What do policyholders need to understand about Contributory plans?

In contributory plans, the key characteristic is that they involve shared premium payments between the employer and employees. This means that both parties contribute to the cost of the insurance premiums. Employees typically pay a portion of the premium through payroll deductions, while the employer covers the remaining amount. This shared responsibility not only helps to lower the overall cost of the insurance for the employer but also encourages employees to take part in the plan, as they have a vested interest in their own health coverage.

Understanding this aspect is crucial for policyholders, as it can influence how much they ultimately pay for coverage and the level of benefits they receive. Additionally, being aware that they are contributing toward their insurance can foster a sense of ownership and accountability regarding their healthcare options.

The other options do not accurately describe contributory plans. For instance, contributory plans do require contributions from employees, and they are not fully funded by the employer alone; rather, it is a partnership between both parties. Furthermore, contributory plans may or may not include dependents, depending on the specific policy details, which means that option about excluding dependents does not pertain to the defining nature of contributory plans.