In a contributory plan, what percentage of eligible employees must participate when the premium is shared?

In a contributory plan, the requirement typically states that a certain percentage of eligible employees must participate in order for the plan to be valid, especially when the premiums are shared between the employer and employees. The correct answer indicates that 75% of eligible employees must participate.

This is significant because requiring a minimum participation level ensures that the risk is spread across a broad base, which can help keep premiums more stable and affordable. A higher percentage of participation often indicates a stronger commitment from the employer and employees towards the plan. By achieving this level of participation, the insurance provider is assured that the risk is adequately diversified, which minimizes the potential for adverse selection where only those expecting to use the insurance participate. Thus, 75% is a commonly accepted benchmark in many contributory plans, striking a balance between making it feasible for employees to opt in while still ensuring that a substantial number of participants are committed.