The intention of multiple employer plans is that for the small plan market, their fees should be lower than single-employer plans. According to a paper by Natalya Shnitser, assistant professor at Boston College Law School, it seems that the average expenses of MEPs, especially MEPs belonging to professional employer organizations (PEOS) are higher.
This isn’t surprising since most MEPs haven’t achieved the size of critical mass to achieve the cost savings they were intended to provide. I know it firsthand, after setting up several MEPs over the years.
In 2016, the average administrative fee in PEO MEPs was 86 basis points, more than two and a half times the level in single-employer plans, which was ONLY 32 bps. Association MEPs (Closed MEPs), or those sponsored by trade groups or other types of associations, had an average administrative fee of 53 bps, and all other types of MEPs averaged 35 bps.
