20 ways to find budget for Lifestyle Spending Accounts
Get tips for ways you can get funding and budget for Lifestyle Spending Accounts at no extra cost with existing resources in place.
How to justify the budget for Lifestyle Spending Accounts
Implementing Lifestyle Spending Accounts (LSAs) may be the most powerful way for organizations to offer the most meaningful and competitive employee benefits programs.
When done right, LSAs:
- Give employees more flexibility and choice to get benefits that are meaningful to them
- Cut the administrative burden for benefits professionals
- Stretch budgets further, eliminate wasteful spending, and help make every dollar count
In this blog, we will cover the 20 ways to find the budget to support a Lifestyle Spending Account (LSA) program. You may not have to find new dollars to spend. From cutting costs on office supplies to negotiating with vendors, we’ve got you covered.
20 tactics to get the budget for Lifestyle spending accounts
1. Consolidate various employee benefits vendors
LSAs are unique in that, unlike other benefits, they don’t require a new budget and add value! Most LSAs are justified by consolidating vendors, saving on program costs, reducing administrative burdens, and simplifying processes across legal, payroll, IT, and other functions. The construct is flexible where multiple options can roll up and function under one system. As a result, a Lifestyle Spending Account (LSA) not only reduces the cost of benefits it proves valuable by offering more choice and flexibility.
*In addition to consolidation savings, Forma is backed by a world-class member support team. The combination can help save admin time with a dedicated resource available to answer employee questions 24/7.
2. Use wellness funds offered by healthcare providers
Medical carriers and healthcare provider programs commonly include wellness incentives as part top of their core programs to stay competitive. Access to these funds is often complicated, sometimes with highly complex reimbursement policies. Rather than struggling with the complexities, shift the wellness incentive funds to a modern, easy-to-use LSA. And, you can cover a broad range of options in the benefits package beyond what's in the group health plan.
*At Forma, we can help sift through the policy, master eligibility, and ensure dollars are used.
3. Convert wellness challenge dollars
Wellness challenges can cost anywhere from $150 to $2000 per employee, which can be a big expense for an option that only draws in a small slice of the workforce. While the intent is to encourage workforce well-being, the execution has limitations (again, not everyone will participate). A better way to ensure workforce well-being would be to shift the wellness challenge funds by adding an LSA with its flexible construct. This way, employees select options that are meaningful and motivating on their terms.
4. Remove costly expense software.
Many companies rely on expense software with cost-per-click type charges. For example, some products charge a dollar amount to process each claim. Add to that the time it takes staff to input information and the price only goes up. Instead, consider consolidating and streamlining with a holistic solution. Using flexible LSA benefits technology offers a modern solution to drive efficiency and save costs. And, HR and payroll teams save time which can be another form of savings.
*At Forma, we can help you uncover hidden cost savings. Using the bespoke tooling and data modeling in our ROI calculator, we can identify inefficiencies, focus spend, and unlock opportunities to save.
5. Shift a small portion of the YOY comp increase.
Ever wonder why we spend more time thinking about how we’ll spend airline miles or gift cards than cash? It’s behavioral economics. Applying the principle to pay increases, the benefit can be short-lived, especially in lean years. However, you can stretch the impact longer by taking a small percentage and moving it into an employer-sponsored spending account. For example, instead of a 5% merit increase, give 4% and create new spending accounts with leftover 1%. The perceived value will be greater.
6. Repurpose 401k match contributions.
Studies show people prefer an employer who contributes LSA to a 401k. Why’s that? An LSA can be used immediately whereas a 401k is a long-term savings play. Yes, there’s a clear advantage to saving for retirement. However, a nice way to balance long and short-term needs would be to take a bit from the money aligned to 401k matches and put it into an LSA. Then, everyone gets a little something.
* A conjoint analysis Zoom conducted showed employees rated LSAs as the #1 benefit and that they’d prefer LSA funds over 401k match dollars.
7. Save by bundling pricing for pre-tax and LSA administration
Companies can eliminate redundancies, software spending, and admin time by consolidating all of their spending accounts on a single platform - including those that are post-tax and others that provide tax advantages. Traditional taxable benefits such as Flexible Spending Account (FSAs), Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs) and commuter reimbursements can be managed in the same platform as Lifestyle Spending Accounts (LSAs). The employee experience is better, too. They have one place to go with an easy-to-use system of record.
8. Redirect caregiving account funds when unused.
Caregiving is important - especially when you have dependents to care for. However, when offering a caregiving allowance via DCFSA, should workforce demographics evolve and the demand lower, it’s a good alternative to provide the workforce with a viable option meaningful to them.
