Aon | Professional Services Practice
U.S. Law Firms Explore Efficiencies in the Face of Continued Healthcare Inflation
Release Date: May 2025When the primary product of a business is its people, it is of the utmost importance to offer a robust benefit program that keeps participants healthy and engaged. However, many law firms are feeling cost pressures brought by high healthcare trend and elevated general inflation. They are asking their people leaders to explore opportunities for greater efficiency.
Key Takeaways
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Compared to general industry or Fortune 500 employers, law firms pay significantly more on a per capita basis to offer their health plans.
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Demographics, high-cost markets, rich plan designs, and high utilization of behavioral health services are among the top reasons law firms face higher healthcare costs.
- Prudent steps can be taken to improve the financial sustainability of benefit plans, while also making them more responsive to the needs of the firm’s attorneys and business professionals.
The Professional Services Practice at Aon collaborated with Aon’s Data Forensics and Informatics team to compile data on “Am Law 200” law firms with an average size of 1,020 participants, including partners. The report is based on data for the 2024 plan year and is the fourth report on health plan benchmarking to be released by our practice.
Demonstrating that providing participants meaningful choice is still expected and valued, the surveyed firms offered an average of four plan options. 70% of the firms self-insured either all their plans or just their “national” plans, while 30% offered only fully insured plans.
The results, powered by Aon’s Health Value Initiative database, focus on three main characteristics:
Plan Design: The average actuarial value for law firm medical plans was 88% (for every $1.00 spent on healthcare, the plan is estimated to pay $0.88), which is higher than the Fortune 500 average of 86%. This reflects the desires of law firm participants, particularly partners that typically pay the full premium and expect minimal out-of-pocket costs in return.
Participant Contributions: Non-partner participants (professional staff, associates, counsel, etc.) paid more for their benefits (about 30% of plan cost) than did Fortune 500 workers (about 26% of plan cost). This is especially true for participants who cover their spouses or children in addition to themselves as law firms tend to focus on subsidizing single coverage rather than family coverage.
Demographics: The employee populations of large law firms tend to skew female (55%) and have a preponderance of participants between the ages of 25-40 and participants working past age 65. This results in more fertility-related claims as well as chronic conditions that present later in life, all of which can be costly.
By leveraging the report’s insights, law firms can measure the economic value their benefit spend and position their health and welfare plans relative to other players.
Firms must balance their cost management strategies with the need to offer robust and diverse benefits for the evolving needs of their population. To effectively manage healthcare spend, firms will need to challenge legacy thinking, exercise vendor due diligence with a focus on quality and effectiveness, adopt new care delivery models, and take a data driven approach to key investments.
Please register to read the 2025 U.S. Law Firm Medical and Pharmacy Benefit Benchmarking Report.
Contact
For more information about healthcare costs, benefit plan strategies, or benchmarking and how Aon can help, please contact Jake Delman and Mark Scarafone.
Senior Consultant
Washington, DC
Senior Vice President and Health & Benefits Leader
Radnor, PA
About Aon
Aon (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.
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