Webinar to Empower Your Benefits Strategy with Espresa’s Benchmark and Trends Report!

Dan Weinstein, RVP of Strategic Alliances, Espresa

Sylvia Flores, Chief of Brand, Espresa

Sarah Claxton, Sr. Manager Brand + Creative, Espresa

Sarah Claxton//

Hi, everyone. If you’re just popping on, we’re just about to get started. We’re giving everyone a chance to get settled. So in the next 30 seconds or so, we’ll kick it off. So we’ll just small talk over here while we give you a chance to arrive. I think maybe just 20 more seconds or so, just give people a chance to get settled.

Okay. I think we’re good. So thank you for joining us today, everyone. We’re with Espresa. You know us as your Culture Benefits platform. We’re about to dive into our Benchmark and Trends Report that just came out for 2023. It features Lifestyle Spending Accounts, commonly referred to as LSAs. So before we get into our agenda today, we want to introduce you to our two speakers who you see on screen.

Read More: What is a Lifestyle Spending Account?

Two of our industry experts from Espresa are joining us. So you have Dan and Jenna, Dan Weinstein and Jenna Carter. They’re both on our Strategic Alliances team here at Espresa. Dan has spent the bulk of his career focusing on people-first HR and benefits solutions. He is dialing in from Colorado today. You might be able to tell from his background.

And next we have Jenna, Jenna Carter. Also, for the majority of her career, she has likewise been in the wellness and public health space, focusing a lot on benefit solutions. And today, she is joining us from Massachusetts.

We will hold Q&A about 30 minutes in. Any questions that you have, please direct it to myself or Sylvia Flores or direct in the Q&A function or in the web chat.

For anyone that’s needing closed captioning, on the lower kind of mid-control area of your Zoom, you’ll see a CC. CC for closed captioning. It’s enabled. So if you click on that, you can either hide it or show it, whatever you may need.

And then I think with that little bit of housekeeping, we are ready to hand it off to Dan and Jenna, and we’ll be back with you in about a half hour for Q&A.

Industry Insights, a Look at Strategic Benefit Trends

Dan Weinstein//

Great. Well, thanks so much, everyone, and thanks for joining us here. Just to set the stage as we start, we’d like to take a look at where everyone is coming from. Why are we even talking about LSAs? And so, when we take the standpoint of employees, well, we continue to hear our employees asking for choice and personalization. So we see in a couple of surveys, two-thirds of employees want a wider mix of nonmedical benefits that they can choose, purchase on their own.

And even almost more interestingly, almost 70% of employees are interested in customizable benefits. Right? So this is sort of not great for benefits teams thinking about how do you meet every single need, but this is what we’re hearing from employees. And so, you go, “Where is that coming from?” As we see here moving forward, our employees have a… Sorry, my computer decided it wanted to restart right now.

Our employees come from a whole diverse set of needs. So we are used to hearing about five generations in the workforce. The sixth generation is on the corner selling lemonade this summer, but they’ll be in it shortly. But we have diversity across ethnicity, around geography, around gender. We have all these different areas. And as unique as each employee is, their needs are even more unique. So you start to take this pie and divide it up into essentially infinite number of slices.

Read More: The Surprising Benefits of Generational Differences in Today’s Workplace

And so, it’s not surprising that 80% of employees are looking at ways to meet this diverse workforce, and this is where LSAs really come in. So as we start to move forward, the way Espresa approaches it and where we really feel like we stand out is in four key areas. So we talk about inclusivity, and this is really important because we tend to bring LSAs up within the US benefits conversation. But the reality of it is, is that we’re really looking at it not just from are they in the US or not, but are they global? Can we meet them everywhere they are?

Read More: Why is Diversity, Equity, and Inclusion Important?

Also, we’re not as concerned as to whether they are benefits-eligible, full-time, electing benefits. This is really an area to offer choice to every employee. Being flexible is key. LSAs, by their nature, are flexible, but the true ability to be flexible is really tied to the administrator. So Espresa takes a very hands-on approach, creating every plan specific to that employer.

And then it’s got to be engaging, right? You never get a second chance to make a first impression. Same thing goes with LSAs and with benefit options. We’ve all seen the list of point solutions that are rolled out. People take a quick look and never come back. So really engaging and keeping employees, utilizing that, and other pieces you’ll hear about.

