How to Transition to a Lifestyle Spending Account in 9 Easy Steps

Today's employees seek more than just healthcare and retirement planning from their benefits packages. They want support in multiple areas of their lives. And it's the "multiple" part of this sentence that can be challenging. 

The more plans an employer has to manage or the employee has to access, the more complicated the benefits ecosystem becomes for everyone involved. This guide describes how a lifestyle spending account simplifies your benefits offering without losing any breadth and how to transition to this program in nine easy steps. 

What is a lifestyle spending account? 

A lifestyle spending account (LSA) is an employer-sponsored benefit that gives employees access to an allowance they can use on a wide range of eligible expenses. Employers typically pay a fixed sum into the LSA each month, and their employees may spend the money on benefits related to health and fitness, meals, childcare, wellness, professional development, and more. 

What are the key benefits of adopting an LSA? 

An LSA provides clear advantages both for the employer offering them and the employee receiving them. These include: 

Improved flexibility for diverse employee needs

For the first time in history, the US workplace hosts five generations: traditionalists, boomers, Gen X, millennials, and Gen Z. And each of these generations has different priorities shaped by their life stage, along with multiple personal variables, like their family status and dependents, geographical location, career path, hobbies, and so much more. 

One-size-fits-all benefits are a disaster at accommodating their needs, but LSAs are a flexible, inclusive solution that enables employees to tailor benefits to their individual needs. 

Reduced administrative burden for HR teams

Of course, some well-meaning companies try to cater to their employees’ diverse preferences by using multiple point solutions to deliver their solutions. For example, they might opt for a combo of DoorDash for food benefits, ClassPass for fitness benefits, Bright Horizons for childcare, etc. But working with different vendors puts an unnecessary burden on benefits administration teams. And the more stress you create in-house, the greater the chance of human error or compliance issues, especially if you rely on outdated, manual processes to administer your benefits. 

With an LSA, you’re just managing one account, which dramatically reduces your admin time. 

Consolidated costs and streamlined vendor management

Companies running lifestyle programs through multiple-point solutions will find it expensive. They'll pay excessive yearly contracts and fees, along with implementation or integration fees for processes like payroll connection and file feed setup. Consolidating these point solutions into a single LSA reduces these costs since companies are paying for just one vendor rather than a range. But these are reduced when companies consolidate their benefits into a single LSA. 

Enhanced employee satisfaction and engagement

The extent to which employees engage with their benefits usually hinges on two areas: the choice of benefits available and how easy it is to access their benefits. 

Vendors with clunky, outdated technology will repel users, leading to low participation rates. And this is cumulative if your benefits tech stack includes several vendor platforms. Switching to a vendor with modern, intuitive technology and exceptional customer service improves the user experience. Consolidating benefits into a single account or platform also makes it easier for employees to understand the benefits available to them and use them effectively. For example, Crunchbase now boasts a benefits engagement rate of 95% after switching to Benepass. 

9 steps to adopting a lifestyle spending account successfully 

Like any type of employee benefits program or people-focused initiative, your lifestyle spending account will be successful when you commit to a launch strategy, including the following steps: 

1. Evaluate your current benefits program 

Unless you’re a startup, you’re probably already offering some types of benefits to your employees. Begin by assessing how things are going, asking questions like: 

• What are the participation rates for our current lifestyle benefits program? 
• Can we afford our current lifestyle benefits? 
• Does our vendor plan to increase our price next year? 
• Do our lifestyle benefits move the needle on our benefits goals? For example, do they improve employee retention and engagement rates or decrease absenteeism? 
• Are our lifestyle benefits inclusive? Do all employees have access to meaningful benefits, regardless of their work location, age, gender, family status, etc? 
• Does our benefits admin team experience any challenges with our current program? 

A mix of qualitative and quantitative data will deliver comprehensive insights into your benefits program. We suggest benchmarking some key metrics and collecting honest feedback from your employees and in-house teams using surveys, 1:1 meetings, and focus groups.

2. Define your goals and create a strategic plan 

Based on your findings, the next step is to define your goal—what do you want to achieve by offering a lifestyle spending account? To create a detailed, actionable plan, we recommend using the SMART goal-setting framework to develop a specific, measurable, achievable, realistic, and time-bound goal. 

Example: We want to increase the participation rate in our lifestyle spending account from 50% to 80% within the next year by launching a new LSA vendor and improving our internal communication strategy around benefits. 

