HR teams are getting squeezed from both sides. Modern employee benefits programs are expected to do more without increasing total benefits spend.
Gartner’s recent CFO survey found that roughly eight in 10 plan to trim OpEx between 1-5% in 2026. They need to find those savings somewhere, and benefits are an obvious target because they’re ultra-visible and scale with headcount.
But employees also want more benefits — family care in particular. 81% of employees told BenefitsPRO they’re more likely to stay with an employer that offers caregiving benefits, and 73% said it would influence a new job decision.
The catch is that “family care” is not one problem with one solution. Aging parents, fertility treatments, childcare … it means something different to everyone. And adding a separate vendor for each one would be hard to justify if Finance already wants to cut costs.
The good news is, it’s possible to sidestep this problem altogether. Most of those perks can fold into a broader Lifestyle Spending Account (LSA), which only requires one budget and admin layer, and is flexible enough to cover the rest of your lifestyle benefits as well.
Today’s guide shows you how to offer family care employee benefits without creating another expense category.
Why family care benefits are becoming a retention issue
Family care is a concern that’s hitting almost every demographic in your workforce at once.
- The workforce (and population) is aging fast. As of 2022, nearly a quarter of workers were 55 or older, compared to just 10% in 1994, and employees 65+ have more than doubled over the last two decades. Elder care is no longer an edge case.
- Gen Z and Millennials are in peak family-forming years. So childcare and fertility support are top of mind for a huge chunk of your younger workforce at the same time.
- The financial weight of caregiving is tremendous. Working caregivers spend an average of $7,242 out of pocket every year on caregiving costs. And parents spend 9-16% of their total household income on full-day care per child.
- Costs are only increasing. They’re up 22% from just half a decade ago.
- You can’t always plan for caregiving responsibilities. And when they collide with work, employees become less productive, cut their hours, turn down promotions, or simply quit.
HR and People Ops already know your benefits strategy is one of the biggest levers when it comes to talent sourcing and retention. And family care is one of the largest recurring expenses for a significant portion of the workforce, so helping with it has an outsized impact.
Yet, in our 2026 Annual Lifestyle Benefits Benchmarking Report, only 4% of customers offer exclusive family and caregiving stipends.
But the retention math is what gets CFOs to pay attention. When someone does leave, SHRM estimates replacement costs at 50–200% of that employee’s salary once you factor in recruiting, onboarding, lost productivity, and ramp time.
TL;DR: What you spend on family care benefits will almost always cost less than what you spend replacing the people who left because you didn’t offer them.
Point solutions make family care benefits admin harder.
The instinct when employees ask for family care support is to go find a vendor that solves that specific problem. That makes sense in the moment, but creates problems once you scale multiple vendors across a team of hundreds.
Three platforms, three contracts, three admin logins
Fertility benefit, childcare stipend platform, elder care EAP add-on. That’s three separate renewal cycles, utilization reports, and vendor relationships HR has to manage on top of everything else.
Budget creep is worse if you’re fronting the money.
Debit card–based card models require employers to load funds upfront before employees spend them. Unused balances, timing mismatches, and low utilization mean you’re carrying costs that don’t reflect actual usage.
Disparate systems create tax reporting headaches.
Each platform tracks its category spend independently, which means taxable and nontaxable benefits must be reconciled across multiple systems at year-end. This increases the risk of reporting errors and manual cleanup for Finance.
Point solutions are hard to sunset.
Mid-contract exits usually result in penalties or renegotiation, and pulling a benefit that even a small group of employees depends on creates morale damage that’s going to be hard to walk back.
Well then … how do employers support caregivers without overcommitting to high-cost, low-utilization point solutions?
LSAs. That’s how.
How LSAs solve the family care problem (without adding to your stack)
If you’re planning fertility, childcare, and/or caregiver benefits, you can fold those into a broader Lifestyle Spending Account (LSA) instead of adding separate vendors.
An LSA is an employer-funded allowance employees can spend across a defined list of eligible categories. Instead of managing a fertility vendor, childcare platform, and elder care EAP separately, you define one allotment and let employees use it for their personal circumstances.