Read More: How to Score Top Talent with an Inclusive Employee Benefits Strategy

And then being able to be adaptable. If there’s anything we’ve learned over the last three, four, really infinite number of years is that the only constant is change. And so, having a program that could change with the environment, whether it be pandemics, inflation, natural disasters, how do we meet our employees with the needs they need today and tomorrow without knowing what those needs are going to be?

So my favorite kind of view of what we’re seeing in the market is this. So when you start out, you really think about a continuum of looking at LSAs. On the left, you see being foundational. Right? So this is the entry point. This is all the great pieces. We’re talking about being inclusive, flexible, offering choice, being adaptable, providing something globally to all employees. That’s the sweet spot. That’s building the foundation of a great program.

But what we’ve seen as we’ve talked to our clients and we’re talking to prospects is this move into being more strategic around it and going, “Well, hold on a second. How else can we utilize these dollars, utilize these programs as part of a total reward strategy?” And sometimes that means bringing in other components, such as recognition and well-being, incentivizing additional dollars where it makes sense, and streamlining administration.

And then what we’re really seeing, and it’s not even that far out, but is a more progressive look of now looking at LSAs to align with an organization’s mission and vision and values and defining what success looks like, which really has to happen on an individual, company-by-company basis. So we talk about value on investment or VOI. There’s not one set way of measuring that. It really was based on what’s important to each individual organization, and that’s where we’re really seeing this move forward. And you’ll hear a little bit more about that from Jenna as we get later on in the slides.

So with that, we’re going to quickly hit some of the highlights. If you’ve downloaded the report, you’re going to recognize some of these and we’re going to talk about what’s behind it. And then there’s plenty more details, so you can download and look at on your own. If you have questions, feel free to start to formulate them as we’re going here.

First and foremost, who are the industries that are doing this? Not surprisingly, the top industries match where you tend to see folks that are on the front end of the innovation curve. So high tech, fintech, pharma, biosciences, life sciences. That’s what’s really led the pack on LSAs. And if you go back a few years ago, before some of the economic worries, they were flush with cash and attraction and retention was really key to growing their business. So that’s where they started.

Now, as we continue to dig in and look at the conversations we’ve been having for mid-year and implementations and even into 2024, we actually see that what we’re calling emerging industries starts to round out the world of industries out there. So you see oil, gas, retail, healthcare, engineering. These tend to be industries that are not necessarily leading the pack on new ideas and innovation, but very much are looking around and saying, “Hey, what is everyone else doing? What does our employee value prop look like? And what do we need to do to make sure we’re competitive?”

Webinar: LSA, the Launch Anytime, Off-Cycle Benefit

Lifestyle Spending Account (LSA) Funding and Budgetary Considerations

So that’s really what’s happening. The take-home message from all this is that it fits wherever it needs to be because of that flexibility. So, obviously, “Hey, let’s look at budgets.” We’re seeing 66% of our clients offering LSAs between $250 and $1,000. That is actually a shift down from previous years. What we’re starting to see is, as we increase the number of industries that are getting into it, there’s a little bit more of starter LSAs, so to speak, in that $250, $300, or $500 dollar range.

And as you start to break down the different percentages here, what you’ll see is, that’s actually coming out from the fact that as we are expanding who’s looking at it, most organizations are repurposing dollars to shift into an LSA. So think about well-being programs that had incentive dollars. That $250, $300 is a somewhat comfortable area to shift over and go, “How else can we get more value out of it?” or “How can we make sure employees get more choice and value out of it?”

And then we still have, again, around the horn, we have folks that are looking at broader budgets that are really part of a recruiting process as well, and then everything in between. So we’d love to kind of chat about it. There’s a million different ways that you can find funding for it. But when you start to look at how they are funded, there’s really three core ways. If you split this actually in half, if you look at the far right, annually speaking, which is all funds are available right away, that’s about half of our clients. So that tends to be linked with our smaller starter LSAs that we talked to, and then the other half are divvying out those funds either monthly or quarterly.

