You will learn about:
- How LSAs (lifestyle savings accounts) work, and why they may become a table-stakes benefit in the future
- How flexible stipends and spending accounts like LSAs can eliminate financial stress and give employees the tools and bandwidth to focus on weight management.
- What tools or services could employees afford, given the right resources
Transcript:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Stephanie Koch (00:00:12):
Good afternoon, and thank you so much for attending the Employee Benefit News Health and Wellness Summit. My name is Stephanie Koch and I'm the Director of Human Resources for Hendry Marine Industries. And first and foremost, we'd like to thank our sponsor. Found also just a couple of other housekeeping items before we get into the meat and potatoes of why we're here this afternoon. There are professional development credits for S-H-R-M-S-H. RM recognizes the Health and Wellness Benefits Summit for professional development credits. So it's applicable to the SHRM CP or S-H-R-M-S-C-P certifications. Now, attendees can earn up to three professional development credits for virtual sessions that they attend, but there are some caveats saying the full hour is one, participate in audience engagement activities. And if you could please complete and submit the evaluation form no later than Monday, December 16th. Once the evaluation form is submitted and it's validated that the attendees participated in the sessions, the certificates will be mailed by eant within two weeks.
(00:01:31):
Now we do encourage audience participation. We really would love to hear your questions and feedback, and if you have questions, make sure you submit them in the chat and we'll do our best to get to all of your questions and answer as many questions as possible during the q and a session at the end of our discussion this afternoon. So with that being said, we are in session three, which is investing in wellness, how lifestyle spending accounts and stipends elevate employee health journeys. So when we talk about lifestyle spending accounts and wellness stipends, they're really important to transforming how employers are supporting employers with their health and wellbeing, make it easier for them to take charge of their wellness journeys. And this session is going to delve into how LSAs function and why they're becoming an essential benefit. So without further ado, we have an amazing panelist, speakers, I had the pleasure of meeting them yesterday and having an initial conversation and I couldn't wait to dive in today. So let's go ahead and start with Geoff, if you could introduce yourself, your company, and a little bit about what you're doing right now.
Geoff Geredien (00:02:52):
Sure. Thanks Stephanie. Hi everyone. Geoff Geredien. I'm the Chief Growth Officer at well, an employee wellness and rewards company. And one of the rewards solutions that we offer through a partner of ours, thrive Pass is a lifestyle spending account. So really looking forward to the conversation today with Stephanie Marian Harrison to share more about what I've observed in terms of our clients adopting lifestyle spending accounts and having, again, a lot of success with them.
Stephanie Koch (00:03:23):
Great. Mari, how about you? You're next.
Mari Kemp (00:03:27):
Well, hello there. Glad to be here. Mari Kemp, VP of HR Technology and Total Rewards here at Grady Health Systems. Essentially, this is perfect timing to have this conversation because we just completed our open enrollment for 2025 and part of that decisioning had everything to do with today's discussion. So I'm excited to be here, have amazing partners, and we've had a great conversation yesterday and glad to share this with the rest of the group today.
Stephanie Koch (00:03:56):
Fantastic. And how about you, Harrison? We'll throw it over to you now.
Harrison Newman (00:04:00):
Perfect. I guess it's not true that they saved the best for last because I'm definitely not the best. But Harrison Newman, I'm a vice president benefits consultant with corporate synergies. We're in National Benefits shop, I work with employers in the mid-market space from about 50 to a thousand employees. I'm also a vice president of New York City, so it matters there. So I think that gives me a little bit of a different unique impression on how things are going.
Stephanie Koch (00:04:28):
Excellent. Well, this is going to be such a great discussion, but before we dive into the full discussion, we're going to actually poll our audience. And what we're asking is if you are currently offering an LSA to your employee. So the answers are yes, no, we are thinking about it or what is an LSA? And really if you are on the fourth answer, what is an LSA? This is a perfect time to attend this session. Right? So Harrison, as far as what you guys are seeing, are you seeing more employers being interested in these types of benefits from a broker perspective?
Harrison Newman (00:05:16):
Interesting is an interesting word. We're seeing a lot more conversations around it. We're seeing the discussion definitely happen. I would say about 80% of my clients are having the discussion around it. It's the age old question of HR versus finance and HR might love the idea, but we'll finance fund it. I would say you're seeing a significant boost, even the funding aspect, but I think about probably 80% of my clients are at least starting the initial conversations and expressing an interest and implementing some kind of LSA program.
Stephanie Koch (00:05:48):
Oh, that's a big number. Okay. Alright. Alright, so now let's dive in. This is going to be really, really fun and exciting. So well, let's start with the basics. So I have worked in HR for 25 years. We're always interested in learning new and innovative solutions to bring to our employees and our companies that hopefully impact our bottom line, but more importantly the employee engagement. But I think it's important to understand what are lifestyle spending accounts and why are they important to organizations? What value are they actually bringing to company? So I'm going to throw it over to Geoff to answer that question first and then we'll go from there.
Geoff Geredien (00:06:44):
Yeah, thanks Stephanie. I think it's important to define an LSA first by defining what it's not right. And the term LSA often sparks the thought of something like A HSA or an FSA account. And interestingly enough, that's exactly what an LSA is not, it's not a tax advantaged account like an HSA or some other type of pre-tax account like that. It's really an allocation. It's a stipend that an employer is designating for employees to use in a way that they can purchase services, goods subscriptions that will in some way fulfill different areas of need in their life. The most common use case for an LSA, and this is again not a novel concept, right, is a gym membership reimbursement. So there are some versions of LSA programs that are primarily focused on that. But I think what's really cool is that especially over the past few years, there's been this big shift into broadening the scope of what maybe had been traditionally considered part of a reimbursement style program. And now it's going way beyond just your typical gym membership and fitness classes and running shoes. Now we're able to provide employees with a wide range of options that best suits their needs at any given point in time, be it a gym membership or be it childcare support or some other type of lifestyle expense.
