December 29, 2021

Comparing prepaid cards, marketplaces, and card-connected wellness benefits

Finding the right solution for your workforce is stressful. For People Teams investing in wellness benefits, there are countless tools and platforms, few of which will actually meet their workforce’s needs and expectations. Here are the factors to consider when introducing or automating your wellness benefits programs, along with a comparison of the most popular solutions.

Types of wellness solutions

For the most part, there are five types of technologies that power wellness benefits. Some solutions span one or more, but here’s an overview of each:

  • Pre-tax funded accounts: The IRS incentivizes companies to make programs available that facilitate well-defined expenditures and contributions that an employee can make. These initiatives are considered “tax advantaged” and include programs like qualified commuter benefits and 401(k)s, along with some health and wellness-related programs like health spending accounts and flexible spending accounts. Learn more about the taxability of benefits and how pre-tax benefits compare to taxable benefits.
  • Single-purpose cards: Branded prepaid or corporate-issued cards with built-in spending limits and eligible merchants offer an attractive way to facilitate wellness spending across a workforce.
  • Marketplaces: Portals with exclusive merchants and discounts give your workforce access to deals and wellness options.
  • Card-connected: Using the newest financial technology available, benefits recipients can connect a personal card and bank account to make eligible purchases and receive reimbursements. Learn more about how card-connected benefits work and how it solves for the drawbacks of single-purpose cards and marketplaces.
  • Manual reimbursements: As a quick and dirty solution, some employers administer wellness benefits by having employees manually submit receipts for review and reimbursement. Some of the above technologies use manual reimbursements as a fallback or secondary capability.

Pros and cons

Every employer and workforce is unique so it’s critical to determine the specific problems and objectives to solve for. That being said, there are a few definitive factors to consider when designing a benefits program. Here’s a brief overview of each with the tradeoffs:

  • Flexibility: Depending on the size and makeup of a workforce, benefits recipients may have diverse needs that can’t be met with a small bundle of eligible merchants. There’s a tradeoff between offering a broad range of categories and merchant options vs. a focused group of perhaps more heavily discounted options.
  • Seamlessness: It’s important to strike a balance between rigid rules and total anarchy. By default, some employers want to prevent abuse and optimize for tax advantages which means administering a wellness program with lots of rules and steps. Such programs typically achieve much lower utilization compared to more seamless options.
  • Adaptability: Iteration and fine-tuning are key aspects of any workforce initiative. Some solutions will require long-term contracts and predefined contributions, while others will allow for adaptation throughout the year as circumstances change.

Comparing solutions

With the above factors in mind, here is a chart comparing four popular solutions that People Teams use for administering wellness benefits.

Again, there are a number of different underlying technologies that power wellness benefits, so the right solution really depends on your workforce’s needs and organization’s objectives.

  • If utilization is your goal, then you’ll want to prioritize flexibility, seamlessness, and adaptability. JOON is the best solution for you as it’s currently the only card-connected product in the market. There are no long-term contracts so you can continuously fine-tune your program or cancel if your workforce doesn’t love it.
  • If tax minimization is your goal, then you’ll want a way to offer wellness benefits that include pre-tax options. Forma offers a wellness marketplace along with pre-tax cards while Benepass offers a prepaid card for the same.
  • If you want to spend less on your wellness initiative with a more basic receipt management tool, then consider Compt.

If you still need help determining what your organization needs, check out our guide to surveying your workforce about their wellness preferences.