Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
In a contributory group health plan, which statement is correct?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A contributory group plan is one in which the employees contribute to the premium cost. Because employees are paying part of the cost, such plans typically require a minimum participation percentage (for example, 75%) and often minimum employer contribution levels, to keep the risk pool broad and prevent adverse selection. A noncontributory plan is paid entirely by the employer, and then all eligible employees must be covered.
Why the other options are wrong
- B) Paying the entire premium describes a noncontributory plan, and in noncontributory plans coverage of eligible employees is generally mandatory, not optional.
- C) A plan with no employer contribution at all is not the standard contributory model — the employer usually pays a substantial share.
- D) Insurer dividends do not fund employee premium contributions; the employer and employees fund the plan.
Memory hook
Contributory = everyone chips in (and the plan needs a crowd to work). Noncontributory = employer pays all, so everyone is in.