Employers are looking to prevent turnover. They’re looking to use their budget to increase culture engagement. It’s not surprising to see broad adoption with LSAs launched that support diverse lifestyles and employee bases.

And that has a lot to do with employers that are looking to protect from turnover or looking to gate some of those dollars over the course of the year and attach them to pieces. As we continue down through some of those stats, you’ll start to see, in those that are divvying it out, the vast majority, at least right now, and this is shifting, so it will be interesting to see next year’s benchmarking, but almost three-quarters are not allowing it to carry forward from either month to month or quarter to quarter, whereas 27% are carrying it forward. This is not counting those that are providing it, obviously, all upfront.

None of our clients carry from year to year, and that has a lot to do with tax implications. It can be done, but accounting departments do not like to. We’re seeing this shift. My guess is we’ll see it get closer to 50/50 next year based on how new plans are going in. And then you look at that utilization. This is where it starts to really get fun regarding how they’re created and how creative each employer is getting. But when you look at broad-based LSA programs, which, for us, think about broadly holistic, multidimensional programs, we see that 85% participation. We see employees jumping in, on average, six claims per year.

So they’ve found something that meets their lifestyle. It’s choice that drives value, and they’re going and they’re utilizing it. What we’re also having conversations with is, not every employer wants to start out with the broadest possible situation. And there are levers that employers have to adjust. And so, as we look more specifically, the more flexible a program is, unsurprisingly, the higher usage it is, because you’re going to find something for everyone.

Read More: The Most Popular Employee Benefits, Beyond the Expected

And on the flip side, the more narrow it is, so we have some that say, “Hey, you know what? We really want to focus on physical well-being to start out with.” And that’s fine and we want to broaden choice within physical well-being. Well, you’re going to see utilization be a little bit lower, and that’s normal and that’s not a bad program. And this is why we start and kind of really set up with what our expectations based on how that program is set.

So there are a lot of levers to tweak around that, but then you start to dig in a little bit deeper on budget utilization. Again, it falls in line. We’re seeing about 84% of budget utilization within our broad-based, multidimensional well-being programs. Right? There’s something for everyone. And once they find that, they’re using those dollars, because, again, if you give employees free money to use with what connects with them, they’re going to utilize it. And then the more narrow the program. If it’s a commuter program, that’s only for those that are commuting, if it’s a work-from-home. Again, it’s not for everyone. Even tuition. Not everyone is going to be looking for additional training.

Read More: Lifestyle Spending Accounts for Tuition Reimbursement Benefits

But you could start to see that the broader it is, the more you’re going to utilize it. And that’s great because that’s where we’re talking about folks going in and utilizing programs and not just having it sit on the shelf of the point solution buffet that gets ignored for most of the year.

So with that, what I’d love to do is turn it over to Jenna, who’s going to dig into our top trends. You’re going to get to see a little bit of the platform and probably come up with a whole host of other questions as we go. Jenna, take it away.

Looking to the Future of Workplace Benefits

Jenna Carter//

Thanks, Dan. Yeah. So when we think about LSAs, obviously, historically, I think they’ve been more tied to more of your traditional maybe gym reimbursements. Right? You think about those traditional programs that maybe the medical carrier had provided around that fitness reimbursement. And then I think a lot more employers started to bring that in-house, maybe have a broader umbrella under that wellness reimbursement. But it didn’t get a lot of utilization. It was kind of like, “Okay. We have this benefit, but no one’s really finding the value in it.”

And so, we kind of flipped it on its head basically and said, “Okay. Well, you know what? Sometimes the old programs become new again.” And so, really thinking about revitalizing those types of programs and really thinking about it more holistically in what we call Lifestyle Spending Accounts. And now we can really think about personalizing the benefit, taking that total reward strategy that Dan was talking about, and really amplifying the value of those additional dollars or cash or compensation, however you want to spin it, under that heading of, “Here’s a benefit. We really, really care about you. We want you to be able to use it in a very personalized way that is meaningful and valuable to you.” Right?

Organizations are offering LSAs as a forward-thinking, strategic tool. And there are employers really looking at this as part of their broader total-reward strategy and really truly integrating that into their mission, vision, and values.

