Lifestyle Spending Accounts: Offering Employees a Flexible Benefits Choice

BY Carrie Snider | February 27, 2024

It’s not always about dollars and cents, but about what you can do with them. That’s the takeaway that flexible benefits company Forma has found working with 280 companies across the globe.

Megan Burns, benefits strategy team lead at Forma, spoke to these findings at a From Day One Webinar titled “How Lifestyle Spending Accounts (LSAs) Revitalize Benefits for the Most Employee.” As a newer benefit in the industry, Lifestyle Spending Accounts (LSAs) are growing. Fast. The biggest reasons?

“The power in these programs is employee flexibility and choice,” Burns said. “Since employees can choose how to spend their money, there’s always something valuable for every employee to use those dollars on, and then no one is left out.”

A Changing Marketplace

It’s no surprise that the cost of employee benefits increases year after year. So benefits leaders need to ensure their dollars are working efficiently without compromising the quality of benefits. Employees are already feeling the pinch financially, Burns says, as the cost of living keeps going up.

“This type of stress is impacting both workplace productivity, and also makes employees more likely to explore alternative positions outside of your organization, directly impacting your overall retention,” she said.

Traditionally, lifestyle benefits solutions relied on a confusing point system, leading to low engagement and low appreciation. Meanwhile, it takes more work for the admin to run these programs. Enter LSAs: this new way of looking at benefits can be a win-win for companies in more ways than one.

An LSA, which can be called by many names, is a customizable spending account that the employer designs and sets up, then the employee decides how to spend those funds within the parameters. LSAs look different from company to company, depending on their goals.

Megan Burns, benefits strategy team lead at Forma, led the webinar (company photo)

Empowering Employees

Supporting employee wellness is one common way of structuring an LSA, Burns told the audience. You as the employer set the pillars and budget with specific parameters. For example, a company could allot $50 per month for each employee as part of their LSA.

“Once that’s set in place, the employee then gets to decide how to spend that $50. Within those program parameters, those pillars, they may choose to spend that $50 on a local gym membership, or purchasing a bicycle or running shoes because they like to be outdoors.”

But it doesn’t have to stop there. Employers could set up parameters for financial wellness, caregiving support, or other benefits that could help support employee wellness. Forma can help companies set it up and offer employees a debit card to a discounted store with 250 vendors, making each dollar go further.

Dollars are only debited from the company if they are used by the employee, and Burns said a majority of employees don’t always use 100 percent of what’s allotted to them. Not only that, but there is cost savings thanks to lower call volume and admin time required. For one company, Forma was able to save them $500,000 in the first six months, partially because they could use the Forma platform and offload their expensive benefits software.

“We worked cross functionally across a number of different teams to realize what that amount would look like. For this particular client, they did choose to reimburse for gym, home office expenses like internet, cell phone, and other wellness items.”

Gaining Popularity

Employers and employees have both benefited from this program, which is why Burns said LSAs continue to grow. In fact, 70% of employers are currently considering adding a lifestyle spending account. A projected 13% of companies will have them in place by 2024 and 43% by the end of 2025.

“Employers are more diverse and dispersed than ever before. There’s five different generations in the workforce, and the most efficient way to meet their unique needs is to provide them with choice and give them benefit dollars that they can then use towards what matters most to them.” That’s why LSAs also translate well across global populations, since they are customizable and can adapt needs country by country.

According to a Radford analysis, employees ranked their 401k match as the most appreciated and valued benefit program, with LSA as a close second. It’s interesting to note, too, that employees actually ranked less dollars given to them and an LSA as high as having higher value than more dollars put into a program that's specifically designed with strict parameters and less choice, Burns explained.

In Forma’s recent benchmark report of 200 companies with 450,000 members as of December 2023, the broad all-inclusive LSA is the most popular. One likely reason is that it helps companies reach their DEI goals.

“They want to lean into that flexibility of choice where everyone gets the same dollar value, the same dollar amount, and then they get to choose on how to spend that money,” Burns said.

One account some companies have set up is medical travel. Especially for those who are in underserved areas and require medical services in another area, employees can get reimbursed for travel costs associated with medical procedures. Education repayment and other development reimbursement is also high on the list of LSAs for companies, as are home office reimbursements, rewards and recognition, caregiving, and even meal delivery service. The opportunities are endless.

