The workforce has received some major shakeups over the past several years. With declining loyalty and job satisfaction rates, increased job hopping and the ongoing struggle to find talent, employers have a keen focus on doing more to hire the right people and perhaps more importantly, do more to keep their current employees around.

Given the ongoing challenges of today’s labor market, employers are focusing on new strategies with employee benefits, and lifestyle spending accounts (LSAs) are growing in popularity as a viable tactical and strategic position for many employers. According to recent surveys, 70% of employers said that they are considering adding LSAs to their benefits programs in 2023.

What's an LSA? 

A lifestyle spending account (LSA) is an after-tax benefit account that goes above and beyond the scope of traditional benefits. These accounts allow employers to build a benefit where employees receive funds for the things that matter to them – like professional development, care services, daily living expenses, and much more. At the same time, employers can encourage further professional and personal development of their employees by covering different expense categories. LSAs offer employers the chance to show their employees that they’re invested in them and want to provide a benefit that’s unique to their needs.

The Value of an LSA

For example, employers can help employees sharpen their skills in their field by covering professional development opportunities, like taking a continuing education course or attending a conference. The employer would benefit because their employee would improve at aspects of their job and may be more engaged at work because they recognize their employer cares about their career development. At the same time, the employee benefits because they get to learn or develop new skills that they might not have if their employer wasn’t paying for it.

New Product! EBC's LSA

EBC is excited to announce the launch of our Lifestyle Spending Accounts with plan administration beginning on January 1, 2023. With our LSAs, we have two main plan structure options that employers must pick when designing their plan – defined benefit and earned benefit.

With defined benefit, the more common path, employers choose how much the benefit will be, who’s eligible, and what expense categories they will cover.

The only difference with earned benefit is that eligible employees must earn their LSA funds on a predetermined basis set by their employer. Employers may choose the earned deposit option to incentivize certain activities. Some examples of incentives and activities include:

• • Wellness: wearing a fitness tracker, getting an annual physical, receiving a flu shot
  • Tenure: incentivize longevity with the employer for an allowance based on how long they’ve been there
  • Return-to-office: encourage employees to return to the workplace by offering LSA funds to help offset expenses incurred outside of work-at-home like gas and lunch.

Please note: With the earned benefit option, the employer is responsible for defining, managing, and tracking program activities. The employer must notify EBC who should receive the funds and when.

With either plan design, once an employee makes an eligible out-of-pocket purchase, they submit a claim through their online account at www.ebcflex.com and are reimbursed via direct deposit.

What can Employees Spend Their Funds on?

Since LSAs do not receive the same tax benefits as traditional notional accounts, such as a flexible spending account (FSA), the employer has a lot more leeway when it comes to choosing eligible expense categories.

Here are the expense categories and a few examples of eligible expenses:

• • Fitness: gym memberships, athletic gear, exercise equipment
  • Work from Home Expenses: home office equipment, office supplies, Internet bill
  • Professional Development: continuing education courses, conferences
  • Return to Office Incentives: gas, meals, auto maintenance
  • Care Services: adult and child care-related expenses
  • Convenience Services: grocery delivery, food delivery, dry cleaning
  • Financial Services: financial planning, budgetary education classes
  • Pet Care: daycare, grooming, insurance
  • Work Uniforms or Equipment

With EBC’s Lifestyle Spending Accounts, employers can pick one or several different expense categories. If they choose multiple categories, they can allocate the budget to be split by category or allow the funds to be used on any of the chosen options.

Example: An employer chooses to offer $1,000 into the Lifestyle Spending Account. They can select specific categories, such as work-from-home expenses and professional development opportunities, and split their allocation to cover $500 of each category. Or, if they want to offer more flexibility to employees, they can cover $1,000 for all eligible expense categories listed above.

The flexibility is endless when it comes to LSAs. Employers can create a plan that supports their goals while offering their employees funds that is unique to their needs. To top it all off, employers keep any funds that employees didn’t use throughout the plan year.

Upcoming LSA Webinar

There’s so much more to learn about Lifestyle Spending Accounts. Next month, EBC’s VP of Business Development, Brian Connelly, will be discussing all things LSA, including:

• • Market trends around LSAs
  • Where LSAs fit into the overall benefits picture
  • Who should consider offering an LSA and why?
  • EBC’s new LSA product

Register today: www.ebcflex.com/webinars