What are prepaid legal plans?
Prepaid legal plans are a benefit offered by employers that has become more popular over the past 10 years. Prepaid legal plans operate similar to a legal insurance plan. For a small monthly or per paycheck fee, a plan member can prepay for legal services that may be needed in the future. A prepaid legal plan is a contract wherein the legal provider agrees to provide certain legal services through a network of attorneys.
Prepaid Legal Plans have grown in popularity.
As seen in the figure below, the number of Russell 3000 companies offering prepaid legal plans has increased steadily over the past 6 years. In 2015, only 11% of Russell 3000 companies offered a prepaid legal plan, and this has grown to over 19% in 2021. These prepaid legal plans are becoming a more popular benefit as they are a benefit that employers can provide at either low or no-cost to the employer. The employer can “sponsor” the plan, but may not pay any of the premiums for the employees themselves.
A Majority of Russell 3000 Companies use MetLife for their Prepaid Legal Plans.
As seen in the table, of those Russell 3000 companies indicating they have a prepaid legal plan, nearly 70% have an insurance contract with MetLife. Comparing the size of the insurance contracts among the 3 largest providers, Arag Insurance Company has the highest median count of persons covered per insurance contract. Prepaid Legal Services Inc. DBA Legal Shield has the lowest median count of persons covered per insurance contract which is not surprising given that Legal Shield focuses on small and medium businesses.
Axiomatic Data Form 5500 Prepaid Legal Data.
Download here a sample of Axiomatic Data Prepaid Legal data. Key fields include company name along with address, insurance provider name, count of members covered by insurance contract, start and end date of the policy contract, and price of the insurance contract.
About Axiomatic Data:
Axiomatic Data extracts and aligns data from IRS Form 5500 (ERISA) filings, which cover retirement and welfare benefit plans. In Form 5500 filings, the plan sponsor must provide information about each insurance contract that is used. Key insurance contract information includes: Insurance carrier name, number of persons covered by contract, and broker name along with commission paid. While this post looks at Prepaid Legal, similar information can be found for Health, Dental, Life Insurance, Vision, Temporary Disability, Long-term Disability, Death Benefits plans.