Massachusetts Health & Accident Insurance Practice Exam

In a noncontributory plan, who pays the insurance premium?

1. Only the employees

2. Both the employer and employees

3. Only the employer

4. Insurance does not require premiums

The correct answer is: Only the employer

In a noncontributory plan, the employer is responsible for paying the entire insurance premium without requiring any contribution from the employees. This type of plan is structured to provide benefits solely funded by the employer, which simplifies the process for employees and ensures that they receive coverage without any cost to them. In contrast, contributory plans involve shared costs where both the employer and employees contribute to the premium payments. The option that states insurance does not require premiums is inaccurate since both noncontributory and contributory plans necessitate premium payments for coverage to be in effect. This understanding highlights the defining characteristic of a noncontributory plan, where the burden of premium payment falls solely on the employer, granting employees the benefit of coverage without any financial obligation on their part.