Life · Chapter 8 · Plans & Participation
Contributory Plan
Definition
Employer AND employees share the premium cost. Employees must authorize payroll deduction. Insurers typically require at least 75% of eligible employees to participate — that 75% is an underwriting standard, not a Florida statute (no section of F.S. ch. 627 Part V sets a participation percentage), but it is the answer the exam expects.
In plain English
Workers chip in, so joining is optional — that's why the insurer demands 3 out of 4 sign up, to keep the healthy people in the pool.
Exam tip
Contributory = employees CONTRIBUTE = 75%. Noncontributory = employer pays all = 100%. Memorize the pair.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms