Over the last few years, employment conditions have been tumultuous to say the least. Even among the recent wave of layoffs that have drawn media attention, the unemployment rate sits at the low level of 3.5% across the country. Finding strong candidates to hire and keeping excellent workers within the company is still immensely important and difficult for employers to do.

According to Alegeus, EBC’s administrative partner, 68% of employees say they plan to leave their current job within one year. This is bad news for hiring managers and human resources teams who are responsible for finding strong and qualified candidates. Hiring new employees is a time consuming and expensive process, with a cost of about $1,500 to hire an hourly employee and 100-150% of an employee’s salary for technical positions, coming from the same partner data. Multiply this across your workforce and you have an expensive hiring problem on your hands.

There are insights showing one clear way employers can avoid losing employees, which is evaluating their benefits program. With 65% of employees saying they would leave their current job for better benefits, based on data gathered from an Alegeus survey in April 2022, employers need to adapt to the changing wants and needs of the workforce to keep employees happy and bring in new talent. 

One way many employers are helping bridge this gap is by going above and beyond traditional benefits and offering lifestyle spending accounts (LSAs). LSAs are employer-funded accounts that use after-tax funds to pay for eligible expenses that aren’t otherwise covered by traditional benefits. With an LSA, employers have the opportunity to provide their employees with a benefit that can be used in a meaningful way to contribute to their overall well-being.

Supporting Employee Well-Being

The rise of remote and hybrid work over the last few years has created a shift where employees are placing more emphasis on flexibility and wellness within their careers. Nearly half of the workforce expects more day-to-day flexibility, a better work life balance, and an increased focus on well-being in the wake of the COVID-19 pandemic, according to McKinsey & Co. This means that creating a workplace where employees feel supported holistically can be a significant matter for attracting and retaining employees.

With all of this in mind, it’s time for employers to critically examine how their benefits are supporting their employees’:

• Financial wellness
• Mental health
• Social well-being
• Physical well-being
• Career advancement/opportunities

In today’s landscape, traditional benefits are not enough to meet the growing needs of employees. In order to attract and retain talent, employers must consider new ways to support employees.

Fast, Flexible, and Cost Effective

A lifestyle spending account (LSA) is a benefit booming with popularity that allows employers to cover their employees’ everyday expenses on an after-tax basis. It’s both a fast and flexible solution in a reality where the workforce demands both.

Not only are these benefits flexible, but also cost-effective option for employers to support their employees’ well-being without breaking the bank. Offering employees an LSA helps meet the desire for higher total compensation without permanently increasing payroll, as LSAs aren’t subject to annual increases like salary and hourly pay are. Beyond that, employers have the opportunity to evaluate their LSA program each year and tweak it depending on how the program is going. Employers also ensuring budget dollars are optimized because they retain any funds employees don’t use at the end of the year. 

Building Your LSA

Before creating a benefits program, organizations should establish concrete goals that will help guide decisions of the specific offerings. At EBC, experts from across our organization are willing to collaborate with employers to understand the goals of an employer and help inform how to drive certain employee behaviors to meet these goals. An LSA with EBC gives employers the opportunity to select a specific category to cover to meet their defined goals, or create even more flexibility by letting the employee select from a variety of eligible categories. A study from MetLife found that more than 90% of employees say the ability to customize their benefits is a “must-have” or “nice-to-have”, and an LSA is an excellent opportunity to provide immense flexibility that employees want.

Also, the Alegeus consumer study states that over two-thirds of employees expressed interest in lifestyle benefits in health and wellness, like gym memberships, and financial wellness, like planning resources. With a benefit as flexible as a lifestyle spending account, there are a variety of personal well-being goals employers can help employees achieve. Employers can help with a variety of personal well-being goals, from helping fitness goals by covering athletic gear, exercise or gym memberships, to financial well-being by assisting with financial planning services and budgetary education classes. Outside of personal wellness, employers can also achieve professional development goals such as covering continuing education courses or attending industry-specific conferences or promote workforce enablement with return to office incentives including gas, meals, or auto maintenance.

At the end of the day, an LSA is a flexible and cost-effective solution that helps employers meet numerous different goals to help promote their employees’ well-being. Contact us to learn more about LSAs and we’ll help you create a program that will help meet your goals. 

Attend our Webinar!

Looking to take a closer look at LSAs? On May 16, EBC is presenting a webinar on Lifestyle Spending Accounts where we’ll discuss market trends around LSAs, where LSAs fit into the overall benefits picture, who should offer one, and how EBC’s clients are using LSAs.