August 1, 2023

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

Finding the right lifestyle spending account (LSA) 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 changing your LSA, along with a comparison of the most popular solutions.

Types of wellness solutions

There are five types of technologies that power LSAs. Some solutions span one or more and also function as pre-tax HSAs or FSAs. Here’s an overview of each:

  • Curated bundle: A hand-selected group of wellness and lifestyle-focused brands that every employee is offered an account on
  • Single-purpose cards: Branded prepaid or corporate-issued cards with built-in spending limits and eligible merchants
  • Marketplaces: Portals with exclusive merchants and discounts that utilize points or allowances for redemption
  • Card-connected: Using the newest financial technology available, benefits recipients connect a personal card and bank account to make eligible purchases and receive reimbursements 
  • Receipt upload: 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 an LSA. 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 or restrictive marketplace 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 10 popular solutions that People Teams use for administering LSAs.

Again, there are a number of different underlying technologies that power LSAs, 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 the only card-connected product in the market. It works globally and 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 select a vendor that primarily focuses on pre-tax benefits while also offering LSAs. Forma and Benepass offer modern HSA and FSA accounts, while Level offers integrated dental, vision, and commuter benefits. While Wex, HealthEquity, and Navia are household names for pre-tax benefits, their LSAs products are afterthoughts that are rife with bugs and limitations.
  • If employee recognition is your goal, then you’ll want to select an LSA like Espresa or Fringe that also offers wellness rewards and competitions..
  • If you simply want to spend less and check a box that you offer LSAs, then consider Compt which is essentially a spreadsheet for collecting and managing receipts. Wex, HealthEquity, and Navia also offer LSAs at bargain prices or even complimentary when you administer their pre-tax benefits.

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