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Document Sample
UNOFFICIAL COPY AS OF 11/08/12 06 REG. SESS. 06 RS HB 401/HCS
AN ACT relating to public employee health insurance.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
Section 1. KRS 18A.225 is amended to read as follows:
(1) (a)[ The term "health maintenance organization" for the purposes of this section
means a health maintenance organization as defined in KRS 304.38-030 or as
a nonprofit hospital, medical-surgical, dental, and health service corporation,
which has been licensed by the Kentucky Health Facilities and Health
Services Certificate of Need and Licensure Board or its successor agency and
issued a certificate of authority by the Office of Insurance as a health
maintenance organization or as a nonprofit hospital, medical-surgical, dental,
and health service corporation and which is qualified under the requirements
of the United States Department of Health, Education and Welfare except as
provided in subsection (2) of this section; and
(b)] The term "health benefit plan" for the purposes of this section means a
health benefit plan as defined in KRS 304.17A-005;
(b) The term "insurer" for the purposes of this section means an insurer as
defined in KRS 304.17A-005; and
(c) The term "managed care plan" for the purposes of this section means a
managed care plan as defined in KRS 304.17A-500.
(d) The term "public employee" or "employee" for purposes of this section
means:
1. Any person, including an elected public official, who is regularly
employed by any department, office, board, agency, or branch of state
government; or by a public postsecondary educational institution; or by
any city, urban-county, charter county, county, or consolidated local
government, whose legislative body has opted to participate in the
Public Employee[state-sponsored] Health Insurance Program pursuant
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to KRS 79.080; and who is either a contributing member to any one (1)
of the retirement systems administered by the state, including but not
limited to the Kentucky Retirement Systems, Kentucky Teachers'
Retirement System, the Legislators' Retirement Plan, or the Judicial
Retirement Plan; or is receiving a contractual contribution from the state
toward a retirement plan; or, in the case of a public postsecondary
education institution, is an individual participating in an optional
retirement plan authorized by KRS 161.567;
2. Any certified or classified employee of a local board of education;
3. Any person who is a present or future recipient of a retirement
allowance from the Kentucky Retirement Systems, Kentucky Teachers'
Retirement System, the Legislators' Retirement Plan, the Judicial
Retirement Plan, or the Kentucky Community and Technical College
System's optional retirement plan authorized by KRS 161.567, except
that a person who is receiving a retirement allowance and who is age
sixty-five (65) or older shall not be included, with the exception of
persons covered under KRS 61.702(4)(c), unless he or she is actively
employed pursuant to subparagraph 1. of this paragraph; and
4. Any eligible dependents and beneficiaries of participating employees
and retirees who are entitled to participate in the Public Employee[state-
sponsored] Health Insurance Program. To the extent allowed by 42
U.S.C. sec. 1395y, Medicare shall be the primary coverage for
Medicare-eligible dependents of retirees who are entitled to participate
in the program. The program shall clearly communicate, in writing, to
all public employees information regarding when Medicare is primary
coverage.
(e) The term "Public Employee Health Insurance Program" or "program" for
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purposes of this section means the program, administered by the secretary
of the Personnel Cabinet, which shall offer health insurance coverage, on a
fully-insured or self-insured basis, to public employees.
(2) (a) The secretary of the Finance and Administration Cabinet, upon the
recommendation of the secretary of the Personnel Cabinet, shall procure, in
compliance with the provisions of KRS 45A.080, 45A.085, and 45A.090,
from one (1) or more insurers[health insurance companies or from one (1) or
more health maintenance organizations] authorized to do business in this
state, a group health benefit plan or plans[policy or policies of group health
care coverage], that may include but not be limited to health maintenance
organization (HMO), preferred provider organization (PPO), point of service
(POS), and exclusive provider organization (EPO) benefit plans encompassing
all or any class or classes of employees. With the exception of employers
governed by the provisions of KRS Chapters 16, 18A, and 151B, all
employers of any class of employees or former employees shall enter into a
contract with the Personnel Cabinet prior to including that group in the Public
Employee Health [state health] Insurance Program[ Group]. The contracts
shall include but not be limited to designating the entity responsible for filing
any federal forms, adoption of policies required for proper plan
administration, acceptance of the contractual provisions with health insurance
carriers or third-party administrators, and adoption of the payment and
reimbursement methods necessary for efficient administration of the health
insurance program. Health insurance coverage provided to state employees
under this section shall, at a minimum, contain the same benefits as provided
under Kentucky Kare Standard as of January 1, 1994, and shall include a mail-
order drug option as provided in[ subsection (14) of] this section. All
employees and other persons for whom the health benefit plans are[care
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coverage is] provided or made available shall annually be given an option to
elect[ health care coverage through a self-funded plan offered by the
Commonwealth or, if a self-funded plan is not available,] from a list of
coverage options, offered by one (1) or more insurers, determined by the
competitive bid process under the provisions of KRS 45A.080, 45A.085, and
45A.090 and reviewed by the Government Contract Review Committee
pursuant to KRS 45A.705, and made available during annual open
enrollment. The requirements for the fully insured plan are as follows:
1. The health benefit plan or plans, offered by a licensed insurer, shall
be approved by the executive director of insurance. The plan or plans
may contain the provisions he or she approves, whether or not
otherwise permitted by KRS Chapter 304;
2. Any insurer bidding to offer health insurance coverage to employees
shall agree to provide coverage to all employees covered under the
Public Employee Health Insurance Program, including active
employees and retirees and their eligible covered dependents and
beneficiaries, within the county or counties specified in its bid. Any
insurer bidding to offer health insurance coverage to employees shall
also agree to rate all employees as a single entity;
3. Any insurer bidding to offer health benefit plan coverage to employees
shall agree to provide enrollment, claims, and utilization data to the
Commonwealth in a format specified by the Personnel Cabinet with
the understanding that the data shall be owned by the
Commonwealth; to provide data in an electronic form and within a
time frame specified by the Personnel Cabinet; and to be subject to
penalties for noncompliance with data reporting requirements as
specified by the Personnel Cabinet. The Personnel Cabinet shall take
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strict precautions to protect the confidentiality of each individual
employee; however, confidentiality assertions shall not relieve an
insurer from the requirement of providing stipulated data to the
Commonwealth;
4. An insurer that restricts pharmacy benefits to a drug formulary shall
comply with and have an exceptions policy in accordance with KRS
304.17A-535. The insurer shall provide written notice of any
formulary change to the Personnel Cabinet fifteen (15) days before
implementation of any formulary change;
5. The health benefit plan coverage procured under this section shall
include a mail-order drug option for maintenance drugs for public
employees. Maintenance drugs may be dispensed by mail order in
accordance with Kentucky law. The mail-order option shall not permit
the dispensing of a controlled substance classified in Schedule II. An
insurer shall not discriminate against any retail pharmacy located
within the geographic coverage area of the health benefit plan and
that meets the terms and conditions for participation established by
the insurer, including price, dispensing fee, and copay requirements of
a mail-order option. The retail pharmacy shall not be required to
dispense by mail. The net cost to the plan for a quantity of
maintenance drugs dispensed by mail order shall not exceed the net
cost to the health benefit plan for the same quantity of the same drug
dispensed by a retail pharmacy under the terms and conditions
established for dispensing and reimbursement at retail;
6. Interruption of an established treatment regime with maintenance
drugs shall be grounds for an insured to appeal a formulary change
through the established appeal procedures approved by the Office of
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Insurance, if the physician supervising the treatment certifies that the
change is not in the best interests of the patient;
7. The Personnel Cabinet shall develop the necessary techniques and
capabilities for timely analysis of data received from insurers and, to
the extent possible, provide in the request-for-proposal specifics
relating to data requirements, electronic reporting, and penalties for
noncompliance. The Commonwealth shall own the enrollment,
claims, and utilization data provided by each insurer and shall develop
methods to protect the confidentiality of the individual; and
8. The Personnel Cabinet shall include in the October annual report
submitted pursuant to the provisions of KRS 18A.226 to the Governor,
the General Assembly, and the Chief Justice of the Supreme Court, an
analysis of the financial stability of the program, which shall include
but not be limited to loss ratios, methods of risk adjustment,
measurements of insurer quality of service, prescription coverage,
justification for formulary changes and pharmacy cost management,
and statutorially required mandates.
