Health insurance options for independent law firms

The decision to offer health benefits can make a world of difference in your practice. It can boost employee morale, enhance workplace culture, and improve your firm's performance.

However, due to tight budgets, many small independent law firms still overlook this critical aspect of their employment strategy.

In this article, we'll cover the compelling reasons why your independent legal service firm should prioritize offering health insurance coverage. We'll also explain how you can provide affordable, flexible health benefits that meet your firm's unique needs.

In this blog post, you'll learn the following:

• The advantages of offering health benefits to your team.
• Why an HRA outperforms a traditional group health insurance plan.
• How PeopleKeep can help you offer an HRA with ease.

Law firms in America

As of 2024, there are more than 431,300 law firms¹ in the United States, representing a 0.7% growth compared to 2023. Baker McKenzie² stands out as the largest legal service firm with more than 4,700 attorneys. However, such a vast number of legal professionals isn't typical in the industry.

A 2023 report from the Thomson Reuters Institute³ found that independent legal service firms represent approximately 40% of all legal practices. Notably, legal services with fewer than six attorneys account for more than 75% of all firms. These numbers don't include the paralegals, legal assistants, office managers, and other essential support staff contributing to the firm’s success.

The importance of offering health benefits at your firm

KFF⁴ found that only 30% of organizations with fewer than 50 employees offered group health insurance to their employees. If legal service firms reflect this trend, 70% of legal professionals at small law firms may lack access to a group health insurance plan.

When you don't offer health benefits, your firm is behind the competition. Job seekers expect more than a salary from their employer. PeopleKeep's 2024 Employee Benefits Survey found that 81% of employees said an employer’s benefits package is an important factor in whether they accept a job. Additionally, 92% of employees consider health benefits important. This makes them the most sought-after benefit you can offer your team.

Advantages of offering health benefits at your firm

From employee recruitment to retention, there are several benefits of health insurance coverage.

Here are a few ways health benefits can contribute to your firm's success:

• Health benefits demonstrate a commitment to employee well-being. Improving your employees’ well-being can enhance job satisfaction and improve morale.
• By providing health coverage, your firm can attract and retain top talent. Many candidates prioritize robust benefits when choosing an employer.
• Offering health benefits can increase productivity. Healthy employees are more likely to perform better and take fewer sick days, contributing positively to the firm’s overall efficiency and success.
• Medical insurance can serve as a valuable tool for fostering loyalty among employees, encouraging them to build long-term careers with your firm. This stability can create a more cohesive work environment, reducing turnover costs associated with hiring and training new staff.
• Providing health insurance can enhance your firm's reputation. It showcases a professional and caring approach to workplace culture, which can positively impact client relationships and business development efforts.

Affordable options for health coverage

Independent law firms have several health insurance options to consider for their employees. While it's common to go straight to a health insurance company or insurance broker for a group health plan, this often isn't the smartest choice for smaller businesses.

Group health insurance policies work best for larger organizations with substantial budgets and sizable teams. Your independent legal service firm may struggle to meet the high participation requirements or affordability of these plans. According to KFF⁵, the average group health insurance premiums for employer-sponsored health insurance in 2024 were $8,951 for single coverage and $25,572 for family coverage.

According to an Aon report⁶, law firms are paying significantly more than other employers in offering their health plans, and 70% do self-insured plans. However, these plans come with a lot of risk for the employer. You have to ensure you have enough capital to cover any unexpected medical costs. You may also have to purchase additional protections like stop-loss coverage, which can help employers if claims exceed their stop-loss limit. Many firms outsource the administration of their self-insured plan, adding to the cost of offering a health benefit.

This is where the health reimbursement arrangement (HRA) comes in. Stand-alone HRAs are budget-friendly alternatives to self-funded or group healthcare coverage. Instead of purchasing a group policy or funding all medical claims themselves, business owners can simply reimburse their employees tax-free for the cost of their fully-insured individual plans and other out-of-pocket expenses.

Here's how the process works:

• You set an allowance amount that fits your budget.
• Your employees enroll in qualifying health insurance coverage.
• Your employees make healthcare purchases using their own money.
• Your employees submit proof of their out-of-pocket costs to you or your HRA administrator for reimbursement.
• You or your HRA administrator reviews the expense to confirm it's eligible for reimbursement.
• You reimburse the employee up to their set allowance amount.

Plus, unlike one-size-fits-all group healthcare plans, there's a stand-alone HRA for every organization's unique needs. The individual coverage HRA (ICHRA) allows you to customize allowances using 11 employee classes. Plus, there's no limit on employer contributions, so you can offer your workers as much as you'd like. Then there's the qualified small employer HRA (QSERHA), which is designed for small firms with fewer than 50 full-time equivalent employees (FTEs).

With an HRA, you can reimburse your employees for more than 200 eligible medical care expenses, including:

• Monthly premiums for individual vision, dental, or medical insurance plans
• Preventive care
• Emergency care
• Mental health counseling
• Prescription medication
• Over-the-counter medication

When you offer an HRA to your staff, you're giving them the freedom to choose the coverage options that work best for them. Plus, you're working within your budget to do right by your team. And, unlike a self-funded group plan, your employees’ individual health plans handle the financial risk. You simply reimburse employees for their premiums and other costs up to their allowance.

How PeopleKeep can help your firm

Another reason small business owners tend to go for group health insurance is that most employees are familiar with it. An HRA comes with a learning curve, but PeopleKeep is here to help!

With our HRA administration platform, you can provide personalized health benefits to your diverse team in just minutes each month. This gives you more time to focus on other important business matters.

We ease the administrative burden of offering an HRA by:

• Customizing your HRA to the specific needs of your workforce
• Reviewing your employees' reimbursement requests for eligible out-of-pocket costs
• Creating your legal plan documents
• Sending automatic notices to employees on your behalf
• Providing award-winning customer support

Plus, your employees can shop for individual healthcare plans and ancillary benefits directly from their PeopleKeep account. They can compare policies based on network type, metal tier, or carrier. We also offer complimentary health insurance consultations to help them navigate their options.

Conclusion

Offering health benefits is a strategic investment in both your employees’ health and the long-term success of your independent law firm. While self-funded or fully-insured group health insurance are the common go-tos, they aren’t your only options. A more affordable approach is an HRA. With an HRA, you can stay within your budget while offering your employees the health coverage they deserve. A PeopleKeep HRA specialist can help you find the HRA that's right for your firm.

1. Law Firms in the U.S.
2. The 500 Largest Law Firms In America
3. 2023 State of U.S. Small Law Firms
4. KFF Percent of Private Sector Establishments That Offer Health Insurance to Employees
5. KFF 2024 Employer Health Benefits Survey
6. Law Firms Outspend Other Professional Service Employers in Offering Similar Healthcare Benefits