And that’s just the family care side. The same account can absorb other lifestyle categories you’re already funding, such as fitness, professional development, mental wellness, financial coaching, and home office equipment (which is where the real consolidation value kicks in).
One budget, with no surprise utilization spikes
LSAs run on a monthly, quarterly, or annual allotment model. You set the amount per employee, and that’s your ceiling. It becomes your annual cost boundary.
Single admin layer for everything
Instead of managing multiple vendor portals, renewal cycles, and utilization reports, everything runs through that one platform. HR sets the eligible categories, funds the accounts, and the software simplifies expense verification, receipt review, reimbursements, and tax reporting.
(This is why companies offering LSAs through Compt typically spend just 30 minutes per month on admin.)
Employees choose what matters to them
This part solves the “spending more” problem.
- A team member with young kids may use their entire LSA allotment on childcare.
- Someone without caregiving responsibilities might instead put that money toward a gym membership, meditation app, groceries, or all three.
The benefit cost is the same either way, but utilization is naturally distributed across your whole workforce instead of concentrated in one high-cost category.
You’re not paying for a fertility benefit that only 5% of employees use. You’re funding an allotment that 100% of employees can use for whatever fits their life.
Admin simplicity scales as you grow
Point solutions get harder to manage as headcount grows because you have more seats, more contracts, and more renewals to deal with. An LSA scales cleanly; you add employees, you fund their allotments, and the structure stays the same.
LSAs complement FSAs, DCFSAs, and medical benefits.
This is worth being explicit about. LSAs are post-tax, employer-funded accounts with no IRS contribution limits, which gives them flexibility that FSAs and DCFSAs don’t have, but also means they don’t carry the same tax advantages.
- A Dependent Care FSA still lets employees set aside pre-tax dollars for childcare up to the IRS limit of $5,000.
- Medical FSAs still cover qualified medical expenses with pre-tax contributions.
An LSA sits alongside those programs and covers the expenses that fall outside IRS-qualified categories, as well as those for employees who’ve maxed their FSA and still have caregiving costs.
For a deeper dive into how childcare stipends work and how they’re taxed, see “The Ultimate Guide to Childcare Stipends for Employees.”
Which family care expenses are typically eligible under an LSA?
Eligibility varies by employer, but most LSA programs that include a family care category will cover some combination of the following:
Fertility and family planning
- Fertility treatments and IVF cycles
- Egg and sperm freezing
- Adoption fees and legal costs
- Surrogacy expenses
Childcare and dependent support
- Daycare and childcare center fees
- In-home childcare and nanny costs
- After-school programs
- Tutoring and educational support
- Summer camps and enrichment programs
- Baby gear and infant essentials
Elder and adult dependent care
- Elder care and in-home caregiver costs
- Adult day programs
- Memory care support
- Assisted living costs
- Patient advocacy services
- Caregiver travel and transportation
- Respite care for family caregivers
Because LSAs aren’t governed by IRS eligibility rules the way FSAs and DCAs are, employers define what’s in and what’s out. You can tailor the eligible categories to reflect what your workforce actually needs.
And because it is an LSA, you can add any one or more of the following categories:
- Wellness
- Professional development
- Food
- Tuition reimbursement
- Remote work office equipment
- And several others!
Tax treatment of common family care employee benefits
Tax treatment varies a lot depending on which family care benefit type you’re dealing with and how you choose to offer it.
Let’s have a look at the main ones.
Childcare: Dependent Care FSA
Employees can contribute up to $5,000 pre-tax per household annually through a DCFSA. This covers daycare, after-school programs, and in-home care for dependents under 13. Employer contributions count toward that same $5,000 cap.
You can find the full list of eligible expenses on the FSAFEDS website.
Fertility: Medical FSA (but it gets complicated)
Under a medical FSA, employees can contribute up to $3,400 to cover qualified medical expenses. If you have been diagnosed as infertile and want to begin an immediate treatment cycle, some fertility expenses qualify as medical under IRS rules:
- IVF
- Prescribed meds
- Diagnostic tests
- Temporary egg storage
- Support surgeries
- Support services
- Travel expenses
But egg freezing for non-medical reasons, surrogacy, and long-term preservation aren’t covered, and donor expenses are evaluated on a case-by-case basis.