And so, when we look across the spectrum of LSAs, you really think about this as kind of a proactive approach. And here’s an example where maybe an employer is giving $500 to every employee. And so, Dan had mentioned a little bit about participation. And obviously, there’s a lot of flexibility in how you may want to set this up if you want to make it a really broad-based benefit where you’re including all these different areas of well-being, whether it’s financial, physical, social, emotional, career. Sometimes we see family pushed into that as well, and to really give choice on what matters to employees and just being able to provide those choice and whatever parameters, however you want to set up the program.

And LSAs can really serve as an effective well-being tool, because really, we know well-being means something to everybody. Very different, obviously, in how we kind of think about our own well-being. And so, with a little less than a fifth of our clients who are supporting multiple dimensions, that goal of delivering this as more of a holistic approach really continues to grow amongst our employers. And I’d be curious to see where we end up landing next year during our benchmarking survey and in terms of how many employers are really thinking about this more broadly.

And so, as we look along the different dimensions, I would think about some examples around our family. Maybe you’re providing tutoring for your employee’s children as they’re going through school, or maybe you’re helping your employees build their families through adoption or surrogacy. Under physical well-being, it’s not just those traditional fitness reimbursements, but really think about healthy foods and meals.

Maybe someone doesn’t have as much access to some of those fresh fruits and vegetables. What a great way to be able to utilize LSAs to be able to purchase those healthy foods, or even supplements. Right? If you have on-site, if you have some employees on-site, being able to supplement some of those healthy meals that people can purchase.

Read More: Support Working Parents for an Inclusive Workplace

If we think about emotional well-being, thinking about gardening, and being able to use your LSA dollars towards gardening supplies or meditation classes. Financial well-being, I think, is really becoming really a front-runner in terms of areas that employees are really thinking about because we know that financial stress can really impact a whole person’s health.

And so, things like financial seminars or providing tuition reimbursements. Social well-being. Certainly, charitable giving can be part of that, we have a client that is providing LSA dollars for, excuse me, nonbusiness travel and experiences because they want to encourage employees to take time off and to really be able to kind of connect and see the world.

And then from a professional standpoint, you think about maybe a life coach or some kind of learning and development program. So there’s a lot of different areas and variability that you can look into in terms of LSAs.

As Dan alluded to, organizations are really offering LSAs as a really forward-thinking strategic tool. And while we see a larger portion of specific wallet types focused primarily maybe on fitness or just physical wellness, there are employers who are really looking at this as part of their broader total reward strategy and really truly integrating that into their mission, vision, and even values.

And as we look across these specific categories, you can see the companies are really linking this to the total well-being of their employees. Right? And we know that organizations are still very much concerned about burnout. We know stress really continues to be a key factor, not only when we look at employee health, but we also think about productivity and engagement, and then also retaining some of the top talent. Right? As you’re getting burnt out, you may think about going to a different career or a different company. Right?

So I think employers are really recognizing that that is a challenge that they continue to combat. And so, it’s really nice to see that LSAs are really being utilized as a tool to help support employees around things like financial well-being and mental well-being and even family support. The other thing that Dan had mentioned is this kind of idea around incentivizing an LSA. And that’s really a way to be able to drive behaviors that might be really, really important to you as an employer. It’s kind of an add-on to the LSA wallet.

Earning LSA dollars: a new way of thinking about incentives

So think about things like, obviously, in the past, your traditional incentives were typically tied to wellness, maybe not as really engaging, but if you’re thinking about some of those things that drive culture like DE&I initiatives, maybe have employee resource groups, or sustainability is really important to you, being able to drive some of those behaviors to really align with your specific values as an employer and be able to provide additional LSA dollars, again, that is truly meaningful and valuable to your employees.

And we didn’t talk a little bit about what we do here at Espresa. But in addition to Lifestyle Spending Accounts, which is our primary product, we also offer a myriad of different modules: Total Well-Being, Communities and Employee Resource Groups (ERG), and Rewards and Recognition. Our solutions all tie into one another and can be joined or work as standalone strategies.

And so, we know that these benefits, because they’re under a total rewards umbrella, really shouldn’t be designed to work as a siloed program, but really to integrate into one another. And so, we developed this idea around LSA Plus to be able to bring the Lifestyle Spending Account and really seamlessly integrate some of those other solutions together under one roof. And we’ve really seen our clients start to really think about bringing those programs together in a really meaningful way.

