Employee Wellness Stipends: Spending Accounts vs. Reimbursement

April 6, 2023
2 min
Daniel Bolus

Employee wellness stipends are a great way to empower your employees to focus on their holistic health and wellness. We receive a lot of questions as to how best to distribute an employee wellness stipend. In this short article, we will unpack the differences between a traditional reimbursement structure and a more modern lifestyle spending account infrastructure.

  • What is a common wellness stipend? A common wellness stipend is usually around $50/employee/month to encourage and empower individuals to live healthy, positive lifestyles both inside and outside of work. This allows employees to bring their best to work each day and helps with employee retention, productivity, and building positive culture.
  • Spending Accounts vs Reimbursement: The main difference is really how employees pay for products. With a spending account, employees can directly pay for products and services from company funds, whereas a reimbursement model requires employees to pay up-front with their own money, and then submit receipts for reimbursement.
  • Traditional Reimbursement: Traditional reimbursements often have low engagement because employees can get frustrated in the process of paying up-front and submitting receipts to their employer. Reimbursements also end up promoting high-cost purchases like home gym equipment so employees can limit the number of times they have to submit receipts to get reimbursed. Unfortunately, sometimes these high-cost items go underutilized by employees, which can result in an ineffective use of funds.
  • Lifestyle Spending Accounts: Spending accounts for wellness, often called lifestyle spending accounts (LSAs), are a more modern approach to employee wellness. In this model, employees are given a certain amount of money to spend either on a debit card or a built-in marketplace, and employees never have to pay up-front with their own money. This increases engagement by 2-3x, while also eliminating a lot of overhead from traditional reimbursements.
  • Lifestyle Spending Accounts (LSAs) Paired with a Marketplace: A problem that can arise from a debit-card-only method is that employees can be confused as to where and where not their money can be spent. Instead, a lifestyle spending account can be paired with a health and wellness marketplace so employees can directly choose products that meet their holistic wellness goals. ClubHealth's proprietary marketplace gives employees a broad range of low-cost, high-impact health and wellness tools to subscribe to, maximizing employee wellness spend while also empowering employees with frictionless choice. The marketplace model really helps employees discover products that make the best use of their wellness stipend.

Overall, wellness stipends are a great way to empower employees to live healthy lives. Distributing an LSA on a marketplace like ClubHealth allows employees the flexibility of choice and the freedom to spend funds without fronting the cost, while at the same time providing a curated environment so employees can engage with low-cost, high-impact products that maximize the use of the company's stipend.

Written by
Daniel Bolus
CEO, ClubHealth

Daniel is on a mission to change how people access health and wellness for the better. He's a community builder with a knack for bringing people and companies together.