Stephanie Koch (00:08:18):
That's really cool. And I have to say in HR, and Mari could appreciate this, we love acronyms, so why not add one more? Why not somebody, why don't you take the question next. So the question was why are LSAs important to organizations and what value are they bringing to companies?
Mari Kemp (00:08:40):
LSAs also sort of connect employees to sort of give them what they need versus what we think they need.
(00:08:48):
And for a very long time we've been offering benefits to employees and it's all based on we give them one or two things and then we find out that they actually would benefit from having a lot more to leverage and have a customized or their own decision to make in terms of what suits them best. And so this allows and aligns with their lifestyle. This aligns with the work-life balance strategy, if you will. But even more so in a more remote strategy in which most offices are in there were benefits you can provide in office that everyone would have access to. And a remote strategy is very different. It could come in forms of mental health, it could come in forms and maybe wanting a discount on a Peloton. So being able to give people the freedom to do whatever they need to do, but at the same time a help with engagement, but have them focus on their wellness as a true message to them as well is a wonderful benefit to be able to offer individuals today.
Stephanie Koch (00:09:49):
Right. That's
Harrison Newman (00:09:50):
Stephanie, if I could add onto that, I love what Marie said. Yeah, please do. You've seen the benefits space really change significantly or the HR space in general changed significantly over the last 10, 15 years where it used to be a rich benefits package of high salary. Maybe you offer a rich medical plan was enough to attract and retain. I'm a huge movie guy. Everybody knows Jerry McGuire, what was it? Show me the money and that's what they hired for. But it's funny, this actually, there was a conversation I had a couple of days ago with somebody as a Yankee fan, it's hard to bring this up, but if you take a look, even following in the sports world, you look at the Juan Soto sign and the Yankees to the Mets and they're talking about, oh, it was only a $40 million difference, which is nothing in the scheme of things, but it was the perks, it was the suite, it was the family culture, it was all those aspects that they're saying made the deal.
(00:10:42):
And even all the talking heads were shocked that he made a decision for $40 million and they were trying to find reasons and just that mentality over the last 15 years from the Jerry Maguire, show me the money. And that's why you went somewhere through this past week where getting a suite and a family culture and having your family possibly thrown out of a different suite and all these perks or benefits or lifestyle style benefits, you see the major trend and differentiation inside of the world on a larger scale. And even more so in our smaller scale, we're not talking about $40 million differences. It's $10 differences and sometimes between one employer.
Stephanie Koch (00:11:21):
Yeah, I mean you're right. I mean we're definitely as employers challenged more now because we have to really think differently about what offerings we give to our employees. So it's a lot more strategic and how we have to align our healthcare programs and our benefit programs and our full compensation packages. But
Mari Kemp (00:11:43):
Really you have something to add too. Yeah, do remember about 20 years ago all we had to offer was coffee, right? And maybe teas, maybe a couple different box of teas that we would offer.
Stephanie Koch (00:11:56):
And before the kerik.
Mari Kemp (00:11:57):
Yeah, exactly. And so it was just more like, look, you have tea, water and coffee. You should be good, right? You shouldn't want anything else. And if you fast forward to today's time, I think it really kicked in with the.com industry. It really started to soften up where now you're offering lunches and catered meals and things like that, but fast forward to today, it's not. Then you find out when you offered all of those catered lunches and meals like at Google for example, now you're dealing with a different level of BMI health issues. But my point in saying this is that people today want to feel like they have a sense of community that they feel taken care of and there's a sense of belonging. And that's why this plays very well with that because it's not just about the paycheck, it's not just about the coffee. They want to know that you actually care for my health and wellbeing as well, and they're able to make a decision in doing so.
Stephanie Koch (00:12:47):
When we think about a company including the LSA and their total rewards package, why is it important? You guys hit on a couple points. Is there anything else that we haven't touched on in that respect?
Harrison Newman (00:13:02):
I'll go first on this. Looking at a multi-generational workforce for the first time and more generations of workforce than we've ever seen before in certain cases up to five different generations in the workforce,
(00:13:16):
To find benefits that can attract or retain five generations is very hard. There is no one benefit that boomers and millennials and Gen Z and Gen X and all these different categories are attracted to offer different benefits from each one as an administrative nightmare. So these LSA accounts are sometimes so broad, yet so specific that they allow each person to feel like you care about them specifically, but they're broad enough where everybody could find something that attracts them. And at the same point, administratively, you're only providing one benefit or sometimes two benefits in these situations, not 17 different benefits to attract 15 different people. So from both the administrative standpoint and the fact that each employee wants to feel personally touched by the benefits or personally valued by the benefits, you're seeing that more now than ever throw in the hybrid workspace where the needs of a hybrid community are even more so.
(00:14:14):
And I think, Maura, you mentioned yesterday the fact that, and I forgot the numbers and you could bring that up, but the fact that you were sitting behind a desk and not working anymore led to obesity and was worth than smoking, I think was the word you used. And I'll let you give more on that. But the fact that you're in this hybrid environment where you can't even give the coffee anymore to those people, you can't give 'em those lunches because they are hybrid, but you still want them to feel valued, appreciated, and healthy. It has taken these lifestyle accounts in the post covid world, really ramped them up 10, 15, 20 fold than where they were beforehand because of this new hybrid work environment.
Stephanie Koch (00:14:48):
Yeah, those are great points. Now Geoff, was there anything you wanted to add regarding why companies should include LSAs and total reward packages? What are you seeing in your industry from where you are?
