Maximize employee productivity with spending accounts for remote work
Best-in-class Work from Home & Home Office Setup Spending Accounts allow individuals to work better, and shield your organization from waste and risk.
In this piece
Remote work is no longer a pandemic accommodation. It is a baseline expectation that employees now factor into every job decision. Companies that have not built a structured way to support remote workers are either bleeding budget through inefficient stipend models or watching their best people quietly update their resumes.
The frustrating part is that most HR teams already know their current approach is not working. Stipends folded into payroll disappear without recognition. Expense reimbursement tools create friction that employees simply stop engaging with. And when compliance questions surface about who actually has to be reimbursed under state law, the answers are rarely clean.
There is a better model. Customizable remote work spending accounts give employees real choice and employers real control. What follows is a detailed look at how they work, what they should cover, how much to fund them, and how to build a program that holds up legally across the U.S. and globally.
Key takeaways
- Conventional remote work stipends, whether payroll-based or tied to expense tools, result in waste, low engagement, and avoidable compliance exposure.
- Customizable spending accounts cut costs by only charging for funds that are actually used, with typical utilization rates between 50–60% for remote-work accounts.
- Benchmark data shows one-time home office setup stipends average $1,000–$1,500, while monthly recurring stipends average $150 per month.
- Eleven U.S. states mandate employer reimbursement for remote work expenses, and several countries require it at the national level.
- Forma's flexible benefits platform lets HR teams design, fund, and manage remote work spending accounts globally from a single platform. Schedule a demo today to see how leading companies are doing it.
What is a remote work spending account?
A remote work spending account is an employer-funded benefit that gives employees a designated budget for expenses related to working outside the office. Unlike a payroll stipend, funds sit in an account that employees draw from by purchasing eligible items or submitting claims for reimbursement.
Employers define what the account covers, how much it is funded, and when funds expire. That configuration is what separates a well-run program from a benefit that quietly drains budget without generating goodwill. The two most common forms are a one-time home office setup account and a recurring monthly work-from-home account, which are covered in detail later in this piece.
The drawbacks of conventional remote work stipends
Before looking at what works, it helps to understand exactly why the conventional approaches break down. Most organizations address remote work expenses in one of two ways: appending a stipend to regular payroll, or running reimbursements through an expense management tool. Both approaches carry structural problems that most HR teams feel long before they can articulate the cause.
Outcome #1: Low employee engagement and satisfaction
When a remote work stipend is folded into a paycheck, employees rarely connect it to the benefit it represents. The dollar amount blends into gross pay and the goodwill that should come with it simply does not register.
The reimbursement route is no better. If the process involves a multi-step submission, receipt uploads, and a waiting period, most employees will not bother unless the expense is large enough to justify the friction. You end up paying for a benefit program that most of your workforce is not actively using.
Outcome #2: Unnecessary costs that can be hidden
A payroll-based stipend is 100% utilized by design, regardless of whether employees actually spend it on remote work expenses. Employees who work in-office regularly still receive the funds. Employees who need very little still receive the full amount. There is no mechanism to recover unspent budget because there is no budget to recover.
Expense management tools introduce a different cost problem. Each claim processed through these platforms carries a per-claim fee, and because they were built for accounting teams rather than HR, benefits leaders end up burdening colleagues outside their function just to run the program.
Outcome #3: High potential for compliance risk
Several U.S. states, including California and Massachusetts, require employers to reimburse specific remote work expenses by law. Countries like Belgium and Spain address this at the national level. Running a non-compliant program, even unintentionally, opens organizations to wage and hour lawsuits, damage penalties, and regulatory sanctions.
The developing nature of these rules makes them easy to miss without a structured compliance process in place.
3 positive outcomes from customizable spending accounts
Customizable spending accounts have become the market-leading alternative to conventional stipend structures because they resolve the three problems above simultaneously.
Here is what employers can see after making the switch.
Outcome #1: Enhanced employee appreciation and engagement
When employees log into a dedicated account and see a balance earmarked specifically for their home office needs, the benefit registers differently. They connect the purchase to the employer. They understand what is eligible. And they are far more likely to use the funds for their intended purpose.
This clarity also gives HR teams something to point to. Utilization data shows real engagement, not just payroll line items. When it comes time to justify the program budget, the numbers speak for themselves.
