Ultimate Guide to Lifestyle Spending Accounts

Lifestyle Spending Accounts have been gaining traction in the employee benefits space, and are being offered by an increasing number of employers. You may also have heard Lifestyle Spending Accounts being referred to as Personal Spending Accounts or Wellness Spending Accounts – here at Honeybee we call them Allowance Accounts. The benefits that these types of accounts support can range from the ever-popular fitness and wellness expenses, to transit costs, investments in continuous learning, and even assistance with childcare or pet care. 

Perhaps your company offers some of these lifestyle benefits, or perhaps you’re entirely unfamiliar with these benefits and this is all a new concept for you. Regardless, you are in the right place! In this article, we will go over everything there is to know about Lifestyle Spending Accounts. 

First, some food for thought. According to recent studies:

  • 72% of employees said having more work benefits would increase job satisfaction (Zoro)
  • About two-thirds of workers would trade their work-related data for more customized compensation, benefits and rewards and 61% would do the same for more customized learning and development opportunities (Accenture)
  • 70% of staff members would be at least somewhat likely to leave their current organizations and take a job with one that is known for investing in employee development and learning (The Harris Poll)

There are many more similar studies, but the message is the same. In today’s competitive labour market, employees are placing increasingly more importance on the unique employee benefits that businesses offer. In order to attract and retain top talent, employers are quickly realizing that it is necessary to foster a strong workplace culture, support employees’ work/life balance, and look at total compensation packages rather than simply base salaries.

As employee benefits continue to evolve, Lifestyle Spending Accounts are quickly gaining traction with Canadian employees as one of the most sought-after benefits an employer can offer. So let’s get straight to your burning questions and cover everything you need to know about Lifestyle Spending Accounts.

In this guide to Lifestyle Spending Accounts, we will answer the following questions:

  1. What’s a Lifestyle Spending Account? 
  2. What can employees purchase with their Lifestyle Spending Account?
  3. What are Lifestyle Spending Accounts most commonly used for?
  4. Why offer Lifestyle Spending Accounts?

What’s a Lifestyle Spending Account? 

In the industry, you may have also heard a Lifestyle Spending Account being referred to as a Personal Spending Account or a Wellness Account. Sometimes they’ll even be more specifically referred to as Fitness Accounts, after one of the more popular types of expenses that Lifestyle Spending Accounts are used to reimburse. 

Lifestyle Spending Accounts are a way for employers to deliver flexible lifestyle benefits that employees will actually use and enjoy. A Lifestyle Spending Account is an account that employers deposit a set amount of money into every month, which employees can then spend on expenses that have been approved by the employer. The account works much like a bank account in which money is deposited on a recurring basis. 

For example, with a Honeybee Allowance Account (a type of Lifestyle Spending Account) employers can choose the monthly amount to be made available to their employees and they determine what kinds of employee expenses they would like that Allowance Account to reimburse. 

Let’s say that a company wants to offer $50 a month to help subsidize the cost of commuting into the office. They would simply identify the types of commuting expenses they’d like the account to be used for: for instance, perhaps public transit, gas, and parking are acceptable expenses, but not ride-sharing services. Employees can then submit their eligible expenses using the Honeybee benefits app and be reimbursed from the allowance that has been funded by their employer.

Many employers are already offering their employees lifestyle benefits. Popular benefits include free or discounted gym memberships e and stipends for continuous learning and education. However, there are a couple of concerns that commonly arise from lifestyle benefit  programs that don’t leverage the Lifestyle Spending Accounts model:

1. Lack of choice = lack of participation

Oftentimes, not all employees take advantage of something like a gym membership, even if the cost is being subsidized or reimbursed in full. Perhaps they’re not motivated to do so, or maybe they’re unable to. It boils down to the fact that everyone has different lifestyles. Something as specific as a gym membership just doesn’t appeal to someone who prefers to attend kickboxing classes or who already has access to a gym in their condo building, for example. As with all employee benefits, if your employees don’t use the gym membership they will not appreciate it. In fact, they may even begin to feel resentful that these “perks” don’t benefit them.