Geoff Geredien (00:15:02):
Absolutely. I think Harris made some great points. One of the interesting things that we've seen evolve over time is how companies who have robust wellness programs have adapted their incentive structures to align with this new LSA model. And of course there are some tried and true methods out there for incentivizing folks to be healthy and engage in the types of activities that lead to productive happy workers. And they can be things like premium discounts right off your health insurance, or it can be gift cards or payroll contributions or other forms of monetary incentives. But the LSA has been this really winning strategy for helping to create this very virtuous cycle of folks participating in a wellness program and then reinvesting in their own health and wellness by being able to again, spend funds on things that are meaningful to them
Stephanie Koch (00:15:57):
In
Geoff Geredien (00:15:59):
Areas across multiple dimensions of health. So again, the gym membership's always kind of the classic example, but again, for somebody else it could be a calm or a Headspace subscription or something like that. It doesn't have to just be in that physical health domain.
Stephanie Koch (00:16:12):
Yeah, that's excellent. Marty, you look like you had a comment and before we moved on, I wanted to make sure I gave you a chance to talk about it.
Mari Kemp (00:16:19):
Yeah, I think the only thing I wanted to add too, both points just here mentioned is that this transition also puts the ball in the court of the employee. For so many years it's been what can the company do for you now? It's like here is your stipend, go do something. And from an HR perspective, we're always hearing about burnout.
(00:16:43):
So now we're in a remote hybrid setting. I always say, I can't come to your house and unplug the laptop out of the wall. You really have to put blocks on your calendars, you have to review. So this kind of also creates more of expectation of the employee to take it on themselves. We're giving you these funds because we care for you, but you have to be able, you can't force the horse to drink. But at the same time, it is now a dynamic shift too. Now that you're at home working alone, there's things that you have to do and we're giving you the support to show you that we actually care for you.
Stephanie Koch (00:17:20):
Yeah, that's really cool. And I love all those perspectives because each of them were so valuable and really understanding the true, no pun intended benefit of offering these to the employees. So we have a second poll and the question is, if you offer LSAs, what type of LSA benefits are you offering your employees? So wanted to make sure we got that one put out there. Things like fitness memberships and classes, nutrition programs, meal delivery services. So we want to have you guys participate in the poll,
Harrison Newman (00:18:05):
Stephanie, while they're typing in to add on to what Mario was talking about, it fits into what they're offering.
(00:18:10):
A lot of the conversation we're talking now is about the GLP ones and these weight loss drugs and stuff like that. Beforehand there was a mental health benefits, but we're seeing these LSAs really come in handy in those regards because very often employers can't afford to offer them through the major medical plan. It's just too expensive. Whether it is additional mental health support, whether it are these LSA plan, sorry, these not LSAs, these GLP one drugs, whether it is the weight loss drugs, whether it is fertility benefits, whatever these benefits might be, it's too expensive or not available to the medical plan. So we're seeing a lot of employers look to these LSA accounts as ways to at least give something towards it to provide some benefit towards the employees for these type of services that they really want to offer, but can't financially afford to do their major medical plan, but want to still give to those employees who truly need it, some sort of benefit or perk, which might not cover it a hundred percent, but at least help pave the way to getting access.
Stephanie Koch (00:19:08):
Yeah, because certainly employers are really challenged with the costs related to GLP ones, especially if they're not necessarily being monitored or handled or like I said, managed by someone clinical and they're just being taken. So we certainly want to make sure that people that are taking them are in need of them for a certain reason. Hang on, I'm trying to get the answers to the poll here, which I'm having problems with. So sorry. Of course. It's really tiny on my screen, so we're just going to move on. But it does look like, hold on. Yeah, I'm not having much luck with that. Sorry I, it's a tiny little screenshot. So unfortunately we'll get back to the poll responses in a minute. I'm going to move on to the next question, and this is going to Geoff and Harrison. I've been in HR a long time and we hear a lot of acronyms and a lot of cool news shiny objects coming into the space. But for those of us who don't know, how long have the LSAs been around and how long have you been implementing them for the organizations you're working with?
Geoff Geredien (00:20:33):
Yeah, it's a good question. I mean, the concept of an LSAI think has been around for a while. And again, it comes in different forms and it's purest, most simplest form. It's a reimbursement program. And the scope of that can vary by employers and even Harrison and I were having a separate conversation yesterday and we were, I think both interested to find that within our respective domains, the definition of a scope of an LS estate can be so vastly different depending upon that mindset you have. If you have the mindset of keeping it pretty focused on traditional gym memberships and fitness or physical health related expenses, that could be your perception of it. But I think really what we've seen is the broadening of that lens for the majority of employers and thinking of it as much more than just a gym membership reimbursement tool, although that in its own right delivers a lot of automation efficiencies and probably a better experience for employees, much better experience for folks in HR and payroll who might've been previously manually reviewing receipts and having to load payroll files into support reimbursement and things like that. So I've really seen an uptick in it over the past five years. And again, it's probably no coincidence, right? That's kind of in this post covid hybrid and remote era that is really propping up more digitally focused solutions, but also those that can provide a lot of flexibility and choice.
Stephanie Koch (00:22:01):
Yeah, that's a really interesting perspective that it's post and it really makes sense to make it more customizable because of the remote workforce now or more people working remotely. Harrison, what about you?
Harrison Newman (00:22:15):
Yeah, I agree with Geoff in some way, shape or form. They've been around forever. It was funny, Geoff and Mario were talking yesterday about gym reimbursement programs, and when I'm talking about lifestyle accounts, those don't even register for me. To me that's a completely separate factor. I guess they are lifestyle accounts, but to me they've been around for so long. That's not even the discussions we're talking about. We're talking about really expanding them. So I think in some capacity they've been around, I'm not going to say forever, but they've been around for a very, very long time, probably as long as I've been in the insurance space. But over the last couple of years, we've seen them for numerous different reasons, really take on new meaning. And I think the newer lifestyle accounts, which are more than just a gym reimbursement, but in more holistic wellness, which might include some mental health or the ability to use the money on other aspects, has really come on full steam after the covid years. And more so even now is more and more benefits are available and are recognized and are valued by employees. And it's what have you done for me lately? I mean, we're talking now about the job shortages and the fact that there are, I think for every a hundred jobs there are 85 employees and everybody's competing for the best and top talent,
Stephanie Koch (00:23:29):
And
Harrison Newman (00:23:31):
You're trying to find differentiators inside of your marketplace. And sometimes it's not even a differentiator. Sometimes it's an equalizer, LSAs, while they might've been a differentiator a couple of years ago right now, they might not even be differentiators anymore for that much longer. They might be an equalizer where if you don't offer them, you're behind somebody else not even ahead. So you're seeing them really pick up, and I think the job market combined with the different benefits out there, combined with the new business mentality, which is a good mentality where it's a culture mentality versus a financial mentality, I really think you're going to see an even more larger uptick over the next 12, 24 months than we've even seen in the past just to stay equal on the playing field in this tough job market.
