Certified Financial Consultant (CFC) Practice Exam

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What percentage of eligible employees must participate in a non-contributory health insurance plan before it can be effective?

  1. 75%

  2. 50%

  3. 100%

  4. 25%

The correct answer is: 100%

A non-contributory health insurance plan requires that the employer covers the entire cost of the premiums, meaning employees do not have to contribute financially to the plan. For such a plan to take effect, a complete participation rate, or 100% enrollment of eligible employees, is often required. This is to ensure that the insurance pool is adequately funded and spreads risk across all eligible participants. High participation minimizes the risk of adverse selection, where only those most likely to need health insurance enroll, potentially jeopardizing the plan's sustainability. Consequently, having all eligible employees participate fosters a more stable and financially sound insurance arrangement.

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