What is a potential impact of making a benefit plan contributory on employee participation?

The potential impact of making a benefit plan contributory on employee participation primarily revolves around the cost-sharing aspect associated with contributory plans. When employees are required to contribute financially to their benefit plans, this can lead to some employees deciding to opt out of the program due to the additional personal expense.

Cost can be a significant factor in employee decision-making regarding benefits. Some employees may feel that the amount they would have to pay is not worth the perceived benefits they would receive, especially if they are in good health or do not feel the need for certain types of coverage. Therefore, by making the plan contributory, the employer may inadvertently reduce overall participation as some employees choose to disengage from the benefit offerings.

This contrasts with the other options, where full participation cannot be guaranteed under a contributory plan. Simplifying administrative tasks for HR is not necessarily a direct result of making a plan contributory; in fact, it can sometimes complicate administration due to the need to track contributions. Additionally, while a contributory plan might encourage employees to select additional benefits, this effect is not guaranteed and depends on a variety of factors, such as how the benefits are structured and communicated.