And, of course, as we think about the vendor space, I’m sure that managing multiple vendors is a really real big challenge as well. So being able to bring all those pieces under one roof obviously can be very valuable for employers as well. So I want to show you a little example of bringing this to life on our platform. So if you were thinking about rewards and recognition, we’ll kind of start there. And so, if you’re thinking about bringing some of your values, and in this case, this is Tetra. It is used for our demo. It’s a fictitious company, but you can kind of just get the idea of how we may be able to use some of these different tools.

So if I want to recognize a colleague, and I’m going to recognize Dan because he is doing a knockout job with this particular webinar, so I want to make sure that I am able to recognize him in a way that’s meaningful and showcase this to the rest of the employees. So, Dan, you were knocking it out of the park, so we’re going to make sure we recognize you in a proper way. We have it set up so that there’s managerial approval for all of our rewards and recognition. You can certainly set it up however you want. So I’m going to make sure I put a nice note to Dan’s manager about how he’s been an amazing teammate to me and not being able to do this webinar without him.

So I’ll write a nice note to his manager. We’re going to give him some kudos here. But also, I want to drive the different values here. Right? So these are all the Tetra-specific values. This is going to be a powerfully relevant tie to that particular value. So we’re going to choose that as our value. And so, now I can post for Dan that he gets a kudos from me here in the platform.

And so, when we go back, we also have a challenge that we have going on right now. And so, I’m going to go find that challenge, which is a Live Well, Work Well challenge. And so, we have a lot of different pieces of well-being tied to that. In particular, one of the tasks is to reward a colleague. So because I just recognized Dan, I’m going to click that as a task that I just completed and I’ll earn some points for doing so.

The other thing too is we have other things tied to things like emotional well-being and kindness and sustainability, so there’s a lot of different options here. But I happen to have a gratitude journal that I write in every morning, so I want to make sure that I get credit for being able to tie to my gratitude as well. I’m going to earn additional points here. And then I’m going to go back and I have an actual incentive wallet here in addition to my typical LSA wallet.

Read More: LSAs and Sustainability in the Workplace

And so, because I earned those additional points by doing the different challenges and tying into rewards and recognition, I can now use those additional dollars towards my LSA. So just kind of a good example of being able to link some of those pieces together, and again, trying to drive those different values within an organization.

Earned allowance, dynamic plan limits, and global parity

Dan mentioned the global piece, being able to meet employees truly where they are. One thing here at Espresa is we are very much global-first. Available in all countries. We’re active in, I think, over 82 at this point, and we do have 133 different configured languages. We also support all currencies, which is really important for LSAs, as you have folks maybe traveling to different countries and they’re maybe purchasing different well-being-related items or participating in different classes. That’s really important to be able to convert the currency right there in the platform.

The other piece too, very strategic in how we work with employers, excuse me, is something called purchasing power parity. And this basically allows for you to be able to give a very equitable benefit no matter where people live. So if you think about purchasing power in the United States might look different than maybe someone who’s living in India, for example. Right? So if you’re giving, just for the purpose of argument, $1,000 for all US employees, what is that going to equate to in India where you can actually look at the cost of living and how far those dollars will actually go with Purchasing Power Parity.

In actuality, you’d only have to give them about $300 or so in India. So you can kind of see how that can be a really strategic tool as you’re thinking about budgeting and trying to roll this out globally. And then from our benchmarking report, you can kind of see who the top countries are here that are typically engaging in an LSA and how they’re really bringing it to life in terms of adoption.

So I’m going to show you another example in our platform of our global capabilities. So we work directly with our employers to make this look and feel very culturally specific to each country. We have a marketplace. In this particular example, we’re in the Japan location. So we have a marketplace specific to Japan, which we have over 100 different items that are local to that organization. Because I’m in the US, this is actually going to be all US language, English language, but I’m going to change it to Japan. And so, you can see how everything translates really, really easily.

