Flexible employee benefits: Point solutions vs. LSAs
Compare point solutions vs. flexible employee benefits. See how to meet diverse needs at scale by leveraging the flexibility of an LSA with a modern TPA solution.
A practical comparison of point solutions vs. modern LSAs
Companies oftentimes contract vendors to provide point solutions - or stand-alone perks, stipends, or wellness benefits. In an attempt to support growing demands, point solutions are included ad hoc, with employers choosing individual vendors to administer each benefit. While the intent is sound, the strategy falls short. Patching together disparate systems - many of which were built in the 1990s with outdated UX - is inefficient, ineffective, and makes matters worse for everyone involved.
A better approach to meet diverse needs at scale is to leverage flexible employee benefits using an LSA with a modern third-party administrator (TPA) solution. The combination reaps many advantages. And, when compared to point solutions, the modernization of an LSA with newer generation TPAs proves to be the clear winner.
Below details how point solutions and modern LSAs compare in terms of cost, administration effort, use, and scalability.
Substantial cost: Managing multiple solutions and vendors comes at a high price tag compounded by the cost of hours spent on oversight.
Administrative burdens: Implementing and managing multiple solutions is time-consuming and inefficient. Each and every new program requires oversight–from contracting to vendor management, communication plans, and internal support. Now multiply that 5x, 10x, or more. The pain of point solution fatigue is real.
Usage barriers: By offering multiple programs, both admins and employees have to learn how to use multiple applications just to access each benefit - which takes time. Add to that outdated legacy tech with poor UX which leads to frustration and damages utilization. The culmination is problematic, especially when the whole point of benefits is for people to use them.
Difficulty scaling: Adding more and more individual benefits is cumbersome to manage and implement. While important to be agile and respond to evolving needs, before long, the benefits system becomes highly complex and difficult to manage.
Streamline costs: LSAs are ‘notional’, meaning the company only pays for funds that get used. This differs from various benefit point solutions that require a per-employee price regardless of usage.
Drastically reduce administration oversight: Companies can consolidate multiple LSA programs, stipends, and perks into spending accounts for a modern TPA provider handles program design, claims administration, member support, and vendor management.
Higher utilization. With a single source of truth, admins and employees no longer need multiple access points, effectively removing usage barriers and driving utilization.
Adaptive and scalable: It’s near impossible to identify a benefits mix that will be beneficial to thousands of distributed, multi-generational employees. With LSAs, employers can offer expansive options and empower employees to spend funds based on their unique needs.
The advancement of a modern TPA
Outsourcing to a third-party administrator (TPA) should ease administration efforts. Typically, the TPA manages all of the employee claims, vendor relationships, and compliance factors. More sophisticated and innovative TPAs have entered the market–the advancement of which offers a single touchpoint to administer LSAs. This way, employers can provide various LSA programs in a unified manner.
The combination of an LSA and an experienced, modern TPA solution can be game-changing.
- Companies can deliver inclusive, equitable benefits at every scale.
- Budget control, accountability, and administration are best-in-class.
- Employers and employees enjoy enhanced accessibility via a single solution with a rewarding user experience.
- The data-gathering capabilities evaluate program performance, engagement, and utilization.
- The program can be easily adjusted and respond to emerging needs.
All the above lessen the administrative burden and inefficiencies. The modernized solution helps drive engagement and utilization. Naturally, employees choose and use their benefits. Benefits leaders have a clear understanding of when the benefit is being used. As a result, companies can efficiently allocate spend based on when/if employees use funds.
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