Outcome #2: Major cost efficiencies
Because spending accounts are notional, employers only pay for what employees actually use. Employees who work in-office do not automatically receive funds. Employees who do not max out their accounts save the company money without any action required on the HR side.
Remote-work accounts tend to see utilization rates between 50–60%, which translates directly into budget savings compared to a direct-to-payroll model. The table below illustrates what that looks like for a company with 1,000 employees and a $50 monthly stipend.
When you administer the benefit under a modern TPA instead of an expense management system, you do away with the per-claim fees. A more streamlined way to administer your remote work stipend helps you save on transactional operating expenses and admin overhead. This can mean big savings as shown in the table here.
Outcome #3: Lower compliance risk while you maximize tax savings
An important aspect of a customizable spending account is that employers can easily maintain a clear list of what’s eligible under the stipend. This allows companies to have tighter controls over how employees use their funds. With such regulatory oversight in place, it can be more straightforward for organizations to meet the requirements of accountable plans such as substantiation. This helps benefit companies and their workers with tax-free accounts.
Want to understand how your organization can introduce a winning perk while you save? Reach out for a <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button"> personalized value assessment</span> with a Forma expert today.
What should a company’s spending account for remote work cover?
Two accounts are most beneficial for remote workers: Home Office Setup Spending Accounts and Work from Home Spending Accounts. In this section, you’ll find best practices for account design.
What to include for a Home Office Setup Account
Hunching over a kitchen counter doesn’t cut it for remote workers today. The majority of those who work-from-home do so in a room with multiple purposes. Companies must aid new hires with their home office setup. An account dedicated to home office furniture and equipment can go a long way to help new hires work more enjoyably and effectively, and make a positive impression in their first few weeks.
What to cover:
- Home office furniture
- Work equipment items (e.g., headphones, computer accessories)
Tax benefits:
- Reimbursement of some remote work expenses may be eligible for tax-favored treatment as business expenses if the employer uses an accountable plan or the expense qualifies as a working condition fringe. Employers hoping to reimburse eligible expenses on a tax-free basis must satisfy additional IRS requirements.
Key requirements:
- Compliance support: In the U.S., states have various laws impacting reimbursement of employees’ business expenses. Your TPA can provide issues to consider with your tax and legal counsel given where your employees operate.
- Discounted marketplace: Make it simple for your employees to discover the best products that will make their ergonomic home office set-up comfortable for them. Give your workers recommendations of what to buy and discounts can encourage them to use their stipend.
- International reach: Ensure that your employees domestically and internationally can utilize the benefit. Consider aspects like the cost-of-living adjustments so that you can provide the perk equitably to your workers everywhere.
- Policy details: When you set up a home office spending account, you need to set how much you will fund and when the amount will expire. Details like whether you prorate purchases for new hires can help save budget.
What to include for a Work from Home Spending Account
With an ongoing stipend dedicated to productivity, you can help your employees achieve more than before. Team members can upgrade to a higher tier of service which translates to more time at work and less time fixing tech issues. In addition, workers report that 31% of their personal phone usage is for work-related purposes. This warrants companies to subsidize at least a portion of a worker’s monthly cell phone bill.
What to cover:
- Office supplies (e.g., notebooks, pens, pencils, scissors)
- Internet/WiFi fees
- Internet accessories (e.g., modem, router, network hub)
- Phone bill
- Utility bill
Tax benefits:
- Reimbursement of some remote work expenses may be eligible for tax-favored treatment as business expenses if the employer uses an accountable plan or the expense qualifies as a working condition fringe. Employers hoping to reimburse eligible expenses on a tax-free basis must satisfy additional IRS requirements.
Key requirements:
- Seamless employee experience: Your employees should be able to easily reimburse routine, monthly expenses.
- A unified platform: For optimal flexibility, find a TPA that allows for tax-advantaged programs to live alongside taxable programs. That way, you can expand your benefits beyond the accountable plans while making sure your benefits are compliant. For example, you could create a taxable Lifestyle Spending Account (LSA) for employee meals and nutrition for employees who fully work from home and are unable to benefit from in-office lunches.
What other benefits are sometimes included?
Some workers are most productive when they work away from their homes. As a result, companies might cover coworking fees (e.g. WeWork, office rental).
