What best describes a noncontributory program?

What best describes a noncontributory program?

• A. A program financed entirely by general revenues with no mandatory contributions from participants
• B. A program funded by payroll taxes
• C. A program funded by private investments
• D. A program funded by user fees

Answer: (A)

Noncontributory programs are funded without requiring participants to pay into them. They rely on general revenues, like tax dollars, to support benefits rather than payroll deductions or user charges from participants themselves. So the statement describing this is: financed entirely by general revenues with no mandatory contributions from participants. A program funded by payroll taxes is contributory because workers contribute through payroll deductions. A program funded by private investments isn’t typical for public social programs. A program funded by user fees involves charges directly paid by beneficiaries, which counts as participant contributions, so it isn’t noncontributory.

Noncontributory programs are funded without requiring participants to pay into them. They rely on general revenues, like tax dollars, to support benefits rather than payroll deductions or user charges from participants themselves. So the statement describing this is: financed entirely by general revenues with no mandatory contributions from participants.

A program funded by payroll taxes is contributory because workers contribute through payroll deductions. A program funded by private investments isn’t typical for public social programs. A program funded by user fees involves charges directly paid by beneficiaries, which counts as participant contributions, so it isn’t noncontributory.