In a contributory plan, what is required of the eligible employees?

In a contributory plan, eligibility requires that a portion of the employees participates in the insurance coverage. This means that while not every single eligible employee must be enrolled, there needs to be a minimum level of participation to ensure the plan remains viable and cost-effective. Contributory plans typically involve employees contributing to the premium costs, making it essential for a significant segment of the workforce to opt into the plan. This shared responsibility helps spread the risk among policyholders and allows for lower premiums compared to non-contributory plans, where the employer bears the full cost and all eligible employees are usually required to enroll.

In contrast, options that suggest all employees must participate or that employees can opt-out freely are not characteristics of contributory plans. Solely employer-funded plans would not require employee contributions at all and are thus classified differently, not meeting the definition of a contributory plan.