(b) If recommended by the secretary of the Personnel Cabinet, the secretary of
the Finance and Administration Cabinet, in lieu of contracting with one (1)
or more insurers licensed to do business in this state, shall procure, in
compliance with the provisions of KRS 45A.080, 45A.085, 45A.090, and
approved by the Government Contract Review Committee pursuant to KRS
45A.705, a contract with one (1) or more third party administrators,
licensed to do business in the Commonwealth pursuant to KRS 304.9-052,
to administer a self-insured plan offered by the program. The requirements
for the self-insured plan are as follows:
1. The secretary of the Personnel Cabinet shall establish the self-insured
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plan by regulation and incorporate by reference in the regulation,
pursuant to KRS 13A.2251, the summary plan description for public
employees covered under the self insured plan. Prior to filing an
administrative regulation with the Legislative Research Commission,
the secretary of the Personnel Cabinet shall submit the administrative
regulation to the secretary of the Cabinet for Health and Family
Services for review;
2. The self-insured plan offered by the Public Employee Health
Insurance Program shall comply with the utilization review statutes in
KRS 304.17A-600 to 304.17A-633 and any administrative regulations
promulgated thereunder;
3. The self-insured plan offered by the program shall cover hospice care
at least equal to the Medicare benefit;
4. The Personnel Cabinet shall provide written notice of any formulary
change, to employees covered under the self-insurance plan who are
directly impacted by the formulary change and to the Kentucky Group
Health Insurance Board, fifteen (15) days before implementation of
any formulary change. If, after consulting with his or her physician,
the employee still disagrees with the formulary change, the employee
shall have the right to appeal the change. The employee shall have
sixty (60) days from the date of the notice of the formulary change to
file an appeal with the Personnel Cabinet. The cabinet shall render a
decision within thirty (30) days from the receipt of the request for an
appeal. After a final decision is rendered by the Personnel Cabinet, the
employee shall have a right to file an appeal pursuant to the
utilization review statutes in KRS 304.17A-600 to 304.17A-633.
During the appeal process, the employee shall have the right to
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continue to take any drug, as prescribed by his or her physician, that
is the subject of the formulary change;
5. The Personnel Cabinet shall develop the necessary capabilities to
assure that an independent review of each formulary change is
conducted and includes but is not limited to an evaluation of the fiscal
impact and therapeutic benefit of the formulary change. The
independent review shall be conducted by knowledgeable medical
professionals and the results of any formulary change shall be posted
on the Web site of the Personnel Cabinet and the Cabinet for Health
and Family Services and made available to the public upon request
within thirty (30) days of the notice from the insurer required in
subparagraph (4) of this paragraph;
6. If the self-insured plan restricts pharmacy benefits to a drug
formulary, the plan shall comply with and have an exceptions policy
in accordance with KRS 304.17A-535;
7. The self-insured plan under this section shall include a mail-order
drug option for maintenance drugs for public employees.
Maintenance drugs may be dispensed by mail order in accordance
with Kentucky law. The mail-order option shall not permit the
dispensing of a controlled substance classified in Schedule II. The
program shall not discriminate against any retail pharmacy located
within the geographic coverage area of the plan that meets the terms
and conditions for participation established by the program, including
price, dispensing fee, and copay requirements of a mail-order option.
The retail pharmacy shall not be required to dispense by mail. The net
cost to the plan for a quantity of maintenance drugs dispensed by mail
order shall not exceed the net cost to the plan for the same quantity of
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the same drug dispensed by a retail pharmacy under the terms and
conditions established for dispensing and reimbursement at retail; and
8. If the Commonwealth offers a self-insured plan, a report shall be
provided pursuant to Section 7 of this Act.
[(b) The policy or policies shall be approved by the executive director of insurance
and may contain the provisions he approves, whether or not otherwise
permitted by the insurance laws.
(c) Any carrier bidding to offer health care coverage to employees shall agree to
provide coverage to all members of the state group, including active
employees and retirees and their eligible covered dependents and
beneficiaries, within the county or counties specified in its bid. Except as
provided in subsection (19) of this section, any carrier bidding to offer health
care coverage to employees shall also agree to rate all employees as a single
entity, except for those retirees whose former employers insure their active
employees outside the state-sponsored health insurance program.
(d) Any carrier bidding to offer health care coverage to employees shall agree to
provide enrollment, claims, and utilization data to the Commonwealth in a
format specified by the Personnel Cabinet with the understanding that the data
shall be owned by the Commonwealth; to provide data in an electronic form
and within a time frame specified by the Personnel Cabinet; and to be subject
to penalties for noncompliance with data reporting requirements as specified
by the Personnel Cabinet. The Personnel Cabinet shall take strict precautions
to protect the confidentiality of each individual employee; however,
confidentiality assertions shall not relieve a carrier from the requirement of
providing stipulated data to the Commonwealth.
(e) The Personnel Cabinet shall develop the necessary techniques and capabilities
for timely analysis of data received from carriers and, to the extent possible,
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provide in the request-for-proposal specifics relating to data requirements,
electronic reporting, and penalties for noncompliance. The Commonwealth
shall own the enrollment, claims, and utilization data provided by each carrier
and shall develop methods to protect the confidentiality of the individual. The
Personnel Cabinet shall include in the October annual report submitted
pursuant to the provisions of KRS 18A.226 to the Governor, the General
Assembly, and the Chief Justice of the Supreme Court, an analysis of the
financial stability of the program, which shall include but not be limited to
loss ratios, methods of risk adjustment, measurements of carrier quality of
service, prescription coverage and cost management, and statutorially required
mandates. If state self-insurance was available as a carrier option, the report
also shall provide a detailed financial analysis of the self-insurance fund
including, but not limited to, loss ratios, reserves, and reinsurance
agreements.]
(c)[(f)] If any agency participating in the Public[state-sponsored] Employee
Health Insurance Program for its active employees terminates participation
and there is a state appropriation for the employer's contribution for active
employees' health insurance coverage, then neither the agency nor the
employees shall receive the state-funded contribution after termination from
the Public[state-sponsored] Employee Health Insurance Program.
