California Life-Only & Accident and Health AgentAccident and Health InsuranceEasy
An employer offers a group health insurance plan where the employees are required to pay a portion of the premium. This type of group plan is known as:
- AFully Insured
- BNon-Contributory
- CContributory
- DSelf-Funded
Show answer & explanationAnswer & explanation
Correct answer: C. Contributory
A contributory group health plan requires employees to pay a portion of the premium. For these plans, typically a certain percentage of eligible employees (e.g., 75%) must participate.
Why the other options are wrong
- A. Fully Insured refers to a plan where an insurance company bears the risk, regardless of who pays the premium.
- B. A non-contributory plan means the employer pays 100% of the premiums for all eligible employees.
- D. Self-funded plans are those where the employer assumes the financial risk for providing health care benefits to its employees, rather than purchasing an insurance policy.
Contributory Group Plan
A type of group insurance plan where both the employer and employees share in the cost of the premiums. A minimum percentage of eligible employees (e.g., 75%) must typically participate for the plan to be effective.
- Employees pay a portion of the premium.
- Employer also contributes.
- Requires a minimum percentage of employee participation (e.g., 75%).
Memory trick: CONTRIBUTORY: Employees CONTRIBUTE money.