What is the minimum percentage of eligible members required for a non-contributory group plan to participate?

What is the minimum percentage of eligible members required for a non-contributory group plan to participate?

• A. 50%
• B. 75%
• C. 100%
• D. 25%

Answer: (C)

In a non-contributory group plan, the employer pays the entire premium, and typically, participation requirements are established to ensure a broad and stable risk pool. For such plans, it is generally required that a minimum percentage of eligible members must participate to avoid adverse selection and ensure the viability of the plan. In this context, the minimum participation requirement is often set at 75%, meaning that at least three-quarters of all eligible individuals must enroll for the plan to be in effect. This high participation rate helps to spread the risk among a larger group, ultimately benefiting both the insurer and the insured by keeping costs manageable and ensuring that the benefits are adequately funded. Options suggesting lower percentages—like 50%, 25%, or 100%—do not align with the typical regulations and standards for non-contributory group plans, which underlines why 75% is the correct threshold.

In a non-contributory group plan, the employer pays the entire premium, and typically, participation requirements are established to ensure a broad and stable risk pool. For such plans, it is generally required that a minimum percentage of eligible members must participate to avoid adverse selection and ensure the viability of the plan.

In this context, the minimum participation requirement is often set at 75%, meaning that at least three-quarters of all eligible individuals must enroll for the plan to be in effect. This high participation rate helps to spread the risk among a larger group, ultimately benefiting both the insurer and the insured by keeping costs manageable and ensuring that the benefits are adequately funded.

Options suggesting lower percentages—like 50%, 25%, or 100%—do not align with the typical regulations and standards for non-contributory group plans, which underlines why 75% is the correct threshold.