(d)[(g)] Any funds in flexible spending accounts that remain after all
reimbursements have been processed shall be transferred to the credit of the
Public Employee[state-sponsored] Health Insurance Program's trust fund
established in Section 7 of this Act[plan's appropriation account].
(e)[(h)] Each entity participating in the Public Employee[state-sponsored]
Health Insurance Program shall provide an amount at least equal to the state
contribution rate for the employer portion of the health insurance premium.
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For any participating entity that uses[used] the state payroll system, the
employer contribution amount shall be equal to but not greater than the state
contribution rate.
(f) The secretary of the Personnel Cabinet shall establish a provider network or
ensure that a provider network exists for retirees and other individuals
outside of Kentucky who are covered under the Public Employee Health
Insurance Program, whether the plan offered is fully insured or self-
insured.
(g) Premiums for all plans offered by the Public Employee Health Insurance
Program to employees shall be based on the combined experience of the
entire group.
(3) The secretary of the Finance and Administration Cabinet, upon the recommendation
of the secretary of the Personnel Cabinet, may procure from one (1) or more dental
insurance companies, or one (1) or more nonprofit hospital, medical-surgical,
dental, and health service corporations organized under Subtitle 32 of KRS Chapter
304,[ or one (1) or more prepaid dental plan organizations organized under Subtitle
43 of KRS Chapter 304,] a policy or policies of group dental insurance[ or prepaid
dental plan] coverage encompassing all or any class or classes of employees
covered under the Public Employee Health Insurance Program. All employees
for whom the dental insurance[ or prepaid dental plan] coverage is provided shall
annually be given an option to elect[ either] standard dental insurance coverage[ or
coverage by a prepaid dental plan]. The policy or policies shall be approved by the
executive director of insurance[ and may contain the provisions he approves,
whether or not otherwise permitted by the insurance laws]. It is intended that[
either] dental insurance[ or prepaid dental plan] coverage may be made available for
employees, except that the procuring of the insurance[each] is permissive.
(4) The premium for all plans offered under the Public Employee Health Insurance
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Program may be paid by the policyholder:
(a) Wholly from funds contributed by the employee, by payroll deduction or
otherwise;
(b) Wholly from funds contributed by any department, board, agency, public
postsecondary education institution, or branch of state, city, urban-county,
charter county, county, or consolidated local government; or
(c) Partly from each, except that any premium due for health benefit plan[care]
coverage, self-insured coverage, or dental coverage, if any, in excess of the
premium amount contributed by any department, board, agency,
postsecondary education institution, or branch of state, city, urban-county,
charter county, county, or consolidated local government for any other health
benefit plan[care] coverage, self-insured coverage, or dental coverage shall
be paid by the employee.
(5) If an employee moves his place of residence or employment out of the service area
of an insurer offering a managed health care plan, self-insured managed care
plan, or[ of a prepaid] dental plan, under which he has elected coverage, into either
the service area of another managed health care plan or[ prepaid] dental plan or into
an area of the Commonwealth not within a managed health care plan service area
or[ prepaid] dental plan service area, the employee shall be given an option, at the
time of the move or transfer, to change his or her coverage to another health
benefit[care] plan, self-insured managed care plan, or dental plan.
(6) No payment of premium by any department, board, agency, public postsecondary
educational institution, or branch of state, city, urban-county, charter county,
county, or consolidated local government shall constitute compensation to an
insured employee for the purposes of any statute fixing or limiting the
compensation of such an employee. Any premium or other expense incurred by any
department, board, agency, public postsecondary educational institution, or branch
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of state, city, urban-county, charter county, county, or consolidated local
government shall be considered a proper cost of administration.
(7) The policy or policies may contain the provisions with respect to the class or classes
of employees covered, amounts of insurance or coverage for designated classes or
groups of employees, policy options, terms of eligibility, and continuation of
insurance or coverage after retirement.
(8) Group rates under this section shall be made available to the disabled child of an
employee regardless of the child's age if the entire premium for the disabled child's
coverage is paid by the public[state] employee. A child shall be considered disabled
if he has been determined to be eligible for federal Social Security disability
benefits.
(9) The health care contract or contracts for employees, whether for fully-insured or
self-insured benefits, shall be entered into for a period of not less than one (1) year.
The plan year for the Public Employee Health Insurance Program, whether for
fully-insured or self-insured benefits, shall be on a calendar year basis.
(10) The secretary shall appoint thirty-two (32) persons to an Advisory Committee of
State Health Insurance Subscribers to advise the secretary or his designee regarding
the Public Employee[state-sponsored] Health Insurance Program for employees.
The secretary shall appoint, from a list of names submitted by appointing
authorities, members representing school districts from each of the seven (7)
Supreme Court districts, members representing state government from each of the
seven (7) Supreme Court districts, two (2) members representing retirees under age
sixty-five (65), one (1) member representing local health departments, two (2)
members representing the Kentucky Teachers' Retirement System, and three (3)
members at large. The secretary shall also appoint two (2) members from a list of
five (5) names submitted by the Kentucky Education Association, two (2) members
from a list of five (5) names submitted by the largest state employee organization of
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nonschool state employees, two (2) members from a list of five (5) names submitted
by the Kentucky Association of Counties, two (2) members from a list of five (5)
names submitted by the Kentucky League of Cities, and two (2) members from a
list of names consisting of five (5) names submitted by each state employee
organization that has two thousand (2,000) or more members on state payroll
deduction. The advisory committee shall be appointed in January of each year and
shall meet quarterly.
(11) Notwithstanding any other provision of law to the contrary, the policy or policies
provided to employees, whether fully-insured or self-insured[ pursuant to this
section] shall not provide coverage for obtaining or performing an abortion, nor
shall any state funds be used for the purpose of obtaining or performing an abortion
on behalf of employees or their dependents.
[(12) Interruption of an established treatment regime with maintenance drugs shall be
grounds for an insured to appeal a formulary change through the established appeal
procedures approved by the Office of Insurance, if the physician supervising the
treatment certifies that the change is not in the best interests of the patient.]
(12)[(13)] Any employee who is eligible for and elects to participate in the Public
Employee[state] Health Insurance Program as a retiree, or the spouse or beneficiary
of a retiree, under any one (1) of the state-sponsored retirement systems shall not be
eligible to receive the state health insurance contribution toward health care
coverage as a result of any other employment for which there is a public employer
contribution. This does not preclude a retiree and an active employee spouse from
using both contributions to the extent needed for purchase of one (1) public
employee[state sponsored] health insurance policy for that plan year.
[(14) (a) The policies of health insurance coverage procured under subsection (2) of
this section shall include a mail-order drug option for maintenance drugs for
state employees. Maintenance drugs may be dispensed by mail order in
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accordance with Kentucky law.
(b) A health insurer shall not discriminate against any retail pharmacy located
within the geographic coverage area of the health benefit plan and that meets
the terms and conditions for participation established by the insurer, including
price, dispensing fee, and copay requirements of a mail-order option. The
retail pharmacy shall not be required to dispense by mail.
(c) The mail-order option shall not permit the dispensing of a controlled
substance classified in Schedule II.]