Stephanie Koch (00:24:16):
Yeah. Now I'm curious, and we didn't go over this yesterday, but now that I'm thinking about it, are the LSAs more popular in certain parts of the country than others? Is it more prominent east, west, north, south? Anything specific or just doesn't matter? They're offered by companies everywhere.
Geoff Geredien (00:24:39):
I don't know if I've seen a geographic distribution as much as there are certainly some industry trends in terms of maybe companies with knowledge workers versus other manufacturing or construction related industries. Sometimes there are some trends there, but I've even seen successful adoption of this within our client base in those more traditional, again, blue collar workforces because of the, I'd say more widespread adoption of just regular technologies these days, smartphone uses app usage and the ability to simplify the process. Again, in the past it might've been you have to print out a form or take a picture of a receipt or something like that and mail it in somewhere or something like that. And now it's just made pretty simple with some of the different tools that are out there.
Stephanie Koch (00:25:32):
Yeah, that's really,
Harrison Newman (00:25:33):
Yeah, I don't know if it's regional, but I think it is more in the even the hybrid or the multi-state employers, because like Mario was saying beforehand, if you were in the office, it's one thing you can do stuff if everybody's in one general location or a couple locations, you could run wellness fairs in a location, but if you're spread out, if everybody's hybrid, if people aren't in the office anymore, you can't do stuff like that. You can't send them to wellness fairs, you can't interact with 'em the same way. So you need products like this in order to attract, retain, and promote wellness within your organization where it is much harder than when you have everybody in one location where you can just throw some weights in the basement and create a makeshift gym, but now you can't do that anymore.
Stephanie Koch (00:26:18):
Yeah, that's great. All right, so we're going to move on to the next question, and it's for all three of you. And you kind of answered this a little bit, but what size companies typically offer LSAs or are they feasible for organizations of any size? And secondly, what is a typical employer contribution to an LSA because it does have to be seated by the employer? So those are the two questions.
Mari Kemp (00:26:50):
Yeah, I can sort of start off. I've seen it in large organizations where there's 150, 200 employees all the way up to 10,000 plus. I don't think there's a specific headcount that targets that, but I do see definitely a lot of startup organizations because they're trying to attract top talent in a perhaps volatile environment where you don't really know how long startups are going to last, that attracts a little bit more of a more competitive ability to acquire top talent. However, from a spend perspective, I've seen from all the way from 200 to 2000 a year per employee that's given to help them. And it comes in forms of, I've seen one organization where they broke it up where there was a mental health stipend, there was a ergonomic stipend, and then one for fitness wellness stipend. So just they broke it up. But it was given to your point that you were mentioning earlier, Harrison, it is just a lot easier. You don't have to send a bunch of receipts and pull your typewriter out and calculators start figuring it out. They've just made it a lot easier just to be able to purchase what you need, maybe a wellness card that you're given to leverage. So I've definitely seen the majority, I mean the spread of different ways of offering this benefit. Okay.
Harrison Newman (00:28:13):
Alright. Harrison, from the size standpoint, I think a lot has to be why you're offering the LSA accounts. And that goes back to your poll question. The gym reimbursement probably might be non-cost effective at a smaller employer just because it's too much money for not as much ROI, but we were talking about offering it going back to the GLP one drug. So if you're a smaller employer, let's say 50 employees and you want to offer the GLP one drugs, putting it into your medical plan might be too expensive because if you have five, six people taking it, there's not enough premium and not enough good selection in it. I hate to use word good selection, but not enough non-users or good selection in there where it's going to blow up your medical rates. So for a smaller employer like that that wants to offer it, these LSAs are a safer way to do it because you're capping going in, you're giving 'em $500, you're giving 'em a thousand dollars, whatever that is going in, what your worst case scenario is and you know how to budget that.
(00:29:06):
So we're seeing 'em in the smaller employers take advantage of that from a cost control standpoint where you didn't necessarily see that as much in the past. So I think the size does matter, but it depends on the strategy you're trying to implement and the boxes you're trying to check with this product. And the contribution. Mario's right on target with that. I would say the average is anywhere from seven 50 to 1200. Nice round numbers not really applied to anything. It's a random number, so you're not going to go $1,197 and 32 cents. They like to have nice round numbers. I think that's going to change. I think you're going to see an increase in over the next couple of years as the market tightens it needs to become more. But for right now, I would say the average is somewhere between seven 50 or a thousand dollars a
Stephanie Koch (00:29:54):
Year. Okay. Geoff?
Geoff Geredien (00:29:57):
Yeah, I think agreed all round in terms of the wide range of employer sizes that we've seen adopting for us probably the smallest group around 25 employees, but typically it's going to be again, in connection with the delivery of a wellness program for those size groups, not necessarily just a standalone LSA benefit. And in terms of dollar amounts, and again, this might skew a little lower on the small mid-size range, but I've seen as low as $10 per month. So $120 per the year and certainly on the higher end is going to be more a thousand plus.
