What percentage of eligible employees is required to participate in a noncontributory group health plan for it to be effective?

In a noncontributory group health plan, the employer pays the entire premium, and participation by employees is essential for the plan's effectiveness. To ensure that the group is representative and minimizes adverse selection, typically, 100% of eligible employees must participate in a noncontributory plan. This high participation rate is crucial because it allows the insurance company to better predict costs and distribute risk evenly among a larger pool of insured individuals.

When all eligible employees are enrolled, the plan can operate effectively by securing stable premium income and providing comprehensive coverage without the risk of a small group of higher-risk individuals disproportionately affecting the overall claims pool. This requirement underscores the significance of achieving 100% participation in maintaining both the viability of the group health plan and the financial stability for the insurer.