Exploring Health Benefit Efficiency in Law Firms Amid High Healthcare Costs
TL/DR –
Law firms face higher healthcare costs due to factors such as demographics, high-cost markets, substantial plan designs, and a greater use of behavioral health services. Compared to general industries or Fortune 500 companies, law firms pay more to offer health plans on a per capita basis, however, steps can be taken to make these plans more financially sustainable and responsive to the needs of attorneys and business professionals. In navigating these costs, firms must balance their strategies with the need to offer diverse benefits, challenge traditional thinking, prioritize vendor due diligence focusing on quality and effectiveness, adopt new care delivery models, and utilize data-driven approaches to major investments.
The Importance of Robust Benefit Programs in Law Firms
For businesses whose core asset is their people, offering robust benefits is critical to maintain a healthy and engaged workforce. However, law firms are facing increased pressures due to rising healthcare costs and general inflation. Therefore, firm leaders are seeking more efficient opportunities.
Main Points
- Law firms pay significantly more on average per person for healthcare plans compared to the general industry or Fortune 500 companies.
- High costs in law firms are often due to demographics, high-cost markets, rich plan designs, and high utilization of behavioral health services.
- Effective steps can be taken to improve the financial sustainability of benefit plans while meeting the needs of the firm’s attorneys and business professionals.
Aon’s Professional Services Practice partnered with Aon’s Data Forensics and Informatics team to study 200 of the largest US law firms. The firms surveyed offered an average of four plan options with 70% self-insuring, and 30% offering only fully insured plans.
Key Findings
The study, powered by Aon’s Health Value Initiative database, focused on three main characteristics:
Plan Design: The average actuarial value for law firm medical plans was 88%, which is higher than the Fortune 500 average of 86%. Partners, who typically pay the full premium, expect minimal out-of-pocket costs.
Participant Contributions: Non-partner participants paid more for their benefits (about 30% of plan cost) than Fortune 500 workers (about 26% of plan cost). This is especially true for participants who cover their spouses or children in addition to themselves.
Demographics: The employee populations in large law firms tend to be predominantly female (55%) and mainly between the ages of 25-40 or working past age 65. This results in more fertility-related claims and chronic conditions that can be costly.
By using the report’s insights, law firms can assess the economic value of their benefits spend and position their health and welfare plans relative to other firms. They must balance cost management with providing robust and diverse benefits to meet the evolving needs of their workforce. This requires challenging conventional wisdom, diligent vendor selection focusing on quality and effectiveness, adopting new care delivery models, and a data-driven approach.
To read the full 2025 U.S. Law Firm Medical and Pharmacy Benefit Benchmarking Report, please register.
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