Which of the following describes a contributory plan?

A contributory plan refers to a type of insurance arrangement where both the employer and employees share the costs of the premiums. In this plan, employees typically pay a portion of the premium for their individual coverage, while the employer covers the remainder. This shared responsibility allows for lower costs for both parties compared to a non-contributory plan where the employer covers the entire premium.

The other choices do not accurately describe a contributory plan. When employers cover all insurance costs, it represents a non-contributory plan, which is different from a contributory one. Similarly, stating that coverage is free for all members or that no costs are associated with the plan implies that there is no premium contribution needed, contradicting the definition of a contributory plan. Thus, understanding that a contributory plan requires employee participation in premium payments is essential in distinguishing it from other types of insurance arrangements.