9. Shift dollars budget for real estate
With many companies evolving where and how they work (i.e., hybrid, hoteling, or full remote models), real estate budgets are up for grabs. Take a small slice of the funds previously allocated to real estate. It’s a simple strategy to use existing funds rather than pulling on new budgets with limited resources to support your team.
10. Repurpose gym discounts/reimbursement
Many companies offer a fitness stipend to promote workforce health. While it was once a quick win to provide access to an onsite gym, the offer has limitations. Not everyone works in the office every day. It can be difficult to scale equitable gym memberships benefits depending on the location of your workforce. Repurposing the fitness budget for an LSA can be the new quick win for a healthy workforce.
*Forma’s LSAs can be customized where the funds use a sliding scale based on regional cost of living factors.
11. Tap the work from home budget
When companies responded to COVID, it was common to set up direct-to-payroll options to support work from home needs (e.g., utilities, workstations, and office supplies). Now many companies are questioning the efficiency. LSAs with work-related eligibility criteria ensure money goes where it is intended and is not treated by the employee as a long-forgotten line on their paycheck.
12. Improve cell phone and wifi reimbursements
When you reimburse these expenses directly to payroll you’re likely overpaying. Not every employee incurs these expenses and the cost varies widely. And, using classic expense report software can drive up the expense. The software is typically metered by the expense report submittal. Why pay a $10 fee to reimburse a $25 mobile phone bill? Instead, remove the expense software fees and repurpose the savings into fund the account. Using Forma, you won’t be charged per click. It’s a “no-brainer” source for spending improvements.
* Studies from Forma Research find that companies can save up to 30% of the total budget by switching to a more cost-effective reimbursement model.
13. Look for an ergonomic equipment budget
Many companies pay for workspace improvements and ergonomic consulting. It’s money well spent to keep a healthy and focused workplace. However, remote work has complicated the ability to do this well. LSAs can help disseminate ergonomic needs at scale with your hand-selecting the item and shipping directly to the destination of your choice.
14. Create a more inclusive family formation strategy
Many companies have focused on improving fertility benefits. While impactful, the benefit is costly and can be time-consuming to scale across the entire organization. Why not reimagine and streamline your approach? By defining eligibility rules and letting employees decide how to source these benefits, you can save time and make your approach more inclusive to include a broader range of family formation benefits.
15. Give renewed purpose to new parent budgets
It’s great that so many companies support new parents. Who doesn’t love to see a baby in company swag on social? Companies that have budgets for new parent gifts may want to consider shifting funds into an LSA mode. You can give new parents choices so they can use the funds for something they need most.
16. Draw from the Learning and Development Budget
Learning budgets can usually be separated into two buckets: Mandatory, compliance, and company-specific training and more bespoke professional development. Professional development fits well within LSAs because choice and flexibility are given to employees. They can choose training resources that are most meaningful to them based on their roles, development opportunities, and career stage.
17. Refresh performance and competitions awards
For companies offering financial incentives and competitions, administering payouts can be a pain (and this is after you’ve worked with finance for approval). Many use expense systems that everyone may not have access to, and procure/send individual gift cards which are difficult to scale. Funding an LSA is much easier with a couple of clicks of a button in a system everyone can access. Rewards can go into specific spending accounts, so employees can use the funds for defined uses that benefit the company as well.
18. Streamline holiday gift budgets
Employee holiday gifts start with the best of intentions, but let's face it they can be a pain to administer. Like everything else, what can I possibly give that every employee will value? Jelly of the month, anyone? Plus, these gifts should often be taxable and integrated with accounting systems. Spending accounts solve both of these challenges where the employer can dictate how specific or broad they want gift stipends to be spent. It’s easy to administer. And it will fit in with existing accounting.
19. Administer service anniversary bonuses
Many organizations will honor retention and tenure. For example, retailers will provide retention bonuses at the 6-month mark to remain competitive. Other companies reward long-standing employees. Similar to holiday gifts, these bonuses can also be administered in Lifestyle Spending Accounts. All of the administrative, tax, and accounting benefits hold up.
20. Allow SWAG to be purchased
Like employee benefits, the way companies buy and distribute company SWAG is usually a top-down exercise that often misses the mark. Rather than wasting money on t-shirts sitting at the bottom of someone’s closet, use the budget and give people the ability to select their SWAG. And then the company only pays for things people want.
For more information about Lifestyle Spending Accounts and discuss more ways to save budget, <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">schedule a consultation</span> with one of our experts. We’d be happy to help you find the perfect solution for your unique needs.