Stephanie Koch (00:30:31):
I mean those are generous amounts regardless. A company that is offering an LSA, I mean definitely forward thinking, really trying to build a culture, think about the employee experience. And it's something that a lot of organizations should definitely consider from recruiting and retention standpoint. So
Mari Kemp (00:30:52):
I was also too bigger picture strategy though. It's great to offer this, but the ROI is what you want to start to track over time. For example, you should see a spike in engagement for example, or you should see maybe your diabetes goes down on your renewal or you should see a different strategy of how the GLP one is used within the organization. So while we're talking about LSAs, I would say it's really important too for organizations to have a full picture strategy of that sort of embeds into their overall wellness plan for the organization. Your goal is to create a healthier population, healthier people, not only for your organization but for the world. And so when you're able to look at it from that perspective, it's also looking at, okay, so if I were to take my current contributions, say from 1500, the strategy to take it to maybe 3000 is because you're starting to see a decrease in your healthcare when you do your renewals, you're starting to see a shift from that perspective. So the goal too is also to tie it in holistically, like leveraging the data of usage from all of these different organizations that you're partnering to do it to build a holistic strategy around your wellness and your healthcare benefits of the organization.
Stephanie Koch (00:32:13):
Yeah, those are such excellent points. I love that. Well
Harrison Newman (00:32:17):
Said. Sorry, from an employer standpoint, it's also soft money, meaning as opposed to giving a thousand dollars to each employee in a employee benefits, you're giving 'em access to this money. But in most of these situations, at least year one, if you have 50% participation, that's a lot. And I am not going to put anybody in the spot, but once again, from what I've seen, you can bring a horse to water, but you can't force 'em to drink. So you're giving 'em this benefit that you get the goodwill of offering this benefit, but they're not necessarily taking advantage of it. And while you want them to take advantage when they need it, some people just aren't going to, and that's also soft money. So you're giving the benefit. But from a financial standpoint, it's a lot easier to give the soft money than the hard money is. Instead of spending extra thousand dollars on a benefits plan and stuff where it's going to a carrier and you're not getting that money back here, it's soft money because you're not really spending the money unless they actually use it and a lot won't use it.
Stephanie Koch (00:33:10):
So are you saying that the benefit is voluntary, that an employee would have to opt in to be a participant of it or
Harrison Newman (00:33:17):
No, but they have to spend the money, meaning it's not that everybody's eligible. Typically everybody's eligible, but if I don't go to the gym or if I do go to the gym, but I don't process the paperwork because I'm too lazy to process the paperwork, not that I would never do that, don't tell my wife, but not that I'm not ping the paperwork to get the money or I'm not taking the GLP one drugs or I'm not using, I'm fine with an old fashioned chair as opposed to one of those ball chairs that said net better for my back and I'm not using those funds. You still get the reward of offering something like that, but at the same, you still get the brownie points of offering it, but you're not actually spending the
Stephanie Koch (00:33:59):
Money, right, because the employee hasn't
Harrison Newman (00:34:02):
Used
Stephanie Koch (00:34:02):
It, executed or used it. Got it. Okay. So we have our last poll. If your company is offering an LSA, what amount are you offering? Less than $500? 500 to a thousand or over a thousand. So yeah, I don't know that with companies that are thinking about doing this, while we're waiting for the poll results, anybody have any thoughts on if a company wanted to seed this for the first time, what's a good number maybe for them to start out with to see how engaged the employees are with it?
Mari Kemp (00:34:45):
It's interesting. I like what you said, Geoff. It could be as small as $10 a month. It doesn't have to be a huge investment initially if you're trying to get your feelers out. But then again, I would also put it out there and do some sort of survey or so to see if that's even a demand or a need for the organization for the employee base. And then to Harrison's point, it's a win-win, whether you do $10 or a hundred dollars or two 50. Sometimes what we've identified is that it's more of a behavioral shift. There's only so much you can do, but it's creating the awareness, which is what the best you can do. But also it is more of an employee behavior shift that you're really trying to push if you can, but sometimes you just can't. So anyway, needless to say, there's ROI. Either way it goes.
Stephanie Koch (00:35:35):
Yeah, no
Geoff Geredien (00:35:36):
Doubt. Across our client base we typically see is the point at which you're able to consistently see higher levels of engagement tends to be $25 a month or $300 per year. At that point, you can really see noticeable improvements in employee participation. You can still absolutely have success with $10 a month, maybe that's a fine starting point, but as the program matures and you're looking to, again, get more folks included and make it a pretty compelling offering, that tends to be where you see higher levels of participation.
Stephanie Koch (00:36:08):
That makes sense. So I, I actually have the poll results this time. So 78% of companies are offering less than $500, 17% are offering 500 to 1005% are over a thousand. So that's a really good mix. But
Harrison Newman (00:36:32):
It is, and I'd be curious, and once again we can't add to the poll, but I'd be curious, the ones offering under 500, if there are more limited LSA accounts focused on gym reimbursement as opposed to more broad ones. I think that goes to a lot of it is what are you looking to cover in this If you are looking to cover, once again, I hate picking the GLP one, but if you're looking to cover the GLP ones, then you might be closer to a thousand dollars because saving off your medical plan, it all depends on what you're looking to cover and how broad you want them to be. So I'd be curious where those numbers come in from that standpoint because I think that makes the major difference.
Stephanie Koch (00:37:03):
Yeah, makes sense. So in other words, like Mar said, there's a strategy behind the amount that you're offering because at some point you wanted to have an impact on a part of your healthcare plan or obviously results for an employee wellbeing. Alright, so I'm so curious about this and Harrison, I think you hit on it a little bit before, but do you think LSAs are more popular with specific generations or are they beneficial across all age groups? And what are you seeing with the ages as far as adoption and using the LSA?