Elder care: Dependent Care FSA
Same DCFSA as childcare, same $5,000 household limit, shared across both. Team members carrying elder care AND childcare responsibilities are splitting one ceiling, which means the funds run out faster.
LSAs: Post-tax, no IRS restrictions
Again, LSA contributions are taxable income to the employee. They have no contribution limits, qualifying expense lists, or use-it-or-lose-it rules.
If you already offer an FSA and/or DCFSA, employees who need extra money for childcare costs can use it for that. And those who don’t can use it across 10+ other categories. And because all categories run through a single reimbursement workflow, taxable coding and reporting are centralized instead of split across multiple vendors.
How to design a cost-neutral family care benefits program with an LSA
Chances are, Finance doesn’t want a bigger benefits program. Your #1 goal as an HR or People Ops leader is to restructure what you’re already spending to incorporate family care employee benefits.
These are the nine steps to do it:
- Audit your current benefits stack.
Pull every family care-adjacent vendor you’re currently paying for: fertility platforms, childcare stipends, EAP add-ons, anything caregiving-related. For each one, document what you’re paying annually, when the contract renews, and what your actual utilization rate looks like.
And if you want to consolidate all vendors and benefits into an LSA, consider your other lifestyle benefits — health and wellness stipends, for example.
Note: Most family care vendors come with platform fees, per-seat minimums, and multiyear contracts. Quantify it all up front to fully understand the ROI of LSA consolidation later. - Identify underutilized point solutions.
Caregiving and family stipends are inherently situational. They’re designed for ad hoc use, not broad participation, so low utilization isn’t a failure; it’s just how they work.
What you’ll probably find is that so are most of your lifestyle benefits. A gym membership that only sees 50% engagement? You can consolidate that too. Rolling it into a broader LSA means the other 50% can put that same allotment toward something they’ll actually use.
Remember, though, that FSAs and DCAs are a different story. Low enrollment doesn’t cost you anything if employees aren’t contributing, and there’s a tax advantage for the ones who do enroll. If you have them, those stay.
This logic applies specifically to vendor-based point solutions where you’re paying per-seat or platform fees regardless of actual usage. - Run the consolidation math.
Add up your total annual spend across every point solution you’re sunsetting. Divide by eligible headcount. That’s your LSA allotment baseline.
Let’s say you’re spending $240,000 annually across fertility, childcare, and wellness vendors for 200 employees; that’s $1,200 per employee per year before platform overlap, renewal increases, or unused balances.
If the number feels low, remember employees are choosing how to spend it across all eligible categories, so effective utilization will be higher than any single point solution ever was. This is why Compt LSAs average 93% participation and 89% utilization — significantly higher than standalone caregiving or professional development stipends.
For context, according to our 2026 benchmarks, the annual median per-employee LSA allotment was $1,200. - Define eligible LSA categories.
Ideally, an LSA should cover anything that improves your employees’ physical, mental, or financial wellness. That breadth is intentional — it ensures the program works across life stages and roles.
See our guide to LSA-eligible expenses for more. - Map the tax implications.
Identify what was previously covered by pre-tax accounts like DCFSA or medical FSA and make sure those programs stay intact. LSA contributions are post-tax, so you aren’t replacing the tax advantage; you’re just covering what those accounts can’t.
- Build a case for Finance.
Once you’ve run the math, position the conversation around predictability and simplification. You’re moving from variable vendor spend with platform fees, per-seat costs, and unpredictable utilization to a fixed annual allotment per employee.
-Pull your current vendor costs.
-Show the per-employee equivalent.
-Make the line item consolidation visible.
Make it clear this isn’t another family care benefits vendor, but a way to optimize benefits spending and simplify admin. - Plan vendor offboarding.
If you have other vendors currently, pull every contract end date and flag any early termination penalties before you commit to an implementation timeline. And give employees enough notice that nobody loses access to an active benefit mid-use.
- Communicate the change to employees.
Benefits communication is equally important as offering them in the first place. Frame this as a flexibility upgrade, and highlight family caregiving as one of the key categories they can spend from to maximize participation.
If you choose a stipend platform like Compt, we’ll provide you with materials to share as well as a few emails per stipend cadence to keep your benefit top of mind for your employees. - Set a utilization review cadence.