Editor’s note: From Day One thanks our partner, Forma, for sponsoring this webinar.

Carrie Snider is a Phoenix-based journalist and marketing copywriter.


RELATED STORIES

Applying Machine Learning and AI in HR: Proven Playbooks and Approaches

Jason Radisson, founder and CEO of Movo has a simple request of human resources executives: Don’t be afraid of the future.Movo is an AI-powered human capital management tool for the frontline. In a thought leadership spotlight at From Day One’s Minneapolis event, Radisson led a presentation titled “Applying Machine Learning and AI in HR: Proven Playbooks and Approaches,” where he went over some potential applications of innovative technology.“It doesn’t have to be scary, and it doesn’t have to be vague,” said Radisson, who previously was a general manager for Uber. “When I started Movo, I wanted to try to figure out how to bring a modern, flexible experience to everybody else’s workforce.”This early in its adoption process, Radisson says that AI is mostly reserved for the recruitment and retention of white-collar talent. But that could be changing.Jason Radisson of Movo led the thought leadership spotlight in Minneapolis“Now, what we’re talking about is a little bit more like outsourcing,” he says. “If you look at a lot of the different operations that we run in H.R., those are the classic things that already can be automated.“We’re starting to see globally that there just aren’t enough people to take these jobs. How long have we not had traders on the stock floor at most of the major markets in the world? How long has it been since an airline ticket was manually priced? There are all kinds of areas where AI and advanced systems already can generate a lot of value.”Another use case for AI and machine learning in the HR realm could be the ability to treat remote locations and distributed work locations just like you would an office building, says Radisson.“We’re in a flex, multiple-location kind of a world,” he says. “With today’s AI, a person at the head office with a smart system can distribute tasks and follow up on those tasks, wherever the’'re happening in the world.”Radisson left the audience with a piece of advice to continue to progress and stay ahead of innovative technological transformations: “I think all of us right now should have some kind of AI counsel,” he said.Referring to “somebody in the company that’s really looking forward to six months or 12 months trying to see what’s coming: Where would it make sense to pilot this? Do we have the developers we need? Do we need to borrow somebody else's developer platform? What’s the cost benefit? Just experimenting, seeing if a piece of automation adds value to the company.”Editor’s note: From Day One thanks our partner, Movo, for sponsoring this thought leadership spotlight.Dan Heilman is a writer and editor based in St. Paul, Minn.

Dan Heilman | June 17, 2024

Belonging for Everyone: Reimagine the Future of DEI

Without taking diversity, equity, inclusion and belonging (DEIB) training seriously, workplace inclusion will not improve. Cultural bias could corrupt the company, making it unsafe and undesirable for minorities in certain roles within a company. Companies deciding that DEIB is unimportant could see higher turnover rates than their competitors who utilize this training to support and accept their employees without judgment. At From Day One’s Dallas conference, Renu Sachdeva, head of client solutions at Talking Talent, North America, spoke to the importance of DEIB training in the workplace, especially in the midst of pushback. For Sachdeva, pushing work around DEIB forward is a driving point each and every day. She shared the story of Botham Jean, who was murdered by an off-duty police officer in 2018. Botham, who went by Bo, was a colleague of Sachdeva. Bo’s murder drew attention to racial biases, being that he was an unarmed Black man, killed in his own home. “Bo is a huge part of why this work continues to be so important to me today,” said Sachdeva. Despite the recent positive steps forward in diversity, equity, inclusion, and belonging, there are still many hurdles to jump over to reach the end goal, says Sachdeva. Many business leaders are already seeing budget cuts and reluctance to these initiatives. But this training is vital to understand the significance of inclusion for the long-term success of companies. Additionally, more workers consider it table stakes when considering a place to work.Renu Sachdeva, head of client solutions at Talking Talent, North America, led the thought leadership spotlight “94% of people in a survey said that it is very or somewhat important to them to feel a sense  of belonging in the workplace. And yet 75% have said that they felt excluded in some way,”  said Sachdeva. With a percentage so high, why would a company not want DEIB training within their organization? Satisfied employees means more productivity and higher retention rates. Talking Talent’s approach to DEIB is rooted in two beliefs. First, diversity, equity, inclusion, and belonging is for everyone. Second, you have to fix the culture. Saying DEIB is for everyone means that no particular ethnic group or cultural background is  excluded from the conversation. It should be at the forefront of the employee lifecycle, and practice in recruiting efforts, onboarding, and performance reviews. Rather than offering training as a one-time solution, it should be an integral aspect of the overall employee experience. Inclusive leadership and allyship training for current and future leaders ensures that each leader has the necessary skills to invite diversity and inclusion into the company. Sachdeva says that employees who get promoted may have exceptional technical skills, which is why they get promoted in the first place. Yet, they have not gained the managerial skills to foster inclusion and guide people underneath them as a strong leader. Each organization has its unique risks if effective inclusion is not a priority. Pushing the work around DEIB forward is a necessity, and can propel engagement and success, says Sachdeva.Editor's note: From Day One thanks our partner, Talking Talent, for sponsoring this thought leadership spotlight.Mary Jones is a freelance writer out of Ohio. Her work is featured in several publications including The Dallas Express, NDash, and The Daily Advocate.