Harrison Newman (00:37:43):
So it's funny, you said two different things. You said popular and beneficial, and I think the answer is different to both. They're definitely more popular amongst the younger, let's call them the newer staff, the millennials downwards
(00:37:58):
Or the younger millennials downwards for the simple reason that their values are different. They value these individualized per benefits more than the salary, more than the baby boomers do. The baby boomers want to get a salary, go home and move on, don't care as much about those perks. But from a benefit standpoint, I actually think it benefits everybody equal. And I think once you implement them, everybody sees the value of them because as we mentioned in the beginning, you have multi-generational workforce and it's hard to find benefits that attract and retain all of them. And when you talk about ROI attract and retention is the number one thing you're looking at ROI, because even if you're not getting a financial ROI from the benefits, it's expensive to recruit, it's expensive to train, and it's expensive to have empty positions inside of an organization. So if these help you fill those positions or keep people in those positions, that's where the true ROI is, what I call the cultural ROI is both a financial ROI. It's the fact that you're building a culture that's going to attract your retained talent, which is going to create the largest even more of an ROI than lowering your medical costs. So I think it is being requested by the younger generations, but I think the benefits of being felt across all five generations in the workforce.
Stephanie Koch (00:39:14):
So speaking of our ROI, Geoff, what are you seeing from your company's perspective of a timeframe to see an ROI and offering these type of benefits to their employees?
Geoff Geredien (00:39:26):
Yeah, absolutely. It's age old question for any sort of benefits investment RO, I think Mari brought up the point earlier around coffee, right? Coffee in the workplace. And I always think the most classic question of ROI is like, what's the R OI of coffee? What's the rro I of having in the workplace? Maybe not so much anymore. We're not all in the office five days a week, but no, back in the day, no one would ever question that. It's just what you did. It was the right thing to do. You knew it was valued so you did it. I'm not saying that necessarily exactly applies here, but in some cases it's a similar concept because some of those benefits are going to be intangible or very difficult to quantify around how this contributes to building a culture of health, of wellbeing, of where folks feel valued, right?
(00:40:13):
I mean, certainly there are some quantifiable efficiencies you could gain if you're already running a reimbursement or some other type of manual reimbursement program. Today, automation and efficiencies will absolutely be gained by implementing a solution around this, right, and helping both administrators and employees with the whole process. But beyond that, the return can be pretty easily quantified. Again, when you look at employee participation in, again, wellness programs, if you are connecting it there, definitely going to see an increase in participation. There's obviously a whole host of positive benefits from that. And because so many of these LSA solutions are utilization based, as Harrison brought up earlier, funds are only being typically charged back to employers if employees are actually utilizing them. So it's an efficient deployment of capital in that sense.
Stephanie Koch (00:41:11):
Yeah. Marty, what are you seeing as far as, I know you said you implemented your LSA and you're so passionate about it, which it so comes through and I love that. What are you hearing from your employees about the LSA and are you seeing any ROI yet?
Mari Kemp (00:41:27):
So our benefits we're implementing that we just selected are 4 20 20. So I have yet to see the ROI yet, but we have built multiple touchpoint strategies every quarter to sort of start to measure, but also to reignite the awareness around what we're offering as well as encouraging individuals. For example, MSK is a big deal within our organization. So we have Hinge Health. When you do open enrollment, they remember in that moment, but as you move to February, March, april, may, they tend to forget. So we have a multiple touchpoint strategy to keep that going. So for us it was big on MSK, we brought Hinge Health and we have Spring Health, which is great for mental health as well as well Hub Gym Pass so far, just in the open enrollment exercise, everyone was ecstatic. They were very excited. We had over 7,000 people actually participate in the open enrollment exercise, which is astounding compared to prior years. So we are making trends, we're making differences because we've created a benefit strategy that aligns with our people. And so with that multiple touchpoint strategy, we and the partnership with our vendors to use the data of what's being used, what what's working, what's not working allows us to pivot and be dynamic about it. But it's something that is not, you can't just implement and then walk away and say, done. There's got to be a constant effort around this exercise as well.
Stephanie Koch (00:43:01):
I love it. That's fantastic,
Harrison Newman (00:43:04):
Mario, when you implemented it, if you don't mind me asking, no, you budgeted, what percent did you budget for a 50% usage? Where did you budget in the usage aspect?
Mari Kemp (00:43:13):
Because of behavior shift that we're definitely focused on, we're looking at about a 30% utilization for now with the intention to increase that over time. And so that's what we IT for for now.
Harrison Newman (00:43:25):
Yeah, I was curious because I think that's important for people to realize because you talk about these large numbers and the large employers a thousand dollars, but it's not really a thousand dollars because even on a large scale, I think 30% is probably around the right number to actually budget for, which I think is important for people to understand when they're looking to implement these products
Stephanie Koch (00:43:42):
And speaking implementation from an HR perspective and appreciating what MARTA does, because I've been in HR a long time myself, and sometimes it's daunting to think about implementing a new type of program. So Mara, I'll throw this one to you. How much administrative workload do you think the LSA created for your team? And obviously it sounds like it's worth it, but what does that implementation look like?
Mari Kemp (00:44:13):
I will say, and I'm not cheating, I am VP of HR technology because I love technology and I'm a geek, but it did not require a heavy lift actually. And by leveraging our partners, our broker, but also most of these vendors come with an implementation team, the key is that you, someone on your side, on the employer side, just being part of the testing exercise to make sure the right data gets to them in terms of employee data, date of births, all of the things that are really critical in that transition process. So number one, I think the only commitment from the employer side is clean data. So whatever HRIS system that you are working on, we're currently on PeopleSoft transitioning to Workday, we had to do a major clean data overhaul and we leveraged the open enrollment exercise to really get people to get back in there and check out their information and clean it up for this very reason. So I would say in terms of implementation is not a heavy lift at all. This is why you leverage your brokers, but most importantly, they make the implementation process very seamless because the implementation team works very closely with all parties.
Stephanie Koch (00:45:20):
That's great. So Geoff, that sounds like a good question for you to answer.
