Card-based lifestyle benefits: A Q&A with Jen Irwin

Employees continue to expect more from their employers in terms of benefits. Not only do employees want help with health care, but also lifestyle benefits. Jen Irwin, senior vice president of marketing and strategy at Alegeus, a leading provider of SaaS-based benefit funding and payment solutions, discusses how card-based lifestyle benefit programs might be the answer to this need.

Card-based lifestyle benefit programs are a great way for employers to support their teams on groceries, fitness/wellness expenses, health care costs, and more. How do these programs work?

We know that employers invest heavily in benefits, particularly health benefits. But economic factors – such as inflation, rising health care costs, and salary pressures – are putting significant strain on traditional benefits. Yet, in this competitive labor market, employers are highly focused on attracting and retaining top talent, differentiating and expanding benefits. Salary compensation is essential, yet transactional. Non-salary compensation reflects how employers address challenges and communicate values. Enter: lifestyle benefits, which allow employers to offer personalized, valuable financial benefits – without locking them into perpetual salary increases.

Lifestyle spending accounts are a great tool for employers to enrich the lives of their employees with personalized, easy-to-use spending accounts that can be used to purchase an array of lifestyle-related goods/services – from food, to fitness, to health care and beyond. Unlike FSAs and HSAs, these accounts are typically post-tax. They are funded solely by the employer who then defines the cash amount to be made available, sets the timetable for when funds will become available (ie. weekly, monthly, all at once, etc.), and defines the allowed categories of spend – i.e., what types of retailers/merchants can the employee go to and use their card (categories, specific stores, and even specific geographical areas). If multiple spending categories and account types are offered, it can all be linked to a single debit card. The employer gains insight into how and where dollars are spent, and ultimately retains any unused funds (after a pre-defined period of time). And, the employer has the flexibility to adapt or evolve the programs over time.

Are there other expenses, less frequently considered, that benefit leaders can be helping employees with through these programs?

The value of lifestyle benefits is that they are so flexible – and can be personalized to the needs of employee populations and segments – so this is not a “one-size-fits-all” benefit strategy. Employers are using these programs for many reasons – from attracting and retaining talent in a competitive labor market, to supporting employees in this post-pandemic work environment (which includes remote and hybrid work modalities), to meeting employee demands for more personalized benefits, to supporting DEI initiatives, and beyond.

The nature and types of benefits being offered now are expanding to address things like employee wellbeing, inflation, or burnout. Caregivers may value help with expanded childcare support, or certain populations may value pet-related care and services. Employees with stretched finances may enjoy support for leisure activities they’ve unfortunately had to deprioritize. Remote employees may just want to spruce up their home office to create a more positive work environment. The key here being that benefit leaders must consider their employees’ unique needs and deliver personalized benefits to address them. And although the category of lifestyle benefits can be pretty broad, these types of non-salary financial perks really fit under that umbrella.

How are TPAs evolving the practice of lifestyle benefits to meet the needs of their clients?

As employees and employers begin to demand more personalized benefits, administrators have a real opportunity to meet this moment of transformation with a lifestyle solution that allows employers to tailor programs that align to employee needs and wants. Flexibility is critical here because employees’ needs are diverse, and can shift over time. Employers should be able to offer choice and easily adjust their lifestyle benefits – including how much they fund, what spending categories are allowed, when and where employees can spend their dollars, and more. Debit card-based lifestyle spending accounts have emerged as a way for administrators to offer this level of flexibility while making it super simple for the employee to use their dollars and manage their spending.

Are there options for digital versions of physical cards? How are those accessed?

Lifestyle benefits can be delivered in many ways – through reimbursement-based methods (employee pays out of pocket and gets reimbursed), through “marketplace” type experiences (where employees can choose from an array of program options), through debit card-based lifestyle spending accounts, and beyond. We believe that debit cards are a best practice – because they offer a familiar and convenient method for accessing benefit dollars directly without having to seek reimbursement; they can be set up so that the employer can control what type of purchases are eligible, multiple lifestyle spending programs can be tied to the same debit card, and lifestyle accounts can even be linked to the same debit card as consumer-directed accounts (FSAs, HSAs, etc.). Today those debit cards are physical cards – but in the near future, they will also be offered digitally.

How do employers monitor what employees spend their lifestyle benefits on? And why is it important that they do?

One of the benefits of offering lifestyle programs via a debit card-based spending account is that the employer gains deep insights into how those dollars are being utilized by their employees – what they are spent on, with which merchants, how quickly the dollars are being spent, remaining balances, etc.

Employers being able to monitor where and how employees are spending is important to delivering a successful lifestyle benefit program. If employees are depleting their balances quickly, maybe a funding limit increase should be considered. If usage is lower with new hires, perhaps there’s an opportunity to change a promotion strategy. Also, as mentioned, employee needs can shift over time. If that monthly lunch and pet care benefit designed to support hybrid employees starts to see lower utilization over the year, that should spark discovery around whether it’s the right time to shift focus to something else, like professional development. The point here being that these types of insights can, and should, influence decisions to ensure the program is engaging employees, keeping them satisfied, and providing relief in the areas employees really need and value.

Related: What do employees care about more: Life/health or lifestyle?

What would be your advice for a company looking to launch their own lifestyle benefits program?

Take the time to really evaluate the pain points you want to address and to intimately know what your employees value. Your employees will feel appreciated and heard by offering a program that addresses their lifestyle needs. Your administrator will likely have some guidance about program design – to get you started. We recommend giving employees as much flexibility and choice as possible out of the gate, until you see what your employees use and value. The most common strategies relate to food, family care, healthy living, professional development, work from home, leisure and hobbies. If employers are already offering some of these programs in different ways, there may be an opportunity to consolidate into one centralized debit card-based program (i.e., multiple spend categories tied to one debit card) – which can drive cost efficiencies for your business and simplicity/convenience for your employees. Consult with your benefits broker and administrator to evaluate your options.