This can be immensely beneficial for certain groups of employees such as those who have at-home caregiving responsibilities or others who may not have visible workspaces in their houses. When you help workers opt into more flexible settings, it serves as a positive signal that you support your people holistically.
As a leader in the flexible benefits space, we have the industry's first eligibility standards for customizable spending accounts. Download your copy of the standards set for a Work from Home Spending Account today.
How to develop a compelling business case for customizable spending accounts
A misconception about customizable spending accounts is that they are a luxury perk. In reality, these accounts help companies achieve cost savings and allow workers to get more done.
Below are tried-and-true steps that will help you justify the investment in customizable spending accounts to leadership:
- Conduct a simple ROI assessment: Evaluate current program spend, employee utilization, and administrative efforts across multiple solutions. Compare this with potential savings and value from a consolidated flexible benefits program.
- Estimate forecasted spend: Determine the projected implementation costs of the new flexible benefits program. Consider aspects such as the number of employees, locations, tax savings, typical utilization rates, and more. Assess competitors’ approaches to ensure your program is attractive to the market.
- Secure budget and approvals: Explore options where you can reallocate funds from unused budgets. Move your current reimbursement program funds into your program. Look into today’s budgets set aside for real estate or ergonomic assessment or equipment and collaborate with other teams to see if you can move around budgets.
- Define success metrics: Collaborate with stakeholders to establish essential organizational goals. Set measurable targets, create reporting mechanisms for easy monitoring, and measure success against your benchmarks.
Successful strategies to design a spending account
A successful remote work stipend involves several key steps. Start with the business goals of the program such as enhanced employee satisfaction or higher utilization. Next, consider what your employees need – you may need to run a survey or conduct work-from-home focus groups.
The nuts and bolts of your program design are critical considerations. What items you cover, how much you provide, the frequency with which you replenish or expire funds, and how you communicate your program to employees will shape your program’s success. Forma has global benchmarks and eligibility standards. Our industry best practices will help you craft your program with ease.
Remote work spending account FAQs
Are customizable spending accounts a taxable benefit?
Typically, yes - customizable spending accounts that are set up as Lifestyle Spending Accounts, or LSAs, are taxable. Customizable spending accounts may incorporate tax-advantaged elements in special circumstances. In the U.S., certain remote work expenses may be eligible for tax-favored treatment if the employer uses an accountable plan or the expense qualifies as a working condition fringe. In other countries, there may be laws so the benefit might be non-taxable. Your TPA can provide issues to consider with your tax and legal counsel given where your employees operate.
How can I save money with a spending account?
Instead of paying for the full cost of wellness stipends regardless of utilization, customizable spending accounts are “notional”. Companies only pay for what employees use.
What should I cover under my Home Office Setup Spending Account? What about a Work from Home Spending Account?
While compliance and tax optimization should be considered, it’s ultimately up to the organizations to determine what expenses they will cover for their accounts. Forma’s eligibility standards cover our best practices - download your complimentary copy today.
How can I help my remote workers’ social well-being?
It can be helpful to introduce other stipends related to your remote workers’ social well-being for full support. Imagine if you gave remote workers a monthly stipend for virtual team events or a small budget for coffee chats with remote peers. The possibilities are endless.
Can LSAs be offered to global employees?
Yes, one of the best advantages of an LSA is that it can be provided to employees around the world. Forma provides one platform for all workers that makes admin easy. We have guidelines for companies who seek to provide an equitable global stipend.
Get started with Forma
Forma helps manage remote work stipends for incredible global companies such as Allbirds and Affirm.
Here’s what employees love about Forma’s spending accounts:
“Previously, my company would deposit our remote first benefits with our first paycheck. While functionally the same, with Forma I feel less like I am spending my own money and more like I am accessing benefits.” Forma user, G2 review
“With remote work being more and more acceptable, my employer provided Forma as part of employee benefits and I was able to acquire a great amount of home office gadgets that I would've taken a lot longer to acquire.” - Forma user, G2 review
To learn more about best practices and speak 1:1 about your considerations for a best-in-class remote work stipend, <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">schedule a consultation</span> with one of our experts today.
Interested to learn how customizable spending accounts can provide holistic support? Choose from the blogs below:
- How customizable spending accounts can revolutionize your employees’ health and well-being
- The power of customizable spending accounts to uplift working caregivers
- Unlock workplace learning and growth at scale with customizable spending accounts
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