Uncertainty reigns in the new benefits world for employers, insurers and producers. That's completely understandable given all they've been through. National health care reform, the regulatory environment and the one of the biggest economic downturns since the Great Depression have made benefits executives wary about adding benefits or costs to current programs.
That hasn't lessened employers' commitment though to making quality benefits available to their workforce. Nor has it diminished insurers' willingness to develop and distribute innovative benefits that meet diverse needs. Employers continue to seek the best business and benefit strategies to ensure benefit dollars go as far as possible and provide coverage that employees want and need. Not surprisingly, the insurance marketplace has responded. Leading insurers have a laser-like focus on delivering the right products, services and technology to their customers.
Producers are working to keep clients close and the competition at arm's length by providing clients with high quality products and solutions. Consider the need. The employment base upon which producer fees have historically been calculated has shrunk during the economic slowdown. As a result of benefit cuts and premium-shifting, voluntary products have begun to assume a core-like role for protection and security needs. One of the products that's seen by many professionals as a must-have offering is group legal coverage.
Growth in Legal Plans
A 2009 Society of Human Resource Management study identified legal services as one of the fastest growing among voluntary benefits. Legal services have enjoyed sales growth of more than 20 percent annual sales growth in recent years. Still, about three out of four Americans don't have legal coverage. (This is in stark contrast with Europe where legal protection insurance is the rule rather than the exception.)
An ARAG-Russell Research national study last year reported that eight out of 10 Americans were concerned about financial-related legal matters (e.g., estate planning, contractor issues, identity theft), and that seven out of 10 Americans experienced legal needs (e.g., credit trouble, contracts, caring for family members) in a 12-month period. While the study noted that legal issues happen to anyone at any time, most people said they didn't have a plan to pay for legal expenses that could occur.
Various studies have shown personal issues affect employee engagement, work-life balance, absenteeism and job performance - often creating difficulties and relationship problems in the workplace and on the home front. Legal plans can provide employees with accessible, affordable and responsive professional services and resources to help prevent or resolve legal-related issues that distract and disturb them.
Given the frequency and severity of legal needs and the scarcity of protection, there's clearly a large, underserved market for group legal plans. Group legal plans are obviously relevant and timely in today's benefits market since they provide protection, security and peace of mind and contribute to a sense of legal wellness. They deliver accessible, affordable and responsive legal services and resources to deal with individual and family needs. That's valuable given the damage done to so many employees' personal safety nets during the recession.
Legal Plans Serve Many Needs
The types of legal plans that are available in the marketplace include comprehensive, access and discount plans. The names reflect the scope of services that are provided.
- Discount plans typically include basic covered services such as will preparation and a discount from an attorney's standard rate or a guaranteed hourly rate.
- Access plans typically provide legal advice and consultation by telephone, attorney calls and follow-up letters and document review and preparation via telephone or fax.
- Comprehensive legal plans typically provide a wider range of services (beyond those offered in discount and access plans) including office work and representation for various types of legal matters at no additional cost.
Most comprehensive plans are designed to meet 80 percent to 90 percent of the personal legal service needs of middle-income families. Some carriers offer flexibility to customize plan design or offer dual plan designs to meet the specific needs of the client's employee population. A leading provider of comprehensive legal plans said it operates on a model that's comparable to PPO medical plans. Members enroll through their employers, paying monthly premiums through convenient payroll deduction. They typically gain access to a group of attorneys and other legal resource to meet legal needs at an affordable premium.
In a comprehensive legal plan, the insurer contracts with a network of attorneys just as health plan insurers have traditionally credentialed their hospitals and physicians. Similarly, the quality of the attorneys' representation is monitored for quality of service. Value-added services such as online documents, identity theft prevention and resolution and elder care services are included in some comprehensive coverage plans, which can represent a cost savings over comparable stand-services provided by a vendor. The average monthly premium for a group legal plan over the course of a year is about the cost of a national roadside assistance membership.
Mitigate Health-Related Costs
While cost-sharing and cost-shifting (through higher premiums, deductibles, co-payments and out-of-pocket maximums) have become common in the new benefits world, some data suggest that employers could address some health care-related costs by embedding a robust legal plan in their health and wellness programs.
The issues that affect employees at home and at work are some of the most stressful they'll ever experience in their lives. Examples include the death of a spouse or a close relative, divorce, marriage separation or reconciliation, injury or illness and caring for a family member.
The American Institute of Stress projected that stress costs American industries more than $300 billion annually in lost hours due to absenteeism, reduced productivity and workers compensation benefits. Stress and unhealthy behavior often go hand-in-hand, as reported by the American Psychological Association. An organizational survey reported more six out 10 of respondents smoked more when stressed, almost half lost sleep, four out of 10 found comfort in overeating and about two out of 10 drank too much.
By adopting a group legal plan, employers place themselves in a position to mitigate risk factors in overall health care costs. It's also worth noting that group legal plans may provide employers with some relief to the impending costs created by the new mental health parity requirements. Many employees view professional legal services as unaffordable or unattainable. The good news is that a legal plan is an affordable resource that's accessible and convenient.
Address Caregiving Concerns
Legal plans can address a wide range of needs for employees of all ages. One of the leading concerns for employers who are baby boomers or members of Generation Y is caregiving. One leading insurer recently added enhanced "caregiving services" to its plans that are providing advice and consultation with an attorney for elder care matters and annual legal check-ups. Plan members get access to online tools and resources such as legal and caregiving guides, a wide range of free do-it-yourself legal documents and support services to assess needs, develop plans and provide information on caregiving facilities.
Almost 66 million people - more than 30 percent of U.S. households - are family caregivers, according to a 2009 study by the National Alliance for Caregiving and AARP. Many of them are career people who are sandwiched between the l needs of their children and their elderly parents or grandparents. For the "sandwich generation" the stress and strain of caregiving can adversely affect their own physical, emotional and financial health, as well their careers and retirement plans.
Provide Value to Clients
Legal wellness can have a positive effect on employees. When employees are able to prevent or resolve personal and family legal matters that adversely they're more focused, productive and satisfied. It's a win-win for employee and employer.
A legal plan can be a tremendous addition to a benefits program. The services and resources can address a wide range of employee concerns and needs. A legal plan can strengthen the employer's benefit program by providing greater choice, coverage that fills potential protection gaps and a value-added benefit that employees will appreciate and use.
For today's producers, product and service excellence have never been more important. Legal plans help producers diversify, differentiate and compete for the attention of current and future clients. Legal plans can provide innovative solutions and opportunities to strengthen the client relationship.
Legal plans represent an open and shut case in the new benefits world, where everyone is trying to do more with less. Legal plans offer affordable, accessible legal coverage to prevent or resolve personal legal matters that affect the quality of life for employees and their loved ones, productivity in the workplace and ultimately, the efficiency and effectiveness of the sponsoring business or organization.
Prior to joining ARAG, Jim was National Vice President of Sales and Marketing for EyeMed Vision Care and Vice President of Sales and Marketing for Anthem Blue Cross and Blue Shield. In addition, he was responsible for the oversight and administration of regional government programs administered by Anthem.
Barone received his Juris Doctorate from the University of Toledo and a Bachelor of Arts in Philosophy from the University of Cincinnati. He is a member of the Ohio State Bar Association. He is a national speaker on the topic of U.S. and Canadian health care reform.