What is the difference between contributory and noncontributory group coverage?

What is the difference between contributory and noncontributory group coverage?

• A. Contributory is funded by the employer alone.
• B. Noncontributory requires employee contributions.
• C. Contributory requires employee contributions; noncontributory is funded by the employer.
• D. Noncontributory means coverage only for retirees.

Answer: (C)

Contributory vs noncontributory group coverage is about who pays the premium. In a contributory plan, employees contribute toward the cost of the coverage (their portion is typically paid through payroll deductions, with the employer possibly covering part too). In a noncontributory plan, the employer pays the entire premium and the employee does not contribute toward the cost. This distinction affects how the plan is funded and how premiums are collected from employees.

Contributory vs noncontributory group coverage is about who pays the premium. In a contributory plan, employees contribute toward the cost of the coverage (their portion is typically paid through payroll deductions, with the employer possibly covering part too). In a noncontributory plan, the employer pays the entire premium and the employee does not contribute toward the cost. This distinction affects how the plan is funded and how premiums are collected from employees.