2. High burden of administration

Administering lifestyle benefits can be a time-consuming, manual process that often requires the attention of more than one department to coordinate the paperwork and payment remittance. Here’s a common scenario: employees send their receipt(s) via email to HR, who then has to validate that the expense is an eligible one before passing it along to Payroll. Not to mention that someone has to track how much each employee has spent, and ensure that T4s are prepared accurately by taking into account this taxable benefit. Logistically, that can add up to quite a few headaches! 

Here at Honeybee, we believe that employee wellness shouldn’t have to be limited to one specific area such as gym memberships. That’s why we allow not just one, not two, but 96 possible areas on which you can potentially spend your Allowance Account dollars. In addition, Honeybee’s Allowance Accounts automate the process of submitting, validating, and reimbursing expenses, tracking employees’ account balances, and producing accurate T4 information. This allows the company to take a “set it and forget it” approach to administering its lifestyle benefits program.

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What exactly you can spend your Honeybee Allowance Account dollars on, you ask? Read on.

What can employees purchase with their Lifestyle Spending Account?

The exact expense categories an employee can spend their Lifestyle Spending Account dollars on is determined by their employer. Below you’ll find a comprehensive list of possible ways to spend Honeybee Lifestyle Spending Account dollars:

1. Wellness

The Wellness category covers your employee’s physical and mental health needs. Many Honeybee clients use their Wellness benefits to fill in the gaps of their existing coverage, or as a supplement to their coverage. At the end of the day, employees that feel good – physically and mentally – are employees that are able to do their best work. 

  • Vitamins & Nutritional Supplements
  • Weight Loss Programs
  • Art Therapy
  • Athletic Therapy
  • Counselling & Therapists
  • Spa and Salon Treatments
  • Foot Care
  • Holistic Healing
  • Marriage and Family Therapist
  • Meditation
  • Non-Traditional Healing
  • Nutritionist
  • Osteopathy
  • Personalized Medicine
  • Professional Prostheses
  • Registered Psychiatric Nurse
  • Life Coaching
  • Health Coaching
  • Midwife
  • Food & Supplements
  • Oral Health
  • Cosmetic Dentistry

2. Fitness, Sports & Equipment

The fitness category is one of the most commonly used (and commonly known) categories of Lifestyle Spending Accounts, and covers all exercise-related expenses. Supporting empoyees’ fitness encourages employees to lead active lifestyles, which has shown to increase productivity and focus levels.

  • Gym Membership
  • Gym Equipment
  • Bicycles or personal non-motorized transportation
  • Sports leagues, Lessons, Programs
  • Sporting Goods (excluding clothing and shoes)
  • Fitness Classes
  • Personal Training
  • Pilates
  • Yoga
  • Athletic Clothing
  • Athletic Shoes

3. Transportation

The Transportation category makes your employees’ commute just a little easier. Whether your employees drive, bike, or take public transit, Honeybee’s Transportation category ensures your employees are able to get to work. 

  • Public Transit
  • Taxi
  • Gas
  • Parking
  • Car Share Program
  • Bike Share Program
  • Uber / Lyft

4. Education

Supporting education and upskilling costs is a great way to show your employees you care about their professional and educational development. It’s also a great way to encourage your employees to learn new skills or keep up-to-date with industry developments that can benefit their current roles. 

  • Conferences & Seminars
  • Training & Course Fees
  • Continuing Education Tuition Reimbursement
  • Student Loans
  • Language Lessons & Instructional
  • Financial Literacy
  • Public Speaking
  • Professional Dues

5. Kids & Pets

The kids and pets category is a great way to recognize that employees are often caregivers for young children or animals. Not every company is able to offer onsite daycare or a dog-friendly office environment. Regardless, this category allows you to show workers that the company wants to help them balance their work responsibilities with their caregiving responsibilities.

