What is typically required for a Contributory Plan to take effect?

A Contributory Plan typically requires a minimum number of participating employees to take effect because the success and viability of such a plan depend on sufficient employee participation. In a contributory plan, both the employer and employees contribute to the premium costs. The participation threshold ensures that there is a broad base of enrolled employees, allowing the plan to function effectively and maintain its financial sustainability.

Having a minimum number of employees also helps in spreading the risk across a larger group, which can lead to more favorable premium rates and better coverage options. The requirement for employee participation distinguishes contributory plans from non-contributory plans, where the employer pays the entire premium without any contribution from the employees.