Geoff Geredien (00:45:24):
Yeah, I would echo what Mari said. Certainly clean data connection to your HRIS, making it simple for employees to log in with single sign on is always good. So certainly there are some technical elements to it, but they tend not to be highly technical products. It's more there are decisions that need to be made. That's where I see the implementation process success succeed or fail. It's around decisions on some of the key things we've talked about today, what's going to be eligible for the LSA, what's the dollar amount that we're going to offer? What's the cadence at which we'll make this stipend available? Are we going to allow funds to roll over from period to period or not? So those are the types of things that are a big part of the implementation process. And as MA said, lean on your partner, lean on your broker, lean on your LSA vendor to make sure that technically some of those things come to life appropriately.
Stephanie Koch (00:46:15):
And I know that a lot of employers myself included with multilingual employees, so I'm just curious if you guys are seeing in the market, are there English, Spanish, multiple language type offerings so it can appeal to everyone.
Mari Kemp (00:46:31):
I would say we've expanded out to Spanish just because that, again, you're looking at your demographics and that's what really worked for us and we are able to expand to them. And one thing in terms of implementation too, for any of the employers out there who are even thinking or considering this, just know too when it comes to this, it doesn't have to be a beginning of the year initiative. You can start this any time of the year, so it doesn't have to roll with open enrollment as well. So that's something else to think about. If this is a nice thing that someone wants to implement in 25 and they haven't even started yet, it could happen in June if you wanted it to.
Stephanie Koch (00:47:08):
Yeah, and sometimes it's good to make those standalone so they can stand out, see employees having more of appreciation for them. So we have several questions from the audience, so this is amazing. Those are doing fantastic. Okay, so question one. We have previously considered an LSA, but we have a set budget and any additional money we put into benefits LSA is taken from salaries instead of giving raises, what are the benefits of putting money into an LSA instead of raises?
Harrison Newman (00:47:50):
So I'll start off with that. Raises are always key. So you don't want to take away people's raises and people will start stoning me if I start talking away their money. That being said, there are two aspects that I think you need to look at. Number one is the difference between soft money and hard money that we mentioned beforehand. Giving a thousand dollars in a salary is giving a thousand dollars in a salary to everybody. We're giving a thousand dollars in an LSA, I'll use round numbers, if you're a hundred employees, you assume 30%, that's a lot less money. They're giving a thousand dollars to everybody. So I do think it's not a clean equation. What we also look at is reallocation of funds. So as a benefits broker, you look at your benefits package and you see what part of the benefits package provides value, where it doesn't provide value.
(00:48:42):
I use baseball references before I'm a big baseball fan in baseball, there's the acronym, WAR wins above replacement. So you look at a benefit and I look at it the exact same way, each benefit, what's the win above replacement? If you have a very rich medical plan that your employees aren't really taking full advantage of, you have really rich out of network coverage and you're spending a lot of money on that, and you see that only 2% of your staff actually go out of network, well, maybe it's not the salary. Maybe you lower your benefit plans a little bit, you tear down a little bit in the out of network coverage and you throw into the lifestyle account. We had a client of ours who was a very young demographic and had a very, very rich out of network benefit plan, and it was a high usage.
(00:49:25):
And we surveyed them and we realized the reason there was such a high usage was because the employees were using it to go to out of network mental health providers. What we were able to do was create a separate mental health account and lower the benefits spend, and they actually got a better mental health benefits and the company saved about 20% on their benefits because they weren't, once again, it's wins above replacement. They weren't paying for these very expensive at network benefits, were actually able to give the benefit to their employees they actually wanted. So my response to that is, is you never want to take away people's salaries, but sometimes with the right broker and the right partner and the right administrators, you can get creative and find other ways to reallocate funds.
Stephanie Koch (00:50:10):
Yeah, those are great points. We're getting a little pressed for time. So I'm going to move to the next question. How do you approach communication of LSAs to employees and their families?
Mari Kemp (00:50:23):
I would say from a communication perspective, multiple touch points. Either it's text messaging, open enrollment emails. I don't know if we're finding out or figuring out that emails are just not the proper chain of communication anymore. It's almost a reality, a harsh reality that probably is hitting us now after it's been in place for so long. But also just really having change agents going all the way back down to sending people just little reminders in form of a gift or something. Just remember your health or things like that. A yoga matter. So being able to send or create a multiple touchpoint strategy in addition to what I was referring to earlier, having a fair, having benefits faires in the middle of the year, doing something every single month that kind of brings back the reminder of what we're trying to achieve here and changing the behavior towards focusing on wellness or fulfilling the needs that they have. So it's not just a one and done it is that's ongoing constant active force of the business. When you no doubt embark on it, doubt,
Harrison Newman (00:51:27):
And it's finding champions inside the organization. Everybody knows who the loud people in the office are for, good or bad. The ones who will influence everybody else, engage those people and help them spread the word
Geoff Geredien (00:51:38):
For you. Couldn't agree more with that, Harrison. And this in particular is one of those benefits that's highly word of mouth and buzzy. I mean, very easy to share a story about, again, how you were able to take a trip using your LSA funds or you were able to get that Peloton you wanted or whatever it might be. So it's very conducive to social engagement and like you said, wherever you can find folks who will shout that from the rooftops, definitely provide them with the platform and the means to do so.
Stephanie Koch (00:52:07):
Yeah. So when we were talking about the LSAs, we were talking about acronyms and all these words that HR and insurance folks like to use, but we forgot to talk about whether or not they're taxable. How does the LSA benefit work? Because we know about some of the other ones being pre-tax, but what does this one look like
Geoff Geredien (00:52:30):
Exactly? So not a tax advantage account, like some of those other traditional savings account. So this would be a taxable benefit. And that's certainly part of the equation when it comes to thinking about implementation and communications for this, right? How are you going to be able to get reporting from your LSA vendor to understand exactly what each individual has redeemed through the program year because those are taxable funds, and making sure that that can get into your payroll system accordingly and make sure that employees know that again, they would be taxed based on the redemption or use of those LSA funds.
Stephanie Koch (00:53:07):
All right, so it's put on the W2 at the end of the year as supplemental income or part of their income. So it's taxed to the employee. Got it.
Harrison Newman (00:53:15):
But only if they use it, not just by being eligible access for it, only if they take advantage.
