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Participation Requirements
Most insurers impose a requirement that a certain percentage of eligible employees (often 75 percent) actually participate in the health care plan. Like contribution requirements, this requirement is designed to prevent what's known as "adverse selection" in which only those prone to sickness sign up for coverage, creating a much higher-risk group for the insurer. By requiring a certain percentage of eligible employees to sign up for the health plan, insurers aim to broaden the pool of covered employees and avoid high-risk groups.
These participation requirements may mean that smaller employers are often limited to offering a single health plan. If offering choice among plans is a high priority for you, consider purchasing alliances or talk to your broker about which plans have lower participation requirements.
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