In a contributory plan, what percentage of eligible employees must participate?

In a contributory plan, what percentage of eligible employees must participate?

• A. 50%
• B. 75%
• C. 100%
• D. 25%

Answer: (B)

In a contributory plan, the requirement is that at least 75% of eligible employees must participate for the plan to be valid. This high participation rate is meant to ensure that the risk pool is large enough to provide coverage effectively while also allowing for contributions from employees to fund the benefits. This participation threshold helps maintain the financial stability of the insurance program, ensuring that premiums collected are sufficient to cover claims. Lower participation rates might lead to increased costs for those involved and could jeopardize the sustainability of the plan. Therefore, aiming for 75% participation aligns with the principles of risk management and collective sharing of costs among those participating in the plan.

In a contributory plan, the requirement is that at least 75% of eligible employees must participate for the plan to be valid. This high participation rate is meant to ensure that the risk pool is large enough to provide coverage effectively while also allowing for contributions from employees to fund the benefits. This participation threshold helps maintain the financial stability of the insurance program, ensuring that premiums collected are sufficient to cover claims.

Lower participation rates might lead to increased costs for those involved and could jeopardize the sustainability of the plan. Therefore, aiming for 75% participation aligns with the principles of risk management and collective sharing of costs among those participating in the plan.