And so, if we go to our LSA wallet, I’m going to go show you an example of how this works in terms of the language capabilities and currency. So it’s going to translate right over to Japanese. And as you can see, even the program parameters itself will translate. I’m going to go ahead and pick a category here. So you can configure this however you want. I just happen to have it all configured to the different dimensions of well-being.

So if I go to physical well-being, maybe I took a yoga class and I want to get reimbursed for that. Right? And so, in Japan, there’s a very popular yoga class called Shin-shin-toitsu-do. And so, I’m going to get reimbursed for that. Maybe I took that class in the United States. And just because I happened to be logging in from the United States, USD is going to be my primary currency. If I were to log in in Japan, the yen would actually be the primary currency there. But for argument purposes, we’ll say we took the class in the United States. Maybe it costs $80. So we want to convert that into Japanese yen. So what is that going to cost there? It’s going to be 11,453 yen.

So you can kind of see how really easy this can be in terms of doing the conversion from a currency perspective, and obviously the ease of being able to translate all those different languages which are preconfigured right into the platform. So if we think about forward-thinking strategy in terms of LSAs, I think more and more, we’re having some interesting conversations with our clients around, “How do we really drive some of the things that we’re starting to think about as an organization?” Right?

So we think about donation, for example. I think we can think about this in a couple of different ways. Right? You have your typical charitable donations to any charitable organization of the employee’s choice, or maybe the employer has certain ones that they want to be able to have employees provide to. Right? So you can give a list of those particular organizations. The other piece too is, we do have some instances where employers will come to us and say, “You know what? We’ve had some instances where we’ve had some wildfires or flooding and we’ve had certain employees that have been displaced. We want to be able to do something for them.”

The ability for an employee to be able to donate some of their LSA dollars to help that employee get back on their feet, I think, can be really, really powerful. When we think about ESG, companies are really looking for ways to encourage employees to be able to engage in some of those behaviors. Maybe it’s around combating climate change, so maybe the ability to use LSA dollars towards maybe solar panels for the home.

Inflation has really become a concern across the country over the last year or so. So that ability to adapt and potentially put in a new wallet to kind of focus on inflation, to help folks with buying food, things like energy, transportation, housing. Right? We know that inflation can affect certain populations more than others, so being able to have that additional funding to help with day-to-day survival. Being able to adapt, as Dan had mentioned, is one of the great benefits of having an LSA.

And then lastly, so social determinants of health, I think, has been a really, really popular topic for a lot of employers. And so, really thinking about this differently, depending on certain geographies, employers may want to provide additional LSA dollars or maybe a separate wallet for folks that are living in areas of the country where they have less access to healthy foods or fresh fruits and vegetables, or maybe it’s a lot harder to get involved with recreational activities or physical activity where there isn’t a lot of areas to go for a walk that’s in a safe area. Right?

So having that ability to have that flexibility and giving those folks some additional LSA dollars to use towards some of those things, I think, can really, really go a long way. And that’s some of the forward-thinking ideas that we’ve seen from employers and that we’re really working with them on. So really a lot of exciting things happening, and we’re really excited to see where LSAs go next.

So I’m going to stop here and I think we’re going to go into Q&A. Right, Sarah?

Question and Answer

Sarah Claxton//

Yes, that is right. All right. We have a very engaged Q&A, so thank you, everyone. I am just shifting the view so you can see us all. Okay. Perfect. All right. So first, Dan and Jenna, thank you so much. I know we always have a buzz around strategic benefits, especially this time of year, and always LSAs. So it’s great for us to dive deeper into this with everyone.

We do have quite a bit of Q&A that came in today. So if there is anything that we miss as we go through this, please email us at consultants@espresa.com. We’re happy to get a little more personal and make sure every part of your question is answered.

1. Can LSAs be set up globally with varying criteria and eligibility by country and employment type?

Yes. LSAs can be set up globally and localized by region. Each country or region can have its own plan, or multiple plans, with different criteria, eligibility, offerings, amounts, languages, and currencies by each.

2. Can LSAs reflect different employment status or worker segments (part-time, full-time, and contract)?

It is common for employers to offer multiple LSAs or flexible reimbursement programs together. Pairing multiple programs on a single platform streamlines the experience for employees, improves engagement, and simplifies administration for employers.