Stephanie Koch (00:53:20):
Okay, awesome. I appreciate you guys answering that question. Question. Let's see. If you offer an LSA, does it go to all employees or only those who are enrolled in group health insurance plan? And then you just answer the question about the taxes. So
Harrison Newman (00:53:40):
Typical question, I think it's a strategy.
Geoff Geredien (00:53:42):
Yeah, go ahead Harrison.
Harrison Newman (00:53:43):
No, you go first. Basically it's a strategy. Each case is different. It depends on how you want to offer it. Some just offer it to people in the medical plan, some offer it to everybody, some offer it to executives. It is a strategy of how you want to implement it, I think.
Stephanie Koch (00:53:56):
And is it based on what the LSA covers? So if it's covering GLP ones, you might want to focus people, focus it to people on the healthcare plan, like something like that. Is that what you mean?
Harrison Newman (00:54:08):
It depends on what your goals are. If your goal is to attract and retain talent, then sometimes you might do it to everything. If it's specifically to offset the medical plan and lower your medical costs by instilling wellness on your medical plan, you might tie it to your medical plan. It all depends on the underlying strategy that you have in place when you're implementing it. And each company is going to be different in that strategy.
Stephanie Koch (00:54:29):
Okay. So let's see. So what are the different things that LSAs can be used for? Geoff? I that question came to you.
Geoff Geredien (00:54:40):
Yeah, a whole host of different things. I know we've touched on some of them today. We've probably used the gym membership example, beaten that to death. But beyond that, I think it's different categories of health and wellness related expenses, right? So financial wellbeing, it could be advisory and planning services, seminars, estate planning, right? Emotional wellbeing. It could be guided meditations, counseling, right? Maybe it's personal development or retreats. There's all sorts of other unique things that can be in there. Everything from pet insurance to nutrition related, meal planning services, spa treatments, the list goes on and on. So there really is such a broad scope to these experiences, which is pretty exciting.
Stephanie Koch (00:55:25):
Yeah, it really is. Mari, this question's for you. How did you decide what spending categories to offer and did you survey your employees?
Mari Kemp (00:55:35):
So this year we did not survey our employees, but we do plan on surveying next year after we have what we currently selected in place. And how did we determine, so the determination came from our medical claims that were at the highest, the most prevalent claims that we were seeing in our renewal. And that's where the strategy was built out from. And then determining how much was based on our budget, how much we were willing to allocate based on that 30% utilization strategy. And again, looking at this holistically, we anticipate seeing some sort of a reduction in our renewals in some of these areas, hopefully. So it's going to take this first year as we're rolling it out. Again, it's a holistic plan and we plan on looking at the data every quarter to continue to measure it. And again, you can pivot, you can change, you can be dynamic with these offerings. So it is going to be a constant process that we're embedded in our strategy overall.
Stephanie Koch (00:56:33):
And it's always making sure that you're measuring along the way, and like you said, working with partners that can provide you with the data to know that you're moving in the right direction. So the question is, have any of you experienced a direct savings on your health plan as a result of implementing the LSA? Does the LSA incentivize your employees to make better choices, which thus in turn has the long-term impact on your claims? And we have only a couple minutes left. So
Geoff Geredien (00:57:05):
I'd say the latter for sure. Because again, most often where we see our clients adopting the LSAs is in connection with their participation in the wellness program. So not only are those funds only going to be utilized when employees them into action, right? Actually, again, utilize 'em for the intended purpose, but they're only made available if they're participating in a wellness program on an ongoing basis. So that again, is that ideal model where you have that nice connection of regular engagement and healthy habits and behaviors, and then utilizing those funds on hopefully things that are going to support a healthy lifestyle.
Harrison Newman (00:57:46):
Okay.
(00:57:47):
Yeah. ROI is always a tough conversation because you need large scale, you need large and you need time. It's not going to flip a switch in one year. You're not going to have a bunch of diabetics become not diabetic in year one because you offered an LSA program. That being said, you judge as a participation. You judge a thing and you know that it does equate to things. You do also see savings because sometimes there are things you were going to put in your benefit plan. This can cover as well. Once again, it's just reallocating and figure out what the best war or what the best value getting from a benefit standpoint. So we definitely have seen savings in that and we have seen long scale savings or, I mean, there's never savings in medical plan. Medical costs keep going up. We've seen less increases in the medical plans because of it, but it's hard to say after one or two years with 20, 30, 40% participation that it's going to drop 15%.
Stephanie Koch (00:58:40):
Yeah. Harrison, this question is for you. Are you seeing more people adding these for 2025? We only have a couple minutes, so
Harrison Newman (00:58:51):
More, yes. Not as many as I would've expected. Definitely more. I'm seeing more and more pickup each here. I'm seeing the conversation start. I'm seeing them. The simple answer is yes, but not to the extent that I would've expected. I'm seeing the conversation happen a lot more often, but I still think in some capacities they're hesitant because it is not pre-tax. They almost feel like they'd rather throw into an HSA or something that does have the tax benefit towards it, even though it doesn't have as much of a reach as these type of benefits from a strategy standpoint.
Stephanie Koch (00:59:26):
Gotcha. Well, you guys, this has been such an amazing conversation. I've learned so much, and I am so blessed to have been part of this panel. I really want to thank all of you and thank you for being here. Thank you for your insight and information, and I'm actually going to turn it back over to Lee Hafner, who is back to join us for her closing remarks. So thank you everybody.
Lee Hafner (00:59:52):
Thank you.
Harrison Newman (00:59:53):
Thank you.
Lee Hafner (00:59:55):
Thank you so much, Stephanie. This concludes our virtual summit. Thank you all to our amazing panelists, all of those who attended today. We will be sending a link with whichever panels you attended to your email and for those who couldn't attend as well, but did register. But in short, this has been wonderful. EBN was extremely honored to host it, so thank you all and I hope you have a wonderful afternoon. Thanks.