Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Health InsuranceEasy
An employer offers a group health plan where employees are required to pay a portion of the premium through payroll deductions. This type of plan typically has a lower participation requirement than plans where the employer pays 100% of the premium. What is this type of group health plan called?
- AFully insured plan
- BContributory plan
- CSelf-funded plan
- DNon-contributory plan
Show answer & explanationAnswer & explanation
Correct answer: B. Contributory plan
A contributory plan is one where both the employer and employee share the cost of the premiums. These plans typically have a lower employee participation requirement (e.g., 75%) compared to non-contributory plans.
Why the other options are wrong
- A. A fully insured plan refers to how the plan is funded (by an insurer), not how premiums are shared or participation rates.
- C. A self-funded plan refers to the employer bearing the risk directly, not how premiums are shared or participation rates.
- D. A non-contributory plan is where the employer pays 100% of the premium, often requiring 100% employee participation.
Contributory Group Health Plan
A group health insurance plan where both the employer and the employee contribute to the payment of premiums. These plans typically have a minimum percentage of eligible employees (e.g., 75%) that must enroll.
- Employer and employee share premium cost.
- Lower participation requirement (e.g., 75%).
- Common type of group plan.
Memory trick: Contributory: Contributions from all, not just the company.