Legal Ease: A New Wave in Benefits
Schwartz, Alec M., Risk Management
For thirty years, group and prepaid legal service plans have been proving their value in making affordable legal services available to the average family, but recent growth has been particularly strong. These plans have been quietly expanding to the point where tens of millions of Americans now have access.
According to the National Resource Center for Consumers of Legal Services, legal service plan coverage grew by an estimated 7.1 percent in 1997. While total eligibility now exceeds 100 million individuals including primary participants, spouses and dependents-the NRCCLS estimates prepaid legal plan coverage at 17.6 million. Increases in both individual enrollment plans (18.5 percent) and payroll deduction plans (8.3 percent) were also reported in 1997.
A long list of consumer groups, labor unions, employers and insurance companies either maintain a legal service plan or are working to establish one.
Plans come in all shapes and sizes. In the simplest, an employee is referred to a lawyer or law finn who by previous arrangement provides legal consultations and additional services according to a plan fee schedule or at a discount. There is no prepayment for services and the program is open to anyone who is a member of the group.
The prepaid legal service plan is usually a little more complex. In a simple access plan, the service covered by the prepaid fee is generally legal advice and consultation by telephone, brief office visits, the preparation or review of a simple legal document, such as a will, and short letters written or phone calls made by a lawyer to an adverse party. Additional services may be available at discounted fees.
More comprehensive prepaid legal service plans, on the other hand, are designed to cover 80 percent to 90 percent of the average person's legal service needs. Once the fee has been paid, the benefits are available at no additional charge, except for deductibles and copayments, which may apply to certain kinds of services. A comprehensive plan may provide access services, such as legal advice and information by phone, and coverage for a wide variety of legal work.
Benefits can be stated in terms of either the type of legal problems covered or the type of service for which the plan will pay. For example, one plan may provide full coverage for problems involving wills and estates, purchase or sale of a residence, consumer disputes, uncontested divorces and landlord/tenant problems, with partial coverage for traffic matters and other criminal offenses. Another may cover unlimited legal advice and consultation by telephone, and pay up to a certain amount for services performed by a lawyer in the office, charging the participants additional amounts for matters involving trials or administrative proceedings.
All plans tend to limit coverage in some way in order to control costs. Coverage limits may be specified in monetary terms or by limiting the number of billable hours for which the plan will pay. Alternatively, the benefit schedule may specify each covered service, regardless of the cost or time spent. Deductibles and copayments can be applied to some benefits in order to keep costs down and discourage frivolous use.
As in other insurance-style arrangements, an administrator handles plan finances, collects contributions, enrolls members, provides plan descriptions and forms, processes and pays claims, and files reports required by regulatory agencies. The administrator also establishes and maintains complaint mechanisms to serve the needs of both plan members and service providers who may have disputes regarding plan coverage, rules or claims.
Legal service plans generally use a system organizing lawyers into a contract service provider panel from which those eligible for legal benefits can receive covered services. …