With the ups and downs of the economy and rising inflation, employees are looking to their workplaces for financial peace of mind and reasons to stay with the organization—lifestyle spending accounts can help.
For many HR teams, putting together an attractive and differentiating suite of benefits is job number one. At the heart of these employee benefits is usually making sure that employees can cover the costs of their medical expenses, get or stay healthy, and provide additional means of savings, such as 401(k) accounts.
However, as the Great Resignation continues to drive a massive talent shortage (currently, there are more than twice as many job openings as there are unemployed people in the U.S.), many employers have turned to perks, discount programs, and other creative ways to “tie a bow” on their benefits package.
How to provide creative benefits to match your company culture
Lifestyle accounts are an up-and-coming benefit that many employers are using to fund non-health related expenses. The possibilities are almost endless.
These accounts are typically offered post-tax and for some specified expenditures. At the start of the pandemic, we helped a MyChoice® Accounts client set up an emergency child care account for employees who needed additional support. Another client provides a buying program for their branded items.
These companies understand that providing funds and supporting employees’ personal and family goals can go a long way toward improving work-life balance. A recent Pew Research report indicates that 60% of men and 48% of women who changed jobs in 2021 report that their new job “makes it easier for them to balance work and family.”
The most-often used lifestyle spending accounts are usually set up for fitness programs, to help cover costs of gym memberships, fitness equipment, exercise classes, or even nutritional counseling. Other organizations are helping to fund employee “experiences,” providing a stipend for hobbies, trips, or other personal development, like cooking classes. Some employers are providing funds for financial planning, such as college savings, retirement planning, or general budgeting classes.
Organizations with large remote workforces might consider providing funds to help upfit a home office for longer-term work-from-home employment. As we continue to look broadly at supporting families and mental health, another lifestyle account type could be to help offset costs for non-medical counseling, like parenting or marriage counseling. The accounts can be set up to cover diverse expenses to meet the needs of diverse populations.
Combating inflation with benefits
In the current economy, lifestyle spending accounts can be part of a greater strategy to help employees offset the strains of inflation and rising fuel costs that might include transit or parking benefits and paired with a tax-advantaged account, such as a flexible spending account or health savings account that can provide a 20%–25% “discount” on health-related items and services through pre-tax contributions. Using all the “tools” in the benefits toolbox is imperative in the tight labor market and economic climate.
Who is eligible for lifestyle spending accounts?
Employers have a unique opportunity to provide a specified-use account to assist employees. Lifestyle spending accounts are typically set up as reimbursement accounts, and funds can be accessible via direct deposit or check.
Because these accounts are not tied to health-plan eligibility or pre-tax implications, organizations can broadly offer these benefits to part-time employees, contractors, and gig workers as well as their full-time population. These accounts are purposely configurable and can be set up easily due to fewer limitations around eligibility and expense categories.
Learn more about lifestyle spending accounts: Read our MyChoice Accounts solution sheet.