Mary Jones | June 13, 2024

The Secrets to Boosting Remote-Team Productivity and Performance

To attract talent, employers need to offer remote and hybrid work, yet also need to create innovative arrangements that work for both the individual employees and the organization. Employees tend to think they're more productive working from home, yet research indicates that's not always the case. How to bridge the gap and ensure optimal performance?“Leaders need to know how to support these distributed workforces in ways that don’t just ensure that they’re physically at work every day, but that they’re performing their best in a sustainable way,” said Sarah Altemus, productivity lab manager at ActivTrak. “This will be a real differentiator for organizations,” she said during a From Day One webinar.ActivTrak provides interactive dashboards and modern software to help employers and managers gain insight into maximizing remote and hybrid workplace productivity. These tools help measure utilization, identify signs of individual burnout, summarize daily and weekly goal progress, and develop more balanced workloads.Leah Ivory, solution consultant at ActivTrak discussed key dashboards and reports that  provide employers and their managers with the tools to identify key results areas, measure individual productivity, measure team utilization, and spot opportunities to reestablish workload balance and engagement.ActivTrak’s software integrates direct email communication to foster coaching discussions among managers and individual team members to strategize performance plans and solutions to engagement challenges.Their one-stop dashboard provides a 30,000-foot organizational and team management system using graphs and charts that can be broken down by department, region, or group. It should be referred to daily to track engagement levels in real-time and over the previous 30-day period to measure goal progress. Users can also see team productivity metrics for every member and weekly utilization trends. Other insights include workload balance reports, coaching and personal insights, and more.These innovative tools help strategize high productivity in remote and hybrid settings. In 2024, most businesses have adapted to offering remote and hybrid work to keep talent. However, without referring to data there is no assurance that investing more in remote or hybrid work policies will be sustainable.Employers often omit key insights by looking at traditional outputs that deliver results like production, revenue, and quality. Altemus says that insights into the inputs, like how employees work, how to use technology, how processes are adapted, and how training influences behavior, offer valuable insights into optimizing remote and hybrid work performance combined with output insights.Sarah Altemus of ActivTrak led the From Day One webinar (company photo)“What happens when we don’t track the inputs is we put ourselves in a position where maybe we overhire, and when we overhire, we’ll have low utilization elsewhere in the organization. We buy technology that goes underutilized and have higher technology costs as a result of it.”Analytical tools revealing personal insights get to the root of the inputs: they identify who is overworking or underworking, who works better and where, and more information that gives employers and managers the opportunity to address the oncoming burnout or disengagement of a team member. Goals can be restructured and more personalized to improve productivity.The ability for managers to access the personal insights of every individual team member presents a highly personalized one-on-one coaching opportunity to strategize a performance plan supporting their upward mobility based on their projects, location where their productivity is the most efficient, or restoring their workload balance.“We’re really committed to being an employee-centric tool, empowering employees with their own data or providing the right level of information to the right level of people in the organization. We’re making sure that executives have access to the data they need for decision-making and managers are able to be effective,” said Altemus.Editor's note: From Day One thanks our partner, ActivTrak, for sponsoring this webinar. Stephanie Reed is a freelance news, marketing, and content writer. Much of her work features small business owners throughout diverse industries. She is passionate about promoting small, ethical, and eco-conscious businesses.

Stephanie Reed | June 12, 2024