California Life and Health Insurance Practice Exam

Which statement is correct regarding a non-contributory group health insurance plan?

1. It requires contributions from eligible members

2. It must cover all eligible members

3. It covers only a portion of eligible members

4. It is optional for employers to offer

The correct answer is: It must cover all eligible members

A non-contributory group health insurance plan is characterized by the requirement that all eligible members are covered without needing to contribute any premium towards the cost of the insurance. This means that the employer or the plan sponsor pays the full premium, which ensures that coverage is provided to everyone who qualifies under the group without financial burden on the members. This approach often leads to higher enrollment since everyone gains access to the benefits without direct costs to them. The other statements do not accurately reflect the principles of a non-contributory plan. Such plans are designed to include all eligible members, which contrasts with the first option that suggests member contributions are necessary. Additionally, the claim that it covers only a portion of eligible members undermines the foundational idea of non-contributory plans, which seek to ensure widespread coverage. While offering a non-contributory health plan is typically an option for employers, the statement regarding universal coverage defines its essence more specifically and correctly.