Which statement is true regarding Noncontributory Plans?

Noncontributory plans are characterized by the employer bearing the full cost of the insurance premiums. This means that every eligible employee is covered without any financial contribution from their side. This setup is particularly beneficial as it ensures that all eligible employees can receive coverage without the financial barrier that sometimes accompanies contributory plans, where employees share in the premium costs.

When discussing noncontributory plans, it is important to note that participation rates are expected to be high, typically around 100%. Since employees do not pay for a portion of the premium, the likelihood of participation increases significantly, which is vital for the plan's risk pool.

Additionally, under noncontributory plans, employees do not generally have the option to opt out of coverage solely based on their personal preference, as the employer mandates coverage for all eligible employees. This is fundamentally different from contributory plans, where employees may choose whether or not to participate based on their own circumstances and ability to pay.

Finally, noncontributory plans are generally considered more economical for the organization in terms of overall costs and administering higher participation rates, as opposed to being more expensive than contributory plans. In summary, the defining feature of noncontributory plans is that the employer pays all premiums, ensuring comprehensive