(13)[(15)] The policy or policies provided to public[state] employees or their dependents
pursuant to this section shall provide coverage for obtaining a hearing aid and
acquiring hearing aid-related services for insured individuals under eighteen (18)
years of age, subject to a cap of one thousand four hundred dollars ($1,400) every
thirty-six (36) months pursuant to KRS 304.17A-132.
(14)[(16)] If a public[state] employee's residence and place of employment are in the
same county, and if the hospital located within that county does not offer surgical
services, intensive care services, obstetrical services, level II neonatal services,
diagnostic cardiac catheterization services, and magnetic resonance imaging
services, the employee may select a plan available in a contiguous county that does
provide those services, and the state contribution for the plan shall be the amount
available in the county where the plan selected is located.
(15)[(17)] If a public[state] employee's residence and place of employment are each
located in counties in which the hospitals do not offer surgical services, intensive
care services, obstetrical services, level II neonatal services, diagnostic cardiac
catheterization services, and magnetic resonance imaging services, the employee
may select a plan available in a county contiguous to the county of residence that
does provide those services, and the state contribution for the plan shall be the
amount available in the county where the plan selected is located.
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(16)[(18)] The Personnel Cabinet is encouraged to study whether it is fair and reasonable
and in the best interests of the program[state group] to allow any carrier bidding to
offer health care coverage under this section to submit bids that may vary county by
county or by larger geographic areas.
[(19) Notwithstanding any other provision of this section, the bid for proposals for health
insurance coverage for calendar year 2004 shall include a bid scenario that reflects
the statewide rating structure provided in calendar year 2003 and a bid scenario that
allows for a regional rating structure that allows carriers to submit bids that may
vary by region for a given product offering as described in this subsection:
(a) The regional rating bid scenario shall not include a request for bid on a
statewide option;
(b) The Personnel Cabinet shall divide the state into geographical regions which
shall be the same as the partnership regions designated by the Department for
Medicaid Services for purposes of the Kentucky Health Care Partnership
Program established pursuant to 907 KAR 1:705;
(c) The request for proposal shall require a carrier's bid to include every county
within the region or regions for which the bid is submitted and include but not
be restricted to a preferred provider organization (PPO) option;
(d) If the Personnel Cabinet accepts a carrier's bid, the cabinet shall award the
carrier all of the counties included in its bid within the region. If the Personnel
Cabinet deems the bids submitted in accordance with this subsection to be in
the best interests of state employees in a region, the cabinet may award the
contract for that region to no more than two (2) carriers; and
(e) Nothing in this subsection shall prohibit the Personnel Cabinet from including
other requirements or criteria in the request for proposal.]
Section 2. KRS 79.080 is amended to read as follows:
(1) (a) The term "health benefit plan" for the purposes of this section means a
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health benefit plan as defined in KRS 304.17A-005;
(b) The term "insurer" for the purposes of this section means an insurer as
defined in KRS 304.17A-005; and
(c) The term "managed care plan" for the purposes of this section means a
managed care plan as defined in KRS 304.17A-500[The term "health
maintenance organization" for the purposes of this section, means a health
maintenance organization as defined in KRS 304.38-030, which has been
licensed by the Kentucky Health Facilities and Health Services Certificate of
Need and Licensure Board and issued a certificate of authority by the Office
of Insurance as a health maintenance organization and which is qualified
under the requirements of the United States Department of Health, Education
and Welfare, except as provided in subsection (4) of this section].
(2) Cities of all classes, counties, and urban-county governments and the agencies of
cities, counties, charter county, and urban-county governments are authorized to
establish and operate plans for the payment of retirement, disability, health benefit
plan[maintenance organization] coverage, or health insurance[hospitalization]
benefits to their employees and elected officers, and health benefit
plan[maintenance organization] coverage or health insurance[hospitalization]
benefits to the immediate families of their employees and elected officers. The plan
may require employees to pay a percentage of their salaries into a fund from which
coverage or benefits are paid, or the city, county, charter county, urban-county
government, or agency may pay out of its own funds the entire cost of the coverage
or benefits. A plan may include a combination of contributions by employees and
elected officers and by the city, county, charter county, urban-county government,
or agency into a fund from which coverage or benefits are paid, or it may take any
form desired by the city, county, charter county, urban-county government, or
agency. Each city, county, charter county, urban-county government, or agency may
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make rules and regulations and do all other things necessary in the establishment
and operation of the plan.
(3) Cities of all classes, counties, charter counties, urban-county governments, the
agencies of cities, counties, charter counties, and urban-county governments, and all
other political subdivisions of the state may provide disability, health benefit plan,
health insurance[hospitalization], or other health or medical care coverage to their
officers and employees, including their elected officers, through independent or
cooperative self-insurance programs and may cooperatively purchase the coverages.
(4) Any city, county, charter county, or urban-county government which is a
contributing member to any one (1) of the retirement systems administered by the
state may participate in the public employee[state] health insurance[ coverage]
program for public[state] employees as defined in Section 1 of this Act[KRS
18A.225 to 18A.229]. Should any city, county, charter county, or urban-county
government opt at any time to participate in the public employee[state] health
insurance[ coverage] program, it shall do so for a minimum of three (3) consecutive
years. If after the three (3) year participation period, the city, county, charter county,
or urban-county government chooses to terminate participation in the public
employee[state] health insurance[ coverage] program, it will be excluded from
further participation for a period of three (3) consecutive years. If a city, county,
charter county, or urban-county government, or one (1) of its agencies, terminates
participation of its active employees in the public employee[state] health insurance[
coverage] program and there is a state appropriation for the employer's contribution
for active employees' health insurance coverage, neither the unit of government, or
its agency, nor the employees shall receive the state-funded contribution after
termination from the public[state] employee health insurance program. The three
(3) year participation and exclusion cycles shall take effect each time a city, county,
charter county, or urban-county government changes its participation status.
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(5) Any city, county, charter county, urban-county government, or other political
subdivision of the state which employs more than twenty-five (25) persons and
which provides health insurance[hospitalization] benefits or health benefit
plan[maintenance organization] coverage to its employees and elected officers,
shall annually give its employees an option to elect either health
insurance[standard hospitalization] benefits or elect coverage from an insurer
offering a managed care plan[membership in a qualified health maintenance
organization] which is engaged in providing basic health services in a managed
care[health maintenance] service area in which at least twenty-five (25) of the
employees reside[; except that if any city, county, charter county, urban-county
government, or agencies of any city, county, charter county, urban-county
government, or any other political subdivision of the state which does not have a
qualified health maintenance organization engaged in providing basic health
services in a health maintenance service area in which at least twenty-five (25) of
the employees reside, the city, county, charter county, urban-county government, or
agencies of the city, county, charter county, urban-county government, or any other
political subdivision of the state may annually give its employees an option to elect
either standard hospitalization benefits or membership in a health maintenance
organization which has been licensed by the Kentucky Health Facilities and Health
Services Certificate of Need and Licensure Board and issued a certificate of
authority by the Office of Insurance as a health maintenance organization and which
is engaged in providing basic health services in a health maintenance service area in
which at least twenty-five (25) of the employees reside]. Any premium due for
managed care plan[health maintenance organization] coverage over the amount
contributed by the city, county, charter county, urban-county government, or other
political subdivision of the state which employs more than twenty-five (25) persons
for any other health insurance[hospitalization] benefit shall be paid by the
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employee.