Here’s how we’ve used the SMART framework: 

• Specific: Increasing the participation rate
• Measurable: From 50% to 80%
• Achievable: With a new vendor and improved communication strategy
• Realistic: Based on industry benchmarks and our budget
• Time-bound: Within the next year.

3. Choose the right LSA vendor 

It pays to commit to the research process by thoroughly exploring each product and evaluating the vendor before you sign any contracts. 

Before you negotiate with a specific vendor, be sure to: 

• Consult third-party review sites like G2 or Capterra to read customer reviews and understand how product features stack up against the competition 
• Review vendor websites and shortlist those with the specific functionality you’re looking for, such as card-first technology for employees
• Read customer success stories. Look for companies like yours (in terms of size and industry) that have experienced common pain points and solved them by moving to a specific vendor 
• Book product demos to learn the ins and outs of an LSA platform and ask any key questions 
• Sign up for free trials, which you might incorporate into a pilot program using your own data 

Once you’ve narrowed down your vendor selection, ask the following questions: 

• How will the vendor integrate with my existing payroll and HRIS systems? 
• How can we automate any manually-intensive work?
• Does the vendor charge any hidden fees? 
• Will we have a direct line of communication to a platform expert?
• Will the vendor require employees to submit claims or will they have access to a card?
• How will the solution work globally?
• Is real-time reporting available out of the box? 
• How will the vendor help us manage reimbursements?
• How quickly can we make updates to our programs?

4. Design an LSA that meets employee needs 

To ensure your LSA is effective and inclusive, focus on customization and flexibility that accommodates your workforce’s diverse needs. Consider the following steps:

• Set contribution amounts and schedules: Decide how much to allocate per employee and the frequency (monthly, quarterly, or annually). Hint: Benepass customers offer a median annual perk amount of $780 per employee. 
• Define eligible expenses: Collaborate with stakeholders to determine spending categories (e.g., fitness, meals, wellness, childcare, professional development).
• Ensure workforce equity: Tailor programs to support various life stages, geographical locations, and employee demographics.
• Incorporate rollovers: Decide if unused funds will roll over to the next year or expire.

5. Implement your transition plan 

A successful LSA rollout needs a well-structured implementation plan and clear communication between your internal team and the vendor. Here’s a breakdown of a typical 12-week implementation plan if you choose Benepass as your vendor: 

Week 1: Kickoff and intake 

Benepass will begin by learning more about each customer’s program goals and the challenges they’ve faced up until this point. This is also the time to: 

• Set up integrations with HRIS and payroll 
• Share financial onboarding items 
• Begin work on benefit design forms 

Weeks 2–6: Program design, funding, and integration support 

Over the next few weeks, Benepass customers will: 

• Submit their finalized benefit design and financial onboarding forms.
• Work closely with the vendor to align all systems and validate configurations

Weeks 7–10: Testing and check-ins 

Testing is a crucial phase, ensuring everything works correctly before your LSA program launch is officially rolled out. At this stage, Benepass customers will: 

• Complete end-to-end testing with HRIS/payroll systems to ensure functionality
• Verify funding mechanisms, including ACH connections
• Review initial funding recommendations

We encourage all customer-owned items to be completed at least 3-4 weeks prior to launch. 

Weeks 10–12: Final review and preparation for launch

At this final stage, customers will work with Benepass to: 

• Conduct a thorough review of benefit configurations and enrollment data
• Finalize employee communications and schedule training sessions
• Confirm all program details are ready for launch.

Benepass recommends that companies planning an LSA rollout should work closely with their chosen vendor to create a collaborative project plan and stick to all key deadlines. To achieve this, every team member should have clarity on what's expected of them throughout the process.

6. Set your internal staff up for success 

Your internal staff, including HR, benefits admin teams, payroll and finance teams, and even hiring managers should all understand how an LSA works and become familiar with it. 

Many people may share a basic understanding of how lifestyle spending accounts work. But training and resources that relate to your specific LSA program will support your teams in launching their programs with ease. 

The beauty of running a card-first platform like Benepass is that your in-house teams should actually have less to do. There's no need to review expenses or handle reimbursements manually, so much of the admin runs in the background, and there's less need for training. 

Benefits lead Justine Bufmack from Mercury admin reports: “Benepass has been a huge time-saver. It functions efficiently in the background, streamlining our benefits management without requiring constant oversight. This allows us to dedicate more focus and resources to other critical areas of our business.” 