Every quarter, check in on which categories employees are actually spending against. This is easy with Compt because you can look at utilization any time. Use that data to adjust eligible expenses and allotment over time as your workforce’s needs shift.
To win on family care benefits, you don’t have to spend more.
You just have to structure what you’re already spending in a smarter way.
How you offer family care employee benefits is a structural decision. One budget, flexible enough to cover fertility, childcare, elder care, and the rest of your lifestyle benefits stack — with predictable costs, less admin, and higher utilization across the board.
That’s what Compt is built for. One platform where HR defines the categories, employees submit expenses through a single workflow, and Finance has real-time visibility into participation, utilization, and taxable reporting. No additional vendors. No manual reconciliation. Just one predictable, scalable structure.
Request a Compt demo today and see for yourself.
FAQs: Family care employee benefits
Yes. Many companies now fold fertility support, childcare reimbursements, and caregiver benefits into a broader Lifestyle Spending Account (LSA) instead of adding multiple employee benefits providers. An LSA allows employers to fund a single employee benefits program that employees can use across categories like family care, wellness, professional development, and remote work.
This structure helps organizations consolidate fringe benefits into one system rather than managing separate vendors. Platforms like Compt’s lifestyle benefits software allow HR teams to define eligible categories while employees submit expenses through a single reimbursement workflow. The result is a simpler employee benefits program with predictable budgets and higher participation across the workforce.
What family care expenses are typically eligible under lifestyle benefits programs?
Family care eligibility varies by employer, but most LSAs and employee stipend programs cover a range of caregiving expenses. These often include fertility treatments, IVF cycles, egg or sperm freezing, adoption costs, surrogacy expenses, childcare and daycare fees, nanny services, after-school programs, tutoring, summer camps, elder care services, assisted living support, adult day programs, and respite care.
Because LSAs are employer-defined fringe benefits, organizations can tailor eligible expenses to match the needs of their workforce. Platforms like Compt allow HR teams to monitor participation and utilization across categories so companies can refine their employee benefits programs over time.
How do employers support caregivers without overcommitting to high-cost, low-utilization point solutions?
Many HR leaders now support caregivers by consolidating benefits into flexible employee stipend programs or LSAs rather than purchasing separate point-solution vendors for fertility, childcare, and elder care.
This approach helps companies control costs while improving participation. Instead of funding several underused benefits programs, employers fund one flexible allowance that employees can use across caregiving, wellness, or professional development categories. Platforms like Compt’s employee benefits software help organizations manage reimbursements, track participation, and analyze utilization data across the entire employee benefits program.
What’s the tax treatment of common family care benefits (childcare, fertility, elder care)?
Tax treatment varies depending on how the benefit is structured. Childcare and elder care expenses may qualify under a Dependent Care FSA (DCFSA), which allows employees to contribute up to $5,000 annually in pre-tax dollars. Some fertility treatments may also qualify under a medical FSA if they meet IRS requirements for medical expenses.
Lifestyle Spending Accounts work differently. LSA reimbursements are generally treated as taxable fringe benefits, but they offer flexibility because they are not restricted by IRS contribution limits or qualifying expense lists. Many employers therefore combine LSAs with FSAs and DCFSAs to build a more comprehensive employee benefits program. Platforms like Compt centralize reimbursement workflows and taxable reporting so HR and Finance teams can manage these benefits more efficiently.
How are mid-market companies bundling family care reimbursements into their broader employee benefits strategy?
Many mid-market companies are consolidating family care reimbursements into broader employee benefits programs and Lifestyle Spending Accounts rather than adding separate caregiving vendors.
Instead of managing multiple point solutions, companies create a flexible benefits allowance that employees can spend across family care, wellness, and professional development categories. This structure helps organizations support caregivers while maintaining predictable benefits budgets.
Platforms like Compt allow HR and Finance teams to track participation, utilization, and reimbursement data across the entire employee benefits program, making it easier to optimize benefits spending over time.
Editor’s note: Compt software supports the categorization and proper reporting of benefits according to IRS guidelines, helping businesses maintain compliance. However, Compt cannot provide tax advice, and users should consult their own tax, legal, and accounting advisors when necessary.
