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					Chapter 56

LEGAL SERVICES PLAN




LEARNING OBJECTIVES:

         Have a basic understanding of legal services plans


REVIEW:

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.


CHAPTER OUTLINE:

   I. What Is It?
   II. When Is It Indicated?
   III. Advantages
   IV. Disadvantages
   V. Design Features
   VI. Tax Implications
   VII. Where Can I Find Out More About It?
   VIII. Chapter Endnotes


FEATURED TOPICS:

Legal services plans




                                                                                 1
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CFP® CERTIFICATION EXAMINATION TOPIC:

    Topic 30: Other employee benefits
       D. Prepaid legal services


COMPETENCY:

Upon completion of this chapter, the student should be able to:

         1. Have a basic understanding of legal services plans.


KEY WORDS:

Legal services plan

Prepaid legal services plan

Scheduled benefits

Comprehensive benefits

Indemnity basis

Prepayment basis

Open-panel prepayment plan

Closed-panel prepayment plan


DISCUSSION:

1. Discuss types of legal services that might be included in a legal services plan.

2. Discuss differences between indemnity and prepayment-type plans.




QUESTIONS:

1. Which of the following types of benefits are often provided by a legal services
   plan?

    (1) will preparation
Chapter 56



    (2) adoption proceedings
    (3) civil or criminal defense
    (4) divorce

         a.   (1) only
         b.   (1) and (2) only
         c.   (1), (2), and (3) only
         d.   (1), (2), (3), and (4)

    Chapter 56, pp. 409, 410

2. When a plan provides services on an indemnity basis, how are legal
   expenses handled?

    a.   covered expenses are reimbursed
    b.   a set benefit amount is set aside each year
    c.   all legal services are paid for
    d.   all legal services are paid for except IRS audits and class action suits

    Chapter 56, p. 410

3. Which of the following actions must an employee take to get a benefit from a
   closed-panel prepayment plan?

    a. submit estimated expenses for a predetermination evaluation
    b. the lawyer must agree to stay within a list of usual, customary and
       reasonable charges
    c. obtain covered services from groups of lawyers specified by the plan
    d. agree to arbitration when available

    Chapter 56, p. 410

4. Which of the following actions must employees take to get a benefit from an
   open-panel prepayment plan?

    (1) choose their own lawyer
    (2) the lawyer must agree in advance to a previously set fee schedule
    (3) choose a lawyer from an approved list
    (4) submit all expenses in advance of reimbursement

         a.   (1) and (3) only
         b.   (1), (2), and (3) only
         c.   (2), (3), and (4) only
         d.   (1), (2), (3), and (4)

    Chapter 56, p. 452
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ANSWERS:

1. d

2. a

3. c

4. b

				
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