(6) If an employee moves his place of residence or employment out of the service area
of an insurer offering a managed care plan[a health maintenance organization],
under which he has elected coverage, into either the service area of another insurer
offering a managed care plan[health maintenance organization] or into an area of
the state not within a managed care plan[health maintenance organization] service
area, the employee shall be given an option, at the time of the move or transfer, to
elect coverage either by the insurer offering a managed care plan[health
maintenance organization] into which service area he moves or is transferred or to
elect health insurance[standard hospitalization] coverage offered by the employer.
(7) Any plan adopted shall provide that any officer or member of a paid fire or police
department who has completed five (5) years or more as a member of the
department, but who is unable to perform his duties by reason of heart disease or
any disease of the lungs or respiratory tract, is presumed to have contracted his
disease while on active duty as a result of strain or the inhalation of noxious fumes,
poison or gases, and shall be retired by the pension board under terms of the
pension system of which he is a member, if the member passed an entrance physical
examination and was found to be in good health as required.
(8) The term "agency" as used herein shall include boards appointed to operate
waterworks, electric plants, hospitals, airports, housing projects, golf courses, parks,
health departments, or any other public project.
(9) After August 1, 1988, except as permitted by KRS 65.156, no new retirement plan
shall be created pursuant to this section, and cities which were covered by this
section on or prior to August 1, 1988, shall participate in the County Employees
Retirement System effective August 1, 1988. Any city, county, charter county,
urban-county, or agency thereof which provided a retirement plan for its employees,
pursuant to this section, on or prior to August 1, 1988, shall place employees hired
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after August 1, 1988, in the County Employees Retirement System. The city,
county, charter county, urban-county, or agency thereof shall offer employees hired
on or prior to August 1, 1988, membership in the County Employees Retirement
System under the alternate participation plan as described in KRS 78.530(3), but
such employees may elect to retain coverage under this section.
Section 3. KRS 61.702 is amended to read as follows:
(1) (a) The board of trustees of Kentucky Retirement Systems shall arrange by
appropriate contract or on a self-insured basis to provide a group
health[hospital and medical] insurance plan for present and future recipients
of a retirement allowance from the Kentucky Employees Retirement System,
County Employees Retirement System, and State Police Retirement System,
except as provided in subsection (8) of this section. The board shall also
arrange to provide health insurance[care] coverage through an insurer
licensed pursuant to Subtitle 38 of KRS Chapter 304 and offering a
managed care plan as defined in KRS 304.17A-500[by health maintenance
organizations, as defined in KRS 18A.225], as an alternative to group
health[hospital and medical] insurance for any person eligible for
health[hospital and medical] benefits under this section. Any person who
chooses coverage under a managed care plan[by a health maintenance
organization] shall pay, by payroll deduction from the retirement allowance or
by another method, the difference in premium between the cost of the
managed care plan[health maintenance organization] coverage and the
benefits to which he would be entitled under this section.
(b) The board may authorize present and future recipients of a retirement
allowance from any of the three (3) retirement systems to be included in the
Public Employee Health Insurance Program[state employees' group] for
health[hospital and medical] insurance and shall provide benefits for
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recipients equal to those provided to public[state] employees having the same
Medicare hospital and medical insurance eligibility status, except as provided
in subsection (8) of this section. Notwithstanding the provisions of any other
statute, recipients shall be included in the same class as current public[state]
employees in determining health[medical] insurance policies and premiums.
(c) For recipients of a retirement allowance who are not eligible for the same
level of hospital and medical benefits as recipients living in Kentucky having
the same Medicare hospital and medical insurance eligibility status, the board
shall provide a medical insurance reimbursement plan as described in
subsection (7) of this section.
(2) Each employer participating in the State Police Retirement System as provided for
in KRS 16.510 to 16.652, each employer participating in the County Employees
Retirement System as provided in KRS 78.510 to 78.852, and each employer
participating in the Kentucky Employees Retirement System as provided for in KRS
61.510 to 61.705 shall contribute to the Kentucky Retirement Systems insurance
fund the amount necessary to provide health[hospital and medical] insurance as
provided for under this section. Such employer contribution rate shall be developed
by appropriate actuarial method as a part of the determination of each respective
employer contribution rate to each respective retirement system determined under
KRS 61.565.
(3) (a) The premium required to provide health insurance[hospital and medical]
benefits under this section shall be paid:
1. Wholly or partly from funds contributed by the recipient of a retirement
allowance, by payroll deduction, or otherwise;
2. Wholly or partly from funds contributed by the Kentucky Retirement
Systems insurance fund;
3. Wholly or partly from funds contributed by another state-administered
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retirement system under a reciprocal arrangement, except that any
portion of the premium paid from the Kentucky Retirement Systems
insurance fund under a reciprocal agreement shall not exceed the amount
that would be payable under this section if all the member's service were
in one (1) of the systems administered by the Kentucky Retirement
Systems;
4. Partly from subparagraphs 1., 2., or 3., except that any premium for
health[hospital and medical] insurance over the amount contributed by
the Kentucky Retirement Systems insurance fund or another state-
administered retirement system under a reciprocal agreement shall be
paid by the recipient. If the board provides for cross-referencing of
insurance premiums, the employer's contribution for the working
member or spouse shall be applied toward the premium, and the
Kentucky Retirement Systems insurance fund shall pay the balance, not
to exceed the monthly contribution.
5. In full from the Kentucky Retirement Systems insurance fund for all
recipients of a retirement allowance from any of the three (3) retirement
systems where such recipient is a retired former member of one (1) or
more of the three (3) retirement systems (not a beneficiary or dependent
child receiving benefits) and had two hundred and forty (240) months or
more of service upon retirement. Should such recipient have less than
two hundred forty (240) months of service but have at least one hundred
eighty (180) months of service, seventy-five percent (75%) of such
premium shall be paid from the insurance fund provided such recipient
agrees to pay the remaining twenty-five percent (25%) by payroll
deduction from his retirement allowance or by another method. Should
such recipient have less than one hundred eighty (180) months of service
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but have at least one hundred twenty (120) months of service, fifty
percent (50%) of such premium shall be paid from the insurance fund
provided such recipient agrees to pay the remaining fifty percent (50%)
by payroll deduction from his retirement allowance or by another
method. Should such recipient have less than one hundred twenty (120)
months of service but have at least forty-eight (48) months of service,
twenty-five percent (25%) of such premium shall be paid from the
insurance fund provided such recipient agrees to pay the remaining
seventy-five percent (75%) by payroll deduction from his retirement
allowance or by another method. Notwithstanding the foregoing
provisions of this subsection, an employee participating in one (1) of the
retirement systems administered by the Kentucky Retirement Systems
who becomes disabled in the line of duty as defined in KRS 16.505(19)
or KRS 61.621, shall have his premium paid in full as if he had two
hundred forty (240) months or more of service. Further, an employee
participating in one (1) of the retirement systems administered by the
Kentucky Retirement Systems who is killed in the line of duty as
defined in KRS 16.505(19) or KRS 61.621, shall have the premium for
the beneficiary, if the beneficiary is the member's spouse, and for each
dependent child paid so long as they individually remain eligible for a
monthly retirement benefit. "Months of service" as used in this section
shall mean the total months of combined service used to determine
benefits under any or all of the three (3) retirement systems, except
service added to determine disability benefits shall not be counted as
"months of service." For current and former employees of the Council
on Postsecondary Education who were employed prior to January 1,
1993, and who earn at least fifteen (15) years of service credit in the
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Kentucky Employees Retirement System, "months of service" shall also
include vested service in another retirement system other than the
Kentucky Teachers' Retirement System sponsored by the Council on
Postsecondary Education.
