages. Employee well-being plays a crucial role in organizational success. This is where Lifestyle Benefits can be a valuable tool. These accounts, also referred to as Lifestyle Spending Accounts or LSAs, go beyond traditional offerings and provide employees with a flexible and personalized approach to managing their well-being, fostering a happier and more engaged workforce.
What is an LSA?
LSAs are employer-funded accounts that allow employees to set aside pre-tax dollars to cover a range of expenses beyond traditional health care. An LSA is a versatile benefit option. Through employer contributions, employees receive a debit card to use toward a variety of recreation, fitness, health and wellness goods and services. Employers determine the unique benefit structure that fits their population. Examples include:
Wellness: gym memberships, fitness classes, spa treatments, etc.
Lifestyle: streaming services, meal delivery, home office equipment, fitness trackers, and more
Mental Health and Well-being: counseling services, meditation apps, and other resources to address the growing importance of mental well-being in the workplace
Adding a benefit to help defray the cost of health and wellness expenses is an investment in employee time outside of work. Outside of greater financial contribution from their employer (42%), employees cite more benefits and resources to help with their financial well-being (33%) and more options and benefits to choose from (33%) as the most valuable improvements to their current benefits package, according to the 2022 EBRI and Greenwald Research Workplace Wellness Survey. Advantages of offering an LSA could include:
Boost employee engagement and satisfaction: By supporting employees' personal and professional lives, LSAs foster a sense of appreciation and loyalty.
Reduce health care costs: LSAs can help employees manage their physical and mental health, leading to fewer sick days and lower health care expenses.
Improve productivity and performance: When employees are less stressed and have a better work-life balance, they are more focused, motivated, and productive.
Increase tax savings: Employer contributions to LSAs are tax-deductible, while employees pay taxes only on the amount they spend.
Thinking about implementing a lifestyle benefit? Here are a few things to consider:
Defining eligible expenses: Determine which expenses you want to cover within the LSA framework.
Funding and administration: Decide how much to contribute to each employee’s LSA and choose a reliable vendor for managing the accounts.
Communication and education: Clearly communicate the benefits and rules of the LSA program to all employees.
As the modern workforce continues to evolve, so do the expectations and needs of employees. An LSA is a forward-thinking addition to your benefit plans, providing a comprehensive and flexible approach to employee well-being. By acknowledging and supporting the diverse needs of your workforce, you can cultivate a positive workplace culture, increase employee satisfaction, and ultimately drive higher levels of productivity and engagement. Learn more about how Nova’s Innovations Lifestyle Benefits can help employers expand their company culture and promote employees’ mental and physical well-being.