The ultimate guide to managing Lifestyle Spending Accounts (LSAs)

The job market is more competitive than ever before. Workplaces looking to gain an edge when their employee recruitment and retention are increasingly embracing creative and flexible benefits. As a result, Lifestyle Spending Accounts (LSAs) are fast becoming a core benefit offering.

This guide tackles the basis of LSAs and provides management with the 5 steps needed to successfully implement an LSA and ensure your workforce is focused, motivated, and happy.

The value of Lifestyle Spending Accounts in modern workplaces

The benefits landscape is becoming increasingly competitive, and LSAs are an impactful way that organizations can become employers of choice overnight.

These accounts not only highlight the employer’s commitment to their workers’ general health, but they also help to promote a more healthy, more engaged, and productive workforce.

Annually, employers provide a broad range of benefits, yet statistics indicate that nearly 44% of employees choose to forego these options, perceiving little personal value in them. The increasing diversity of workers, coupled with more remote or hybrid models of work, calls for higher flexibility with benefits. LSAs offer the flexibility for employees to design benefits to fit their lifestyles.

This guide explores the core principles of LSAs and presents a five-step strategy for effective management, ensuring your workforce remains engaged and productive.

Learn more about LSA's impact in the workplace by downloading our Comprehensive Guide to Lifestyle Spending Accounts whitepaper.

Five essential steps to effectively manage an LSA

1. Evaluate funding requirements

Determining the right amount of funding per employee is a critical first step. Organizations can either align their contributions with industry standards or tailor them based on the available budget and employee count.

For example, offering remote work stipends is an excellent method to support employees in a hybrid or remote setting.

2. Select appropriate benefit options

The diversity in employee preferences means not everyone will value the same benefits.

From gym memberships to caregiver assistance or meditation apps, the key is to offer a range of benefits that cater to different needs. Conducting surveys can help identify the most desired benefits, ensuring that the choices offered resonate with the workforce.

Here are a handful of different benefits you could offer your employees through an LSA offering. 

Work from home benefits

Remote work stipends can cover expenses like home office setups or coworking spaces, offering flexibility and cost-efficiency.

Fitness and wellness

Options could include gym memberships, fitness equipment, or even alternative wellness treatments like aromatherapy or massage therapy.

Mindfulness and mental health

With a significant portion of the population dealing with mental health issues, LSAs can cover treatments and therapies not traditionally included in health plans, like online therapy or meditation apps.

Caregiving support

LSAs can also ease the burden of caregiving by covering expenses related to child and elder care, providing peace of mind for employees.

3. Decide on funding distribution

The timing of fund distribution (monthly, quarterly, or annually) should align with the company’s budget and the needs of the employees, ensuring flexibility and practicality.

Here’s what that could look like in practice:

• Monthly funding - this is a good choice if you have significant funds.
• Quarterly funding - a good fit if there is a limited amount of funds. Furthermore, in the event, employees forget to use their benefits for the month, they still have the next two months to use them.
• Annual plans - these are best for small business owners’ budgets

From our own research, here’s how funding frequency for LSAs typically breaks down:

Learn more about LSAs impact in the workplace by downloading our 2024 Lifestyle Spending Accounts benchmark report.

4. Establish spending timeframes

Setting realistic timeframes for fund usage is essential. Whether opting for quarterly plans or allowing some rollover, the goal is to balance employee flexibility with company budget constraints.

5. Prioritize employee education

In a remote work environment, effectively communicating the benefits and management of LSAs is paramount. Providing resources, organizing informational sessions, and ensuring ongoing support are key to maximizing the value of LSAs for employees.

Partner with Forma for easy LSA management

Managing a customized benefits package like an LSA can be complex.

However, partnering with experts such as Forma can alleviate administrative burdens, streamline the process, and allow HR and finance teams to focus on strategic initiatives.

Forma’s approach to flexible benefits is designed to meet the diverse needs of the modern workforce, empowering employees to choose benefits that truly resonate with their lifestyles and needs.

<span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Schedule a consultation</span> with one of our experts today and start offering an LSA that fits your organization.