  • Pet Insurance
  • Pet Day Care & Walking
  • Pet Grooming
  • Pet Food
  • Child Care Services
  • Child Activities & Programs
  • Child Tutoring Services
  • Baby Sitting

6. Time Savers

We all get bogged down by errands and chores at times. Helping your employees eliminate the distractions of these pesky, time-consuming tasks means that they can focus their time on what matters to them most.

  • Home Repair Services
  • Grocery Delivery (Service Fees)
  • Retail Delivery (Service Fees)
  • Lunch Delivery at Work
  • Lunch Take-Out at Work

7. Financial Services

The financial services category allows employers to lend a hand with employees’ personal finances beyond a simple paycheque. According to the Government of Canada, 40% of working Canadians feel overwhelmed by their level of debt, and 48% say they’ve lost sleep because of financial worries. And it’s not just sleep your employees may be losing due to financial worries – it’s work productivity, focus, and accuracy, too. Helping employees save for their future helps boost morale and productivity levels while lowering presenteeism levels.

  • Student Loan Repayment
  • TFSA
  • RRSP Contribution
  • RESP Contribution
  • Financial Planning
  • Wills and Estate Planning
  • Credit Counseling

8. Travel & Entertainment

Employees have their own separate lives outside of work, and the travel and entertainment category is a way for employers to acknowledge that. It’s a non-traditional perk for most employers to give, so it’s a great way to attract and retain top talent for your company while delivering benefits that make your employees feel good. 

  • Meal Delivery & Take Out
  • Movie Theatre
  • Theatre Tickets
  • Team Meals
  • Social Clubs
  • Personal Travel Expense
  • Music Lessons
  • Sporting Events
  • Hotels & Lodging
  • Charitable Experiences
  • Arrive Alive (don’t drink)
  • Art Lessons
  • Concerts

9. Vacation Fund

The vacation fund category is a way to help your employees relax and unwind away from work. Taking vacations is actually scientifically proven to improve work productivity, so the vacation time you offer may benefit your employees’ performance at work for the rest of the year. 

  • All Vacations
  • Volunteer, Humanitarian/Charity Work
  • Adventure Sports & Activities
  • Travel to Visit Out-of-town Family

10. Charity

The charity category is a way for employers to demonstrate their commitment to their values and their mission. Whether you are a non-profit organization or otherwise, helping your employees contribute to charity shows your company’s dedication to upholding its company culture. 

  • Charitable Donation (Individual)
  • Charitable Leave Expenses (travel, accommodation, etc.)
  • Disaster Relief Donation

11. Additional Protection

The additional protection category enables employers to help keep employees and their families safe and financially secure. You can help with your employees’ peace of mind by providing an allowance which can go towards personal insurance premiums. 

  • Identity Theft Insurance
  • Life Insurance
  • Accidental Death and Dismemberment Insurance
  • Travel Insurance
  • Home / Renters Insurance
  • Auto Insurance
  • Critical Illness Insurance
  • Disability Insurance

What are Lifestyle Spending Accounts most commonly used for?

Among Honeybee clients, common uses of a Lifestyle Spending Account include fitness and wellness expenses, education and professional development expenses, and transportation expenses. 

Another way to get a sense of how Lifestyle Spending Accounts are being used is to read through the descriptions of the benefits offered by companies found on “Top Employer” lists. Below we’ve compiled examples of the benefits that some of Canada’s small to mid-sized top employers are offering their employees many of which could be easily delivered through Lifestyle Spending Accounts:

1. Intelex Technologies Inc. (industry: software publishers)

  • Health and wellness with subsidies for GoodLife membership
  • Wellness spending account which can be used for fitness programs 
  • Tuition subsidies for job-related courses 

2. Diva International Inc. (industry: personal hygiene products)

  • Fitness club subsides
  • Tuition subsidies
  • Health Spending Account

3. Harvard Developments Inc. (industry: commercial real estate management and development)

  • Tuition subsidies
  • Allowance for outside sports programs or organized physical activity

4. Uberflip (industry: Cloud-based marketing software)

  • Annual learning credits
  • Personal wellness spending accounts

5. Wild Rose Brewery (industry: breweries)

  • Wellness spending account
  • Tuition subsidies
  • Health Spending Account 

6. McLeod Law LLP (industry: law)

  • Gym membership subsidy
  • Employee & Family Assistance Program
  • Financial incentives to bike or carpool to work
  • Tuition subsidies

Why offer Lifestyle Spending Accounts?

