MORE EMPLOYERS ADD LEGAL BENEFITS TO MIX

A growing number of employers are adding or planning to add prepaid group legal plans to existing benefit packages, according to legal plan administrators and benefit consultants.

In particular, voluntary enrollment plans that call for employees to pay the full cost of the benefit through payroll deductions are gaining popularity, they say.

"Employers are looking to broaden the array of benefits they offer, but they don't want to put in more money," said Jim Brennan, president of the ARAG Group, formerly Midwest Legal Services, a legal network administrator based in Des Moines, Iowa.

A survey of 509 organizations released in March by Lincolnshire, Ill.-based consulting firm Hewitt Associates L.L.C. showed that the percentage of surveyed firms offering group legal benefits rose to 7% in 1997 from 4% in 1994. On top of that, 14% of the surveyed companies said they planned to offer legal benefits within the next three years.

"The Hewitt study is indicative of the state of our industry," said Mr. Brennan. "This is as feverish a time in this business as I have seen," he said.

Business for the ARAG Group has grown about 25% over the past two years, according to Mr. Brennan. Before that, growth was more like 7% to 10% a year, he said.

Other legal plan administrators also said they have experienced stronger growth over the past one to two years.

The administrators have stepped up marketing in recent years, said Bill Bolger, executive director of the National Resource Center for Consumers of Legal Services in Gloucester, Va.

"But you don't do that unless there is some success," he explained.

Although legal plans are not among the benefits most popular with employees, they serve their purpose, experts say.

"If it is the employee paying for it, then it is a no-brainer for an employer," said Andrew Zuckerman, employee benefit counsel at Milliman & Robertson in Washington.

"As benefit programs mature and more and more cafeteria systems come in, it is just another benefit to offer. It rounds out the whole benefit package," he said.

Janet Snyder, human resources manager-benefits at Washington-based Amtrak, would agree. "We wanted to offer a full array of cafeteria-type benefits," she said.

So, in 1994, Amtrak introduced two voluntary legal plans from which employees can choose. Legal services seemed an easily understood and utilized benefit to add to Amtrak's existing benefit plate, she said.

For employers, legal plans also are "an easy and cheap benefit to offer," said Rick Wald, a Minneapolis-based principal with human resources consulting firm William M. Mercer Inc.

Because many plans are paid for by employees and because those employees need less education, as the legal benefits work largely the same way as managed care, the only cost for an employer often lies in administrative adaptions, consultants say.

Although plan administrators say that typically not more than 10% to 20% of employees enroll when voluntary plans are first offered, such plans are popular with users.

"Satisfaction rates are high, and they are well used, which is not true with all benefits," said Mr. Bolger.

But a Mercer study in May found little evidence for the claims by some consultants and legal plan administrators that legal plans can help attract and retain employees. The questions Mercer asked employees referred to legal access plans that would provide free initial consultations and favorable rates for subsequent legal help.

While 50.6% of respondents expected that they might need legal services some day and 30.6% said they would probably use a legal plan if it were offered as a benefit, only 11.2% said the availability of legal benefits would influence their choice of an employer. "This is a very modest impact," said Mr. Wald.

Still, some employers expect their legal plans will make a difference.

"I don't think too many other companies are offering legal plans in our area," said Regina Douglas, benefits manager at Mantech International Corp. in Fairfax, Va. She is evaluating proposals from two legal plan administrators.

The main incentive to offer a legal plan, however, was the recent death of a young single mother who did not have a will, Ms. Douglas said. Mantech has a lot of young employees who need legal help with drafting wills and dealing with issues such as divorce and guardianship, she said.

Legal plans provide employees the opportunity to get legal advice and, in more comprehensive plans, also to get further legal services from lawyers who are part of a provider network. Therefore, the plans help employees with legal issues they face, such as drafting wills or getting consumer protection, at comparatively low rates.

Legal plans vary in comprehensiveness. The two basic forms offered are legal access plans and comprehensive legal plans. Access plans usually offer free and unlimited consultation with lawyers, mostly by phone, and referrals to obtain discounted legal services in case an employee needs more extensive work.

Comprehensive plans, by contrast, pay the full cost, from the beginning, for legal services. Some administrators, such as the ARAG Group, Hyatt Legal Plans and Lanham, Md.-based Advisory Communications Systems Inc., also include financial consulting services in their comprehensive plans.

The monthly premiums employees pay for voluntary enrollment range from a few dollars to about $20 to $25, depending on the features and services a plan offers.

Prior to June 30, 1992, employers could pay up to $70 a year per employee for prepaid group legal plans without that amount being added to an employee's taxable income.