What type of group insurance plan requires employees to share the costs?

In a contributory plan, both the employer and the employees contribute to the premium costs of the insurance coverage. This shared approach often leads to lower individual costs since part of the burden is distributed among many participants. Employees typically need to enroll in this type of plan to participate, and their contributions are often taken from their paychecks.

This structure can incentivize participation, as employees might be more likely to engage in a plan where they understand they are sharing the costs with their employer. The contribution from employees can also enhance their sense of ownership and investment in the coverage provided.

Other plan types have different funding structures. A guaranteed issue plan, for example, typically involves the insurance provider covering all qualifying applicants without requiring any contributions from the employees. In a noncontributory plan, the employer pays the entire premium with no cost-sharing from the employees. Meanwhile, a universal plan is generally related to individual policies rather than group coverage. Understanding these distinctions is crucial for grasping how group insurance plans function in the workplace.