Legal benefits are not equal: 5 ways to evaluate the options

Employee interest in legal benefits continues to grow, particularly as many Americans have recently found themselves dealing with legal and financial challenges like tenant disputes and consumer protection issues in the aftermath of the pandemic.

Chances are, you’re fielding more inquiries from employer clients who are looking at the pros and cons of adding a legal benefit to their existing lineup, or those who are taking another look at their current legal plan to see if it’s measuring up to employees’ needs.  According to our own research in 2021, more than 75% of Fortune 100 and 55% of Fortune 500 companies now offer some type of legal plan to their workforce.

But not all legal plans are equally beneficial to members. To help your clients better understand the options, here are some of the distinct (and often impactful) differences in coverage, service and customer experience to consider.

Legal benefit basics

Legal benefits are designed to provide employees with a set of legal services and some level of protection against personal legal matters, ranging from document creation and online resources to legal consultation and representation.

Here’s a quick overview of the options, ranging from basic coverage and services to the most comprehensive plans:

• Employee assistance program (EAP): Employees have access to an initial free consultation for general advice; additional legal services are provided at a discounted rate.
• Document provider: Employees can create their own personal legal documents online to address common legal issues. Access to legal counsel or services is usually not included, limited to advice only, or only offered at a discount.
• Discount legal plan:Employees receive discounted hourly rates on legal services through screened attorneys.
• Legal insurance plans: Employees pay a set premium and receive legal services from a plan attorney. Most covered matters for an insured legal plan are 100% paid-in-full when employees use an attorney in the network.

Looking at the most common types of legal benefits available to employees, it’s important to recognize that they can be decidedly different when it comes to service levels and access to attorneys. 

Five questions to help you decipher the differences:

1. What kind of coverage does the legal plan offer?

The biggest distinction here is what level of coverage the plan provides. For example, when it comes to covered matters, does the plan offer paid-in-full or just discounted coverage for paying attorney fees? You also want to understand if the plan covers:

• Both plaintiff and defendant matters: It’s important to note that many carriers only cover defendant matters. Yet based on claims paid by ARAG in 2020, plaintiff matters, like a contractor dispute or a libel case, exceeded defendant matters by as much as 9 to 1 in some areas of law – and on average 4 to 1 across all areas of law.
• Uncontested and contested matters: Most new legal plans cover both, but some older and outdated plans may only offer uncontested coverage.  This can be a major issue when dealing with more litigious situations, like those involving adoption, divorce, and/or guardianship.

2. What kind of limitations, exclusions and clauses does the plan contain?

Price isn’t everything when selecting a legal plan. It’s extremely important for clients to carefully review the fine print for provisions that could impact a member’s ability to access an attorney, the amount of assistance available to them, additional out-of-pocket costs required, as well as their overall satisfaction with the plan. Considerations may include:

• An annual usage limitation: Legal matters may occur many times per year, yet some carriers set a one-time usage limitation. Doing so restricts key legal needs, such as enforcing alimony payments or disputing multiple traffic tickets. In fact, we estimate annual usage limitations reduces the number of claims by more than 10% annually.

• Hourly limits: Some benefits (e.g., small claims, estate administration or probate, divorce-related matters) may have hourly limits, which do not adequately cover the time needed to address the issue. For example, a provider may only offer up to two hours for estate administration and closing, which only provides paid-in-full coverage for approximately 19% of the cases, according to an analysis of ARAG 2019 claims data.
• Waiting periods:  Most carriers offer coverage immediately upon the plan’s effective date, while others may impose a three-to-six month waiting period before they can take advantage of their plan benefits.
• Termination clause: If the employer currently has a plan in place, they should confirm coverage is available for members who leave the company. Additionally, with some providers, if the employer terminates the plan, the members’ coverage ends immediately, forcing the member to pay out-of-pocket for any remaining attorney hours required to resolve their legal matter, even if legal events occurred while they were active members.

3. What kind of access do employees have to attorneys?

Simply put, can employees choose the attorney they want to work with or are they assigned an attorney? Also, does the carrier guarantee access to a network attorney? Things can get sticky when a member has a case that no nearby attorney will take.

Keep in mind that in the legal benefit world, attorney networks can work quite differently. For example, some carriers have managed case rules where the insured must first negotiate fees with the attorney. Then the insured will need to negotiate with the provider to determine what portion they’ll cover and what the insured may need to pay.

Also, what process do attorneys go through to participate in the network? And are they credentialed individually or at the firm level? This can make a difference when an employee is searching for a knowledgeable attorney who practices in a certain area of law.

Finally, does the carrier provide in-depth attorney profiles with ratings and reviews based on member feedback to help employees make confident choices in their legal counsel? That is a huge advantage for an employee who is searching for someone to whom they can relate and trust. Request a demo to better understand the user experience and review the amount of information shared within their attorney profiles.

4. Does the legal plan evolve over time?

Maybe you have clients who’ve had a plan with the same carrier for five, 10 or even 20 years. Maybe the price has stayed relatively the same, which is not necessarily a bad thing. But over time, the plan has possibly gotten stale, offering the same coverages, with little to no enhancements.

If that’s the case, I think it’s fair to ask clients, “How much do you really know about the plan, and are employees utilizing the different coverages, or more specifically, offering the right coverage at the right time?” Ultimately, it’s about ensuring the plan is keeping up with the legal and financial needs of today’s employees and the needs of your clients.

A vested provider will regularly evaluate those needs and provide plan recommendations. For example, in 2019 we recognized a growing need for legal assistance for the LGBTQ community for matters such as a domestic partnership agreement, hospital visitation authorization and gender identifier change. We now offer that coverage, along with other benefits that both align with clients’ diversity, equity, and inclusion initiatives and fill coverage gaps to better address the needs of all employees, in whatever stage they are in life.

5. How does the provider direct support to help administer a successful (no noise) legal plan?

Let’s face it, employers are looking for a smooth experience for their employees and a “no-noise” benefit when it comes to plan implementation and ongoing administration. That starts with an employer contact or client manager who pays attention to what the client is doing, understands their situation, gives them the plan reporting they need and constantly evaluates the plan.

But it also means regularly gathering employee feedback about the plan. A client won’t know if they are providing a positive user experience unless they reach out to their workforce to determine where their pain points are when it comes to legal needs – and if those needs are being duly met with the plan that’s being offered.

Along those lines, you also want a provider who offers proactive employee communication, educates employees about the plan, and keeps them engaged from the time they come on board to informing them of conversion or portability options if they decide to leave the plan.

I’ve offered many questions for you to consider as you meet with clients and open enrollment ramps up this year. But posing them up front can help employers make better informed and more confident choices when selecting – or staying with – a legal plan provider that best fits their employees’ needs. And, at the end of the day, that means more satisfaction and less headaches for both you and the clients you serve.

 As Director of Sales Operations & Product Development at ARAG, a leading legal insurance provider, Derek Overton partners with brokers, consultants, and analysts to oversee more than 500 legal plan proposals annually to offer the right legal plan solutions for their clients.