(b) For a member electing insurance coverage through the Kentucky Retirement
Systems, "months of service" shall include, in addition to service as described
in paragraph (a) of this subsection, service credit in one of the other state-
administered retirement plans.
1. Effective August 1, 1998, the Kentucky Retirement Systems shall
compute the member's combined service, including service credit in
another state-administered retirement plan, and calculate the portion of
the member's premium to be paid by the insurance fund, according to the
criteria established in paragraph (a) of this subsection. Each state-
administered retirement plan annually shall pay to the insurance fund the
percentage of the system's cost of the retiree's monthly contribution for
single coverage for health[hospital and medical] insurance which shall
be equal to the percentage of the member's number of months of service
in the other state-administered retirement plan divided by his total
combined service. The amounts paid by the other state-administered
retirement plans and the insurance fund shall not be more than one
hundred percent (100%) of the monthly contribution adopted by the
respective boards of trustees.
2. A member may not elect coverage for health insurance[hospital and
medical] benefits under this subsection through more than one (1) of the
state-administered retirement plans.
3. A state-administered retirement plan shall not pay any portion of a
member's monthly contribution for health[medical] insurance unless the
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member is a recipient or annuitant of the plan.
(4) (a) Group rates under the health[hospital and medical] insurance plan shall be
made available to the spouse, each dependent child, and each disabled child,
regardless of the disabled child's age, of a recipient who is a former member
or the beneficiary, if the premium for the health[hospital and medical]
insurance for the spouse, each dependent child, and each disabled child, or
beneficiary is paid by payroll deduction from the retirement allowance or by
another method. A child shall be considered disabled if he has been
determined to be eligible for federal Social Security disability benefits.
(b) The other provisions of this section notwithstanding, the insurance fund shall
pay a percentage of the monthly contribution for the spouse and for each
dependent child of a recipient who was a member of the General Assembly
and is receiving a retirement allowance based on General Assembly service, of
the Kentucky Employees Retirement System and determined to be in a
hazardous position, of the County Employees Retirement System, and
determined to be in a hazardous position or of the State Police Retirement
System. The percentage of the monthly contribution paid for the spouse and
each dependent child of a recipient who was in a hazardous position shall be
based solely on the member's service with the State Police Retirement System
or service in a hazardous position using the formula in subsection (3)(a) of
this section, except that for any recipient of a retirement allowance from the
County Employees Retirement System who was contributing to the system on
January 1, 1998, for service in a hazardous position, the percentage of the
monthly contribution shall be based on the total of hazardous service and any
nonhazardous service as a police or firefighter with the same agency, if that
agency was participating in the County Employees Retirement System but did
not offer hazardous duty coverage for its police and firefighters at the time of
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initial participation.
(c) The insurance fund shall continue the same level of coverage for a recipient
who was a member of the County Employees Retirement System after the age
of sixty-five (65) as before the age of sixty-five (65), if the recipient is not
eligible for Medicare coverage. If the insurance fund provides coverage for the
spouse or each dependent child of a former member of the County Employees
Retirement System, the insurance fund shall continue the same level of
coverage for the spouse or each dependent child after the age of sixty-five (65)
as before the age of sixty-five (65), if the spouse or dependent child is not
eligible for Medicare coverage.
(5) After July 1, 1998, notwithstanding any other provision to the contrary, a member
who holds a judicial office but did not elect to participate in the Judicial Retirement
Plan and is participating instead in the Kentucky Employees Retirement System, the
County Employees Retirement System, or the State Police Retirement System, as
provided in KRS 61.680, and who has at least twenty (20) years of total service,
one-half (1/2) of which is in a judicial office, shall receive the same health[hospital
and medical] insurance benefits, including paid benefits for spouse and dependents,
as provided to persons retiring under the provisions of KRS 21.427. The
Administrative Office of the Courts shall pay the cost of the health[medical]
insurance benefits provided by this subsection.
(6) Premiums paid for health[hospital and medical] insurance coverage procured under
authority of this section shall be exempt from any premium tax which might
otherwise be required under KRS Chapter 136. The payment of premiums by the
insurance fund shall not constitute taxable income to an insured recipient. No
commission shall be paid for health[hospital and medical] insurance procured
under authority of this section.
(7) The board shall promulgate an administrative regulation to establish a
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health[medical] insurance reimbursement plan to provide reimbursement for
health[hospital and medical] insurance premiums of recipients of a retirement
allowance who are not eligible for the same level of health[hospital and medical]
benefits as recipients living in Kentucky and having the same Medicare hospital and
medical insurance eligibility status. An eligible recipient shall file proof of payment
for health[hospital and medical] insurance at the retirement office. Reimbursement
to eligible recipients shall be made on a quarterly basis. The recipient shall be
eligible for reimbursement of substantiated health[medical] insurance premiums for
an amount not to exceed the total monthly premium determined under subsection
(3) of this section. The plan shall not be made available if all recipients are eligible
for the same coverage as recipients living in Kentucky.
(8) For employees having a membership date on or after July 1, 2003, participation in
the insurance benefits provided under this section shall not be allowed until the
employee has earned at least one hundred twenty (120) months of service in the
state-administered retirement systems.
(a) An employee who earns at least one hundred twenty (120) months of service
in the state-administered retirement systems shall be eligible for benefits as
follows:
1. For employees who are not in a hazardous position, a monthly insurance
contribution of ten dollars ($10) for each year of service as a
participating employee.
2. For employees who are in a hazardous position or who participate in the
State Police Retirement System, a monthly insurance contribution of
fifteen dollars ($15) for each year of service as a participating employee
in a hazardous position or as a participating member of the State Police
Retirement System. Upon the death of the retired member, the
beneficiary, if the beneficiary is the member's spouse, shall be entitled to
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a monthly insurance contribution of ten dollars ($10) for each year of
service the member attained as a participating employee in a hazardous
position or as a participating member of the State Police Retirement
System.
(b) The one hundred twenty (120) months of service requirement shall be waived
for a member who is disabled or killed in the line of duty as defined in KRS
16.505(19) or KRS 61.621, and the member or his beneficiary shall be entitled
to the benefits payable under this subsection as though the member had twenty
(20) years of service in a hazardous position.
(c) The monthly insurance contribution amount shall be increased July 1 of each
year by the percentage change in the annual average of the consumer price
index for all urban consumers for the most recent calendar year as published
by the federal Bureau of Labor Statistics, not to exceed five percent (5%). The
increase shall be cumulative and shall continue to accrue after the member's
retirement for as long as a monthly insurance contribution is payable to the
retired member or beneficiary.