Offering lifestyle benefits is a terrific way for an employer to reinforce and promote their company culture. In today’s tight labour market, unique benefits can also be used as a selling point for an employer to acquire – and retain – the best and brightest job candidates in any field. 

Interesting Statistic: More than 50% of employees said they have left jobs after hearing the siren calls of better benefits elsewhere. (Randstad)

1. Lifestyle Spending Accounts can help you save down the road 

Numerous studies have shown that happy, active, and overall satisfied employees make for more productive employees in the workplace. While physical exercise is most often associated with weight loss or muscle building, studies also show that employees who engage in regular physical exercise are more focused and productive during the day. In addition to these short-term gains (we’re flexing our fitness puns), your employee’s physical and mental health can be a predictor of how much you will be paying for their insurance premiums, and sick days, down the road. By promoting employee wellness today, you’re actually investing in your company’s long-term future.

2. Lifestyle Spending Accounts help attract and retain top talent

Group insurance is increasingly seen as a necessity for job seekers. So unless you have a spectacular group insurance package, chances are, your employee benefits probably don’t do much to set your company apart from the crowd of employers in today’s tight labour market. The fact is, traditional benefits are just not cutting it anymore when you’re trying to attract high-calibre candidates in a competitive market. By offering Lifestyle Spending Accounts, you can show applicants that you care about your employees beyond simply providing a paycheque, and showcase your commitment to promoting your workplace culture. When implemented and promoted thoughtfully, Lifestyle Spending Accounts can be a very effective way to differentiate your company.

3. Lifestyle Spending Accounts reinforce your company culture

Employee benefits are a way for your company to demonstrate its commitment to its values. Honeybee’s Allowance Accounts help bring your company culture to life by allowing total customization of your employees’ benefits to fit your culture. Don’t just talk about your values; walk the walk by giving your employees something they can boast about!

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4. Lifestyle Spending Accounts can offer unmatched personalization

Traditional benefits are typically one-size-fits-all (read: one size fits none), and even those companies that offer lifestyle benefits currently are failing to truly take into account the unique nature of their workforce. Remember the example of how gym membership lifestyle benefits are only really a perk to those who already go to the gym, or have an interest in starting? 

Lifestyle Spending Accounts can be set up to offer a level of personalization that really embraces employee diversity. By offering a wide selection of possible lifestyle expenses that can be covered, a Lifestyle Spending Account  can offer value for all your employees. For example, a working parent can use their monthly Allowance on childcare expenses and gas, while a Generation Z employee can use their monthly Allowance for public transit, paying down student loans, or even a meal delivery service, so long as these are categories their employer has chosen to make available. Lifestyle Spending Accounts offer the choice, flexibility, and personalization that your diverse, multi-generational workforce needs and wants. 

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5. Lifestyle Spending Accounts are a modern way to deliver benefits

Administering benefits manually is a burden for many plan administrators and HR folk, and on the plan member’s side, mailing in claims and navigating clunky online portals is no fun either. Fortunately, that’s no longer necessary. Honeybee’s Allowance Accounts provide a modern, digital experience, all within a user-friendly app which gets rid of paper and manual processes. All-in-one digital administration, coupled with simple, automated reimbursement, means that plan administrators and HR professionals can be hands-off without worrying about the administrative process. 

Honeybee offers Allowance Accounts for FREE with a demo. Isn't it time you discover Lifestyle Spending Accounts for yourself?