With millennials as the largest generation in the labor force as of 2016, the labor market has faced some drastic changes. For instance, this generation is coming out demanding higher wages, and as we’ve seen here in the last year, large corporations are beginning to make the transition to shorter workweeks to boost productivity. Additionally, millennials are attracted to jobs that offer a great benefits package. Not only do they appreciate the typical medical and dental benefits packages, but they are also impressed by companies who are willing to offer more.
There are tons of options out there in terms of perks, but LSAs, otherwise known as lifestyle spending accounts, have become extremely popular among companies. This is a trend that will continue to dramatically rise in the next five years. It’s not just the millennials that are attracted to LSAs either. Business owners are also jumping all over this new perk that they can offer to their employees. Why? Because LSA dollars are post-tax, which means they are considered additional income to the employee (which was known as a bonus in the past).
This means that employees must pay income tax on this money just as they would on the bonuses that were popular in the past. The nice part about LSAs is that the funds are discretionary, which means that employers can allocate and award funds as they see appropriate. Also, as part of these accounts, employers can set up different guidelines such as time limits (use it or lose it), quarterly installments, etc.
Here are some of the reasons you might want to get on board with offering LSA accounts to your team, and why they are expected to become so popular within the next few years.
1.) The flexibility of LSA’s
When you offer specific perks such as a gym allowance, or financial planning services, a few of your team members will appreciate the benefits, but not all of your employees will use them. A gym membership is great for those who enjoy exercising, and pet daycare is nice, but what if others that have these perks aren’t into exercising or don’t have pets? LSA accounts can be used for pet insurance, a spa day, contribution to a vacation, gym memberships or whatever the employee prefers!
When you offer your team LSA accounts, you offer them more flexibility. Your team can be awarded this money and use the perk they need or want the most. By doing so, you offer them a personalized experience and because of the fact, they will have full control where they spend this money. This makes employees more likely to engage with and get use out of it.
The flexibility is also great for employees that aren’t in the office much. It’s common for some perks to only be offered at the headquarters location. What about the employees that travel or work fully remote? LSA accounts can be a great incentive to anyone at any location.
2.) Easier to Manage
Benefits and employee perks can be a nightmare for your HR team and administration. Most HR teams put a lot of thought into what perks they can offer their teams, only to find out not everyone uses those perks. With LSA accounts, you award the money and that’s that!
The work that goes into employee perks can also be labor-intensive and take lots of time from your administrative team. With LSA accounts, it’s pretty simple. You just add to the account and call it a day.
Finally, taxes can also be a nightmare. Executives at your company can end up dealing with a disaster when it comes to specific perk taxes. With LSA accounts, your executives can rest assured knowing that your new perk is appropriately taxed.
3.) Tactical and Holistic
When you offer your team perks such as food, sporting event tickets or other entertainment activities, there is good chance money is being wasted. A team member might have a conflict with their schedule and not be able to make an event, or they just don’t use their dining expenses. With an LSA account, you know your employee is being taken care of, and your money is going toward something that matters to them.
When is A Good Time to Implement LSA’s?
Whether you are interested in adding employee perks or looking to make updates to an existing program, LSAs can add great personalization. Companies that have made the transition to offer LSAs have done so because they wanted to find perks that were cost-effective, personalized, and able to cater to employees that were not in the office (that were also tax compliant.)
Other companies have chosen to offer LSAs because they wanted to offer something unique that would be appreciated by their team, but not be too difficult to manage. For instance, these companies found that searching for a gym that everyone would enjoy took too much research time that they could have been investing in something else more relative to the business.
Some companies have chosen LSAs because they wanted to offer their team something similar to a bonus but didn’t have a lot of extra money. With an LSA, they can continue to add funds as appropriate.
How to Get Started with Lifestyle Savings Accounts
As mentioned, within the next five years you will continue to see a lot of companies making the transition to LSAs. This means that the job market will become even more competitive. At Work2Live, we want to help you build the best team out there. This is all possible with the excellent employee perks you can offer.
At Work2Live, our LSAs are designed to give your employees the perfect work-life balance. The LSA program is created to be meaningful and impactful. We recommend talking to your team to see what kind of perks they would want, to provide them with the ideal work-life balance.
Want to learn more about LSAs or want to set up a demo with us? Reach out to us at info@work2live.com and a team member will get you started!