Contributory Group Plan
A group plan in which members pay part of the premium, typically requiring at least 75 percent of eligible members to participate.
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How does a contributory group health plan differ from a noncontributory group plan?
In a contributory plan, employees share the premium cost; in a noncontributory plan, the employer pays the entire premium — The contributory versus noncontributory distinction describes who pays the premium. In a contributory plan, both the employer and the covered employees contribute to the cost, and participation requirements usually apply, for example a minimum percentage of eligible employees must enroll to keep the plan in force. In a noncontributory plan, the employer pays 100 percent of the premium, and all eligible employees are typically covered automatically. This distinction affects enrollment rules, premium rates, and the employer's tax treatment of the plan.
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In a contributory group life insurance plan, the:
Employees pay part of the premium, typically requiring at least the insurer's minimum participation percentage for the plan to take effect — In a contributory group plan, employees share in the premium cost, with the employer paying part and covered employees contributing the rest. Because employee contributions make enrollment optional, insurers typically require that a minimum percentage of eligible employees participate to avoid adverse selection. In a noncontributory plan, the employer pays 100% of the premium and all eligible employees must be covered. Participation requirements protect the group's risk pool.
National insurance concept
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