With five generations in the workforce for the first time in history and women accounting for nearly 50% of the workforce, more U.S. companies are adopting flexible perks to meet the needs of all employees
A new benchmarking study from Benepass, a modern benefits platform for people-forward companies, illustrates the impact of increasing workforce diversity, return-to-office measures, and a consistently tight labor market on employee benefits offerings. The company’s second annual benchmarking report, which analyzed benefits data from more than 60,000 employees across the U.S. saw double-digit increases in flexible Lifestyle Spending Accounts (LSAs) across companies of all sizes, the introduction of return-to-office friendly perks such as transit and parking accounts, and a boost in professional enrichment and food benefits.
“Companies need to meet a wide range of wants and needs with their benefits programs, and they’re becoming more aware that traditional one-size-fits-all benefits aren’t designed for today’s workforce. This year’s findings show that companies are prioritizing benefits that are flexible enough to serve a diverse workforce and adapt to modern stressors,” said Jaclyn Chen, CEO, Benepass.
Key report findings:
Based on an analysis of benefits data from large, medium, and small U.S. businesses representing 60,000+ employees, the 2023 Benepass Benefits Benchmarking Report found:
Lifestyle Spending Accounts (LSAs) rise to the top: LSAs, a relatively new benefit in the market, are non-salaried allowances designed to support employee’s physical, mental, and financial wellness that enables them to choose how to best assist in their work-life balance and well-being. LSAs are fully funded by the employer and were developed on the basis that flexible, employee-led benefits lead to happier, more productive employees.
In 2023, LSAs rose to the top spot, with 51% of companies offering this flexible perk compared to 37% in 2022. The largest jump in percentage of companies offering LSAs came from large companies – a staggering 75% of large companies provide an LSA in 2023 compared to just 40% in 2022. Small and medium-sized companies too were seen to rapidly embrace LSAs with medium-sized companies seeing a 33% boost and small companies increasing LSA adoption by 10%. Two bellwether industries in the benefits space, tech and healthcare, saw strong growth in the adoption of LSAs with tech companies seeing a 25% increase and healthcare and life sciences companies seeing a 21% increase in LSA offerings.
In a post-pandemic workplace, Health Spending Accounts (HSA) increase in popularity: While Health FSAs remained the most popular type of pre-tax account in 2023, HSAs overtook Dependent Care FSAs (DCFSA) as the second-most popular type of account in 2023. This could reflect that employers are shifting their attention to healthcare needs now that pandemic-era childcare pressures are subsiding.
Companies implement perks to support return-to-office: Transit and parking accounts are more popular than limited-purpose Flexible Spending Accounts (FSAs) in 2023. As more companies implement return-to-office plans, employers may be offering transit and parking accounts to reduce community costs and incentivize employees to come into the office.
Professional enrichment and food benefits amongst top perks: The largest increases in average contributions were in professional enrichment and food benefits, which grew by 35% and 84% respectively. These perks help companies stand out as employers of choice and provide employees with more funds increasing employee engagement and satisfaction.
Small and medium-sized companies boost fitness and wellness perks: In an effort to remain competitive with larger company offerings, small companies boosted their fitness and wellness perks by 18% and medium-sized companies increased the perk by 12% in 2023. Small companies also offered the widest variety of perks in 2023, which reflects the need for companies in their growth phase to provide strong perks so they can attract the talent they need to achieve their goals for growth.
Charitable giving emerges as new LSA spending category: Companies are harnessing the flexibility of an LSA to spin up eligible categories in response to current events like the war in Ukraine. Millennial and Gen Z employees in particular want to work for values-driven companies with one Deloitte study revealing that 77% of Gen Z respondents consider it important to work for a company whose values align with theirs.
“If you’re really looking to build an inclusive benefits program, a lifestyle spending account is the way to go. It’s that silver bullet if you will. It’s really the only benefit that you can truly be 100% inclusive and know that it’ll have an impact on everyone. There’s truly no other benefit out there that anyone could offer that’ll do the same,” said Matt Sanborn, Senior Manager, Benefits, Seres Therapeutics.