This chapter briefly covers legal services plans, or prepaid legal services plans. Advantages, especially for middle and lower income employees, and disadvantages are mentioned. This section is followed by a group of design features, including suggestions for items to include on a benefit schedule. Tax implications are reviewed, and the chapter ends with a reference for learning more. | What is it? A legal services plan (. “prepaid legal services plan”) is an employer-funded plan that makes legal services available to employees Plan expenses tax deductible to employer Plan benefits taxable to employee Copyright 2009, The National Underwriter Company When is it indicated? Larger employers typically provide for employees in collective bargaining units Plans usually funded through multi-employer trusteeships sponsored by labor unions Copyright 2009, The National Underwriter Company Disadvantages Not all employees need legal services Difficult to fund and administer Need to exclude actions by employee against employer Either employer expenditures for plan or value of legal services provided are taxable income to employee Copyright 2009, The National Underwriter Company Design Features Any group of employees can be covered Benefits are scheduled or comprehensive: Scheduled plan pays only for benefits listed Comprehensive plan pays for all but excluded benefits Copyright 2009, The National Underwriter Company Design Features Plans can be provided on following bases: Indemnity: employee reimbursed for covered expenditures up to set limit Closed-panel: must use specified lawyers Open-panel: can choose any lawyer; lawyer must agree in advance to fee schedule Copyright 2009, The National Underwriter Company Tax Implications Cost of legal services plan tax deductible to employer with certain limits Tax for employee: Employer prefunds plan: Premiums taxed to employee; benefits received tax-free Employer funds out of general revenue: Employee taxed on value of benefits as received Copyright 2009, The National Underwriter Company Advantages Provides legal services for employees without additional employee expenditures Costly legal expenses are provided through insurance-type or group benefit program Copyright 2009, The National Underwriter . | What is it? A legal services plan (. “prepaid legal services plan”) is an employer-funded plan that makes legal services available to employees Plan expenses tax deductible to employer Plan benefits taxable to employee Copyright 2009, The National Underwriter Company When is it indicated? Larger employers typically provide for employees in collective bargaining units Plans usually funded through multi-employer trusteeships sponsored by labor unions Copyright 2009, The National Underwriter Company Disadvantages Not all employees need legal services Difficult to fund and administer Need to exclude actions by employee against employer Either employer expenditures for plan or value of legal services provided are taxable income to employee Copyright 2009, The National Underwriter Company Design Features Any group of employees can be covered Benefits are scheduled or comprehensive: Scheduled plan pays only for benefits listed Comprehensive plan pays for all but excluded .
