How to deliver cost savings with consolidated LSA benefits

Unlocking savings with consolidated LSA benefits   

With high medical renewal costs and sustained inflation, HR professionals and companies are challenged to deliver rich, competitive benefits with tight budgets. Given the complexity of the ask, HR leaders are looking for creative, cost-effective, strategic solutions with proven ROI.

By consolidating perks into LSA benefits, organizations can achieve cost savings and efficiency gains without sacrificing any of their current programs. Rather than paying a premium for multiple niche vendor solutions, HR teams can simply shift programs into a unified LSA system that provides broader, comprehensive coverage.

We'll cover exactly how you can strategically and systematically save with a consolidated LSA program.

How to streamline and save by consolidating LSA benefits

Unlike other benefits, a consolidated LSA benefit doesn't require a new budget and adds value. Companies can simply reallocate funds from previous perks and migrate into a consolidated LSA program. Variables such as workforce construct, specific business objectives, employee feedback, or company values can influence prioritization and strategy. There are many ways to consolidate LSA benefits and support strategic initiatives.

Some examples include:

• An all-encompassing LSA with broad categories that consolidate mental, social, physical, and financial programs into a singular benefit 
• A fitness and wellness LSA for various health and wellness-related support
• A caregiving LSA covering new parents, elder care, dependent care, and pet care needs
• A home office setup LSA that covers equipment to comfortably work from home
• A learning and growth LSA that brings together tuition reimbursement, skills development, learning & development, and professional development  

Whether migrating existing programs or adding some new options to the mix, LSAs offer a means to provide employees comprehensive benefits they value and use.

‍Here's how a consolidated LSA can deliver cost savings.

A 2023 Forma Research report found that on average companies offered 9 perk and wellness benefits. Table 1 shows the 9 most popular perks and the average yearly allowance per employee noted in the report. The total annual budget per employee for comes to $10,741.

Migrating Fitness/wellness challenge, Wellness app, and Gym into a fitness and wellness LSA benefit would provide a total of $3,199 per employee per year (as shown in Table 2 below). Since an LSA is notional, companies only pay for funds when employees use them.

Here's where the magic happens...

If you were to apply the average utilization for Forma's fitness and wellness LSA (74%), that would generate 26% cost savings. The company saves $831 and reduces the annual spend to $2,368 per employee. And, the company didn't have to spend any additional funds.

Applying this model to various workforces sizes, the savings only gets better.

• A company with 250 employees can save $208K annually.
• A company with 1,000 employees can save $831K annually.
• A company with 5,000 employees can save $4.2M annually.

All this savings happens simply by consolidating and using existing funds.

Cut costs not programs with LSA benefits

Given the state of the market, HR professionals are hard-pressed to do more with less. Transitioning from to a consolidated LSA model offers a path to deliver on this ask. The combined advantages empower HR teams to sustain robust benefits despite increasing budget constraints. Consolidating perks into LSA benefits reduces the number of vendors, program costs, and administrative effort - as well as simplifies processes across legal, payroll, IT, and other functions.

By taking a holistic approach to benefits spending, LSA benefits enable greater oversight into utilization and metrics compared to decentralized point solutions. You can optimize investments based on which LSA categories drive the greatest engagement and ROI. This efficient model allows more benefits funding to go directly toward value vs. overhead waste.

LSAs truly help make every dollar count. The integrated path forward is a win-win-win for organizations, HR teams, and employees. For more information about LSA benefits, <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">schedule a consultation</span> with one of our experts. We’d be happy to help you find the perfect solution for your unique needs.