However, it’s also best practice to lean on your vendor's customer service team during the setup and training phase. The level of support you receive will vary depending on the vendor you’ve chosen and the package. At Benepass, you can expect to liaise with a specialized team, including: 

• Dedicated customer onboarding manager who will project manage your implementation, including designing and configuring your benefits to align with your requirements 
• Dedicated customer engineer who is responsible for ensuring all file setups and integrations work smoothly. 
• Dedicated customer success manager, who is responsible for post-implementation tasks, such as monitoring employee engagement, designing campaigns to boost participation, and managing any updates to ensure the continued success of your benefits program. 
• Customer experience associates who provide day-to-day support as required on specific employer accounts so they can deliver personalized, efficient assistance. 

7. Communicate changes to your employees 

It can be disconcerting when you plunge time and money into a new lifestyle benefits program only to discover that your employees aren’t enticed by what you’re offering. Clear, consistent communication is key for informing, educating, and empowering your employees so they understand what you’re offering and how the program works. 

Start with an introductory announcement that outlines what an LSA is, how it works, and the value it brings to employees. Be sure to provide straightforward instructions for accessing the platform, activating their account, and getting started with their benefits.

To make the transition seamless, leverage vendor resources like customizable templates, FAQs, and webinars that explain key program details. Platforms like Benepass also support communication by automating welcome messages, transaction updates, and helpful reminders—ensuring employees stay informed every step of the way.

On launch day, we prioritize straightforward communication by: 

• Providing employees with clear instructions to activate their Benepass Visa card and start spending immediately.
• Highlighting tools like mobile wallet compatibility and real-time balance tracking to emphasize convenience.
• Offering on-demand resources like step-by-step guides or live training sessions to answer questions and build confidence.
• Post-launch, keep communication ongoing to maintain momentum. Send periodic reminders about spending categories, account balances, and upcoming deadlines, and encourage employees to explore all the benefits available to them. Proactive customer support—such as in-app help—also ensures employees have quick answers if issues arise.

By combining clear messaging, intuitive tools, and ongoing support, you’ll maximize employee engagement with the LSA program. As an example, Benepass customers often see 80% of employees spending funds within 90 days, proving the power of effective communication and user-friendly technology.

8. Launch and promote your LSA program 

Launching your LSA program should be an exciting moment for both employers and employees. On launch day, send out a final reminder with helpful resources and instructions on how employees can activate their accounts and start using their benefits.

It's important to ensure everyone in your organization knows the LSA program—including new hires who may join after the initial launch. Keep communication ongoing by regularly highlighting the benefits available, promoting usage, and sharing success stories from satisfied employees.

9. Evaluate and refine your program 

While an LSA is designed to reduce in-house admin, it would be a mistake to think of your program launch as a one-and-done task. The beauty of lifestyle spending accounts is that they can evolve and adapt over time to meet the changing needs of your workforce. This means you’ll need to consistently evaluate and refine your LSA program to ensure it continues to add value to your employees. 

Take advantage of robust reporting capabilities provided by your vendor to track the success of your LSA program. Identify areas for improvement and make changes where necessary, such as adjusting benefit offerings or refining communication strategies.

Additionally, be sure to regularly gather feedback from employees on their experience with the LSA program. By consistently evaluating and refining your LSA program, you’ll ensure its long-term success and continue to provide valuable benefits for your employees. 

Transition to a lifestyle spending account with Benepass 

The Benepass LSA is the perfect solution to your lifestyle benefits challenges. Our specialists will support you throughout the steps above so you're fully prepped to offer an exceptional lifestyle spending account for your people. 

Here’s how some satisfied Benepass customers use their LSA: 

• Joe, aged 25, from Chicago, pays for his Equinox membership. He enjoys fitness classes twice a week and works with a personal trainer every other Friday. 
• Rob, aged 45, from Atlanta, pays for a leadership coach to improve his managerial skills. 
• Daphne, aged 35, from Paris, uses her LSA to pay for a Talkspace subscription. She meets with a therapist once a week. 
• Jackie, aged 32, from Austin, subsidizes childcare for her son with her LSA funds. He attends daycare three days a week, which allows her to attend the office on those days. 

Benepass scores 4.8 out of 5 in the G2 software community, including 9.7 out of 10 in Ease of Use, Ease of Setup, and Quality of Support. 

Ready to see how LSAs provide a superior experience for your employees? Book a free demo or contact sales@getbenepass.com to connect with a benefits specialist.