Many HR leaders have been putting their benefits programs under the microscope in recent years. Increasing costs have made it imperative for many businesses to take a hard look at the benefits they offer.
Unfortunately, traditional benefits programs tend to underperform. Neither employers nor employees are satisfied with them, and costs keep rising. As a result, many leaders recommend cutting benefits, but often without thinking about what they could be doing instead.
That’s where a Lifestyle Spending Account could come into play. This is a relatively new style of benefits program, but it’s already seeing great success. Not only can it help you control costs but it can also improve your employees’ participation.
What Is a Lifestyle Spending Account?
You know how traditional benefits programs work. You enroll all your employees in an insurance program with a group discount. You then pay premiums for the various benefits. When employees use those benefits, they get reimbursement as stated in the plan.
One of the issues with traditional plans is that they often come with plenty of limitations. Employees may have a cap of $700 per person per year on RMT, physiotherapy, and other alternative treatments. They might only receive 85 percent of dental costs up to a certain amount per year. They could have a co-pay or a deductible.
Limitations and exclusions lead to employees feeling that a benefits package doesn’t meet their needs. This leads to less engagement, which means you’re spending money on something no one is even using.
A Lifestyle Spending Account is a solution to this conundrum. With it, employees have much more freedom with their benefits. They can choose what to spend on and when to spend, as well as how much.
This increased freedom improves participation in benefits programs from around 15 percent to 100 percent. Employees also feel better supported by their benefits programs. You as the employer also realize benefits so you can keep offering an excellent program for your team.
How Does a Lifestyle Benefits Program Work?
A Lifestyle Benefits Program is usually based on the health spending account, or HSA, model. The employer contributes a particular dollar amount to an account intended for the employee’s use. The employee can then apply their benefits dollars up to the amount in the account for various purchases.
With an HSA, these purchases are usually medical in nature. They might include getting prescription medication covered, vision care, and dental care. The beauty of the account is that each employee has control over how they spend their dollars. An employee who needs prescription medication to manage a complex health condition can use their dollars there. Another employee who wants laser-eye surgery could apply their benefits dollars towards the procedure this year, then redirect their benefits into dental care the next year when they need a root canal.
It’s easy to see why employees love this sort of program, especially when compared to traditional benefits!
A Lifestyle Benefits Program goes one step beyond offering “just” medical or health spending, though. This type of program allows you to offer savings programs like RRSPs and wellness programs as well.
That means your team members have even more choice when it comes to how they want to allocate their benefits dollars.
Supporting Your Employees
As you can see, a Lifestyle Spending Account offers more flexibility and customization than the traditional group plan. It also offers you a chance to control costs, so you may continue offering great benefits for your team members year after year.
Better yet, the account can change as their needs change. Some employees may be focused on their families right now, but in the future, their thinking will shift to retirement savings.
Your employees’ needs have shifted. A Lifestyle Spending Account can help them manage these changes, both for today and for tomorrow.