(d) The benefits of this subsection provided to a member whose participation
begins on or after July 1, 2003, shall not be considered as benefits protected
by the inviolable contract provisions of KRS 61.692, 16.652, and 78.852. The
General Assembly reserves the right to suspend or reduce the benefits
conferred in this subsection if in its judgment the welfare of the
Commonwealth so demands.
Section 4. KRS 161.675 is amended to read as follows:
(1) The board of trustees shall arrange by appropriate contract or on a self-insured basis
to provide a broad program of group hospital and medical insurance for present and
future eligible recipients of a retirement allowance from the Teachers' Retirement
System. The board of trustees may also arrange to provide health insurance
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coverage through an insurer licensed pursuant to Subtitle 38 of KRS Chapter 304
and offering a managed care plan as defined in KRS 304.17A-500[by health
maintenance organizations as defined in KRS 18A.225] as an alternative to group
health[hospital and medical] insurance for persons eligible for health[hospital and
medical] benefits under this section. The board of trustees may authorize present
and future eligible recipients of a retirement allowance from the Teachers'
Retirement System who are less than age sixty-five (65) to be included in the
program[state-sponsored health insurance] that is provided to active teachers and
public[state] employees under Section 1 of this Act[KRS 18A.225]. Members who
are sixty-five (65) or older and retired for service shall not be eligible to participate
in the public[state] employee health insurance program as described in Section 1 of
this Act[KRS 18A.225].
(2) The coverage provided shall be as set forth in the contracts and the administrative
regulations of the board of trustees. The board of trustees may change the levels of
coverage and eligibility conditions to meet the changing needs of the annuitants and
when necessary to contain the expenses of the insurance program within the funds
available to finance the insurance program. The contracts and administrative
regulations shall provide for but not be limited to hospital room and board, surgical
procedures, doctors' care in the hospital, and miscellaneous hospital costs. An
annuitant whose effective date of retirement is July 1, 1974, and thereafter, must
have a minimum of five (5) years' creditable Kentucky service in the Teachers'
Retirement System or five (5) years of combined creditable service in the state-
administered retirement systems if the member is retiring under the reciprocity
provisions of KRS 61.680 and 61.702. A member retiring under the reciprocity
provisions of KRS 61.680 and 61.702 may not elect coverage through more than
one (1) of the state-administered retirement systems. The board of trustees shall
offer coverage to the disabled child of an annuitant regardless of the disabled child's
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age if the annuitant pays the entire premium for the disabled child's coverage. A
child shall be considered disabled if he has been determined to be eligible for
federal Social Security disability benefits.
(3) All expenses for benefits under this section shall be paid from the funding
provisions contained in KRS 161.420(5), premium charges received from the
annuitants and the spouses, and from funds that may be appropriated or allocated by
statute.
(4) (a) The board of trustees shall determine the amount of health insurance supplement
payments that the Teachers' Retirement System will provide to assist eligible
annuitants in paying the cost of their health insurance, based on the funds
available in the medical insurance fund. The board of trustees shall establish
the maximum monthly amounts of health insurance supplement payments that
will be made by the retirement system for eligible annuitants. The board of
trustees shall annually establish the percentage of the maximum monthly
health insurance supplement payment that will be made, based on age and
years of service credit of eligible recipients of a retirement allowance.
Monthly health insurance supplement payments made by the retirement
system may not exceed the amount of the single coverage insurance premium
chosen by the eligible annuitants. In order to qualify for health insurance
supplements made by the retirement system, the annuitant must agree to pay
the difference between the insurance premium and the applicable supplement
payment, by payroll deduction from his retirement allowance, or by a payment
method approved by the retirement system.
(b) The board of trustees may offer, on a full-cost basis, health care insurance
coverage provided by the retirement system to spouses and dependents of
eligible annuitants not otherwise eligible for regular coverage. Recipients of a
retirement allowance from the retirement system must agree to pay the cost of
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this coverage by payroll deduction from their retirement allowance or by a
payment method approved by the retirement system.
(c) The board of trustees shall offer, on a full-cost basis, health insurance
coverage provided by the retirement system to the disabled child of an
annuitant, regardless of the age of the disabled child. A child shall be
considered disabled for purposes of this section if the child has been
determined to be eligible for federal Social Security disability benefits.
(5) The board of trustees is empowered to require the annuitant and the annuitant's
spouse to pay a premium charge to assist in the financing of the health[hospital and
medical] insurance program. The board of trustees is empowered to pay the
expenses for insurance coverage from the medical insurance fund, from the
premium charges received from the annuitants and the spouses, and from funds that
may be appropriated or allocated by statute. The board may provide insurance
coverage by making payment to insurance carriers including health insurance plans
that are available to active and retired public[state] employees and active teachers,
institutions, and individuals for services performed, or the board of trustees may
elect to provide insurance on a "self-insurance" basis or a combination of these
provisions.
(6) The board of trustees may approve health insurance supplement payments to
eligible annuitants who are less than sixty-five (65) years of age, as reimbursement
for health[hospital and medical] insurance premiums made by annuitants for their
individual coverage. Eligible annuitants or recipients are those annuitants who are
not eligible for Medicare and who do not reside in Kentucky or in an area outside of
Kentucky where comparable coverage is available. The reimbursement payments
shall not exceed the minimum supplement payment that would have been made had
the annuitant lived in Kentucky. Eligible annuitants or recipients shall submit proof
of payment to the retirement system for health[hospital and medical] insurance that
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they have obtained. Reimbursement payments shall be made on a quarterly basis.
(7) Contracts negotiated may include the provision that a stated amount of hospital cost
or period of hospitalization shall incur no obligation on the part of the insurance
carrier or the retirement system.
(8) The board of trustees is empowered to promulgate administrative regulations to
assure efficient operation of the health[hospital and medical] insurance program.
(9) Premiums paid for health[hospital and medical] insurance coverage procured under
authority of this section shall be exempt from any premium tax which might
otherwise be required under KRS Chapter 136. The payment of premiums by the
insurance fund shall not constitute taxable income to an insured recipient.
(10) In the event that a member is providing services on less than a full-time basis under
KRS 161.605, the retirement system may pay the full cost of the member's health
insurance coverage for the full fiscal year that the member is providing those
services, at the conclusion of which, the retirement system may then bill the active
employer and the active employer shall reimburse the retirement system for the cost
of the health insurance coverage incurred by the retirement system on a pro rata
basis for the time that the member was employed by the active employer.
Section 5. KRS 18A.2255 is amended to read as follows:
(1) The secretary of the Personnel Cabinet shall submit to the Advisory Committee of
State Health Insurance Subscribers established in KRS 18A.225, at least sixty
(60)[thirty (30)] days prior to issuing requests for proposals, the health benefit plans
that will be submitted to carriers and third party administrators. The secretary of
the Personnel Cabinet shall also provide to employee organizations who are
represented on the Advisory Committee of State Health Insurance Subscribers
information necessary so that the member representing the organization can fulfill
his or her responsibilities under this section. The advisory committee shall submit in
writing to the secretary the committee's approval of the plans or its
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recommendations on changes to the plans no later than fifteen (15)[seven (7)] days
prior to the issuance of requests for proposals. The advisory committee shall advise
the secretary on:
(a) Health insurance benefit options that should be included in the program;
(b) Procedures for soliciting bids or requesting proposals for contracts from
carriers for the program;
(c) The implementation, maintenance, and administration of the health insurance
benefits under the program; and
(d) The development of a uniform prescription drug formulary that contains fair
and reasonable standards and procedures for patient access to medically
necessary alternatives to the formulary and patient choice of higher-cost
alternatives to the formulary, and that ensures that discounts negotiated with
drug manufacturers are passed to the program.