Employers can offer different LSAs to various segments of their employee population (full-time, part-time, or contract). All of these various programs can establish different reimbursement program parameters and dollar amounts.

Read On: Best Practices in Plan Design

3. How does an LSA compare to an HSA or FSA account?

Espresa does not offer HSA or FSA accounts. LSAs are a largely non-tax advantaged account with fewer regulatory limitations. This allows for tremendous flexibility with plan design, program parameters, offerings, eligibility, and geography. Due to the flexible nature of LSAs, they are naturally more inclusive of all employees at an organization. The “everyone benefit”, LSAs do not compare to HSA or FSA benefits that are largely built around tax-advantaged savings for US medical expenses.

4. Can an LSA be funded using paid time off (PTO)?

Yes, it is possible to use PTO to fund an LSA. We’ve seen discussions around allowing an employee to purchase additional PTO using their available LSA dollars.

5. Are LSAs used as a retention tool?

Yes, we have seen this. Tenure based approaches have been used by clients, and we’ve seen clients create targeted programs to positively impact retention of critical roles.

Watch: Employee Total Well-Being to Deliver Healthy Engagement

6. At the end of a benefit year, what happens with unused or remaining LSA funds?

Our clients employ a “use it or lose it” approach for unused LSA dollars at the end of a plan year. While it is possible for Espresa to administer carryover from one year to another, it creates a variety of accounting complexities related to deferred compensation. We find most accounting and finance teams prefer to avoid this.

From the employer standpoint, LSAs are notional accounts. This means, employers only spend what is used by employees in a plan year, and are not paying for unused or remaining funds.

7. Are LSAs considered taxable income for employees?

LSA dollars are largely considered taxable income for the employee and are coded as such when reporting back to the employer for taxation purposes.

There are some exceptions, such as certain work-from-home expenses, or a portion of tuition reimbursements. Outside of the US, there are also some well-being expenses that are tax advantaged. Espresa is not a tax advisor, and clients should consult with their tax advisor

prior to finalizing program design and account set up.

8. What are other strategic benefits you see commonly combined with an LSA?

There is extensive flexibility in program bundling or combining of benefits, which makes the customization of these programs highly adaptable to a company’s needs. We see high adoption of LSA Plus Total Well-Being and Challenges, and we also see a substantial amount of LSA Plus Rewards and Recognition solution. The monetary incentive pairs seamlessly with the flexibility of choice of an LSA program.

In considering a broader total rewards strategy, it is becoming increasingly common to bundle all of these solutions as a way to enhance total well-being, amplify engagement, and streamline the employee experience, all while reducing administrative costs to the employer.

9. What are typical budgets to consider for incentivized challenges or earned allowance with rewards and recognition?

Budgets for the bundling of these programs vary significantly based on company specific finance. We have seen companies offer the ability to earn an additional $25, $50, $100, and $250 quarterly through challenges. For rewards and recognition, we have seen smaller incremements available by recognition moment, anywhere from $5, $10, $25 to $50, being set at the company level and divided out by managers.

10. Can you participate and earn points from other well-being vendors to incentivize Espresa?

Yes, we are able to take in participation, completion, and points data from third party well-being vendors. We are able to connect to incentives provided through the Espresa LSA platform.

11. Are you measuring ROI across your clients?

Due to the personalized nature of LSAs, a credible ROI is hard to evaluate widely as clients vary extensively across our book of business. We establish goals specified to each client and the programs they are utilizing in order to measure Value of Investment (VOI).

Our primary measure of success is employee participation in each program. When designing and implementing a program, we define success with our clients based upon their selections and goals.

LSA adoption across our book of business is 80-90%.

Since most reimbursements through an LSA program are taxable expenses, each expense is coded. The data is provided to the employer’s payroll at a cadence set by the employer. The employer’s payroll then handles the taxation and reimbursement. In the place of the LSA marketplace, or debit card purchases, payroll would only be managing the taxation.

The Espresa platform is flexible. We can support and administer nearly all plan options, both pre and post-tax, with few limitations.

We do not recommend employers include medical care as part of an LSA (in the US). While we can administer them, many medical care services are considered qualified expenses under IRS Section 213(d) and are subject to various compliance requirements under ERISA.