(2) The secretary of the Personnel Cabinet shall, at the discretion of the co-chairs of the
Interim Joint Committee on Appropriations and Revenue, either submit a written
report to or testify before the Interim Joint Committee on Appropriations and
Revenue on the public[state] employee health insurance program for the next plan
year prior to the issuance of the requests for proposals.
SECTION 6. A NEW SECTION OF KRS CHAPTER 18A IS CREATED TO
READ AS FOLLOWS:
(1) In addition to any fully-insured health benefit plans or self-insured plans, the
Public Employee Health Insurance Program may offer a high deductible health
benefit plan that would qualify to be offered with a health savings account as
described in 26 U.S.C. sec. 223.
(2) In addition to any fully-insured health benefit plans or self-insured plans, the
program shall offer a health reimbursement arrangement. If an employee waives
coverage under the program, the employer shall forward an amount, to be
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prescribed by administrative regulation, for that employee as an employer
contribution to a health reimbursement arrangement for the benefit of that
employee.
(3) In addition to any employer contribution to a health reimbursement arrangement
or health savings account the Personnel Cabinet may collect from the employer
the necessary funds to offset any administrative fees associated with a health
savings account or health reimbursement arrangement. Public employees shall
not be required to pay any administrative fees associated with these accounts or
arrangements offered by the program.
(4) Premiums for all plans, offered by the Public Employee Health Insurance
Program to employees as defined in Section 1 of this Act, shall be based on the
combined experience of the entire public employee health insurance group.
(5) In addition to any other benefit offered pursuant to this section, the program
shall also offer a flexible spending arrangement, as defined in 26. U.S.C. sec.
106, for both dependent care and health care.
SECTION 7. A NEW SECTION OF KRS CHAPTER 18A IS CREATED TO
READ AS FOLLOWS:
(1) A Public Employee Health Insurance Trust Fund is established in the Personnel
Cabinet. The purpose of the Public Employee Health Insurance Trust Fund is to
provide funds to pay medical claims and other costs associated with the
administration of the Public Employee Health Insurance Program self-insured
plan under a competitively bid contract as provided by KRS Chapter 45A and
reviewed by the Government Contract Review Committee pursuant to KRS
45A.705. The trust fund shall not utilize funds for any other purpose, except by
approval of the General Assembly. The following moneys shall be directly
deposited into the trust fund:
(a) Employer and employee premiums collected under the self-insured plan;
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(b) Interest and investment returns earned by the self-insured plan;
(c) Rebates and refunds attributed to the self-insured plan; and
(d) All other receipts attributed to the self-insured plan.
(2) Any balance remaining in the Public Employee Health Insurance Trust Fund at
the end of a fiscal year shall not lapse. Any balance remaining at the end of a
fiscal year shall be carried forward to the next fiscal year and be used solely for
the purpose established in subsection (1) of this section. The balance of funds in
the Public Employee Health Insurance Trust Fund shall be invested by the Office
of Financial Management consistent with the provisions of KRS Chapter 42, and
interest income shall be credited to the trust fund.
(3) The Auditor of Public Accounts shall be responsible for a financial audit of the
books and records of the trust fund. The audit shall be conducted in accordance
with generally accepted accounting principles, shall be paid for by the trust fund,
and shall be completed within ninety (90) days of the close of the plan year. All
audit reports shall be filed with the Governor, the President of the Senate, the
Speaker of the House of Representatives, and the Secretary of the Personnel
Cabinet.
(4) Within thirty (30) days of the end of each calendar quarter, the Secretary of the
Personnel Cabinet shall file with the Governor, the General Assembly, through
the Interim Committee of Appropriations and Revenue, the Kentucky Group
Health Insurance Board, and the Advisory Committee of State Health Insurance
Subscribers a report on the status of the trust fund. The first status report shall be
submitted no later than July 30, 2006. The report shall include the following:
(a) The current balance of the trust fund;
(b) A detailed description of all income to the trust fund since the last report;
(c) A detailed description of any receipts due to the trust fund;
(d) A total amount of payments made for medical claims from the trust fund;
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(e) A detailed description of all payments made to the third party administrator
of the self-insured plan by the trust fund;
(f) Current enrollment data, including monthly enrollment since last report, of
the Public Employee Health Insurance Program self-insured plan;
(g) Specific data regarding the third party administrator's performance under
the contract. The data shall include the following:
1. Any results or outcomes of disease management and wellness
programs;
2. Results of case management audits, educational and communication
efforts; and
3. Comparison of actual measurable results to contract performance
guarantees;
(h) Any other information the secretary may include;
(i) Any other information, requested by the Interim Committee on
Appropriations and Revenue, concerning the operation of the Public
Employee Health Insurance Program self-funded plan or the trust fund;
and
(j) In addition to the information required under paragraphs (a) to (i) of this
subsection, the quarterly report filed in July and January shall also include
the following:
1. A projection of the medical claims incurred but not yet reported that
are considered liabilities to the trust fund;
2. A statement of any other trust fund liabilities;
3. A detailed calculation outlining proposed premium rates for the next
plan year, including base claims, trend assumptions, administrative
fees, and any proposed plan or benefit changes;
4. A detailed description of the current out-of-state network required
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under Section 1 of this Act and the in-state network, and any changes
that have occurred regarding the out-of-state network and in-state
network since the last report and any proposed changes to the out-of-
state network and in-state network during the next six (6) months.
Section 8. The Personnel Cabinet and the Cabinet for Health and Family Services
shall conduct a study of adverse selection in the Public Employee Health Insurance
Program and report the findings to the President of the Senate, speaker of the House, and
the Director of the Legislative Research Commission by October 1, 2007. The study shall
focus on issues relating to premiums and funding of premiums in the program.
Specifically, the shall address the following:
(a) The impact that agencies, who insure their employees outside the program but
whose retirees are covered by plans offered by the program through one of the state
administered retirement systems, have on plan premiums.
(b) The impact that employees, who waive coverage under the program and receive
flexible spending account payments, have on plan premiums.
(c) The impact on the employer contribution rate for the County Employees Retirement
System, if the portion contributed for payment of retiree premiums is separately
determined for school board employers and non-school board employers beginning
with the July 2006 actuarial report compiled by Kentucky Retirement Systems.
The study shall examine the impact of implementing the following new restrictions on
employees who join a state administered retirement system or an optional retirement plan
authorized under the provisions of KRS 161.567 on or after July 1, 2007:
(a) Requiring employees to participate in the program plans for at least the last ten (10)
years of qualifying service prior to termination or retirement or be vested in their
retirement system for insurance purposes.
(b) Allowing time that the employee was on sick or military leave during this period to
count as qualifying service.
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(c) Waiving the ten (10) year or vesting requirement if the employee becomes disabled
or is killed in the line of duty.
(d) Waiving the ten (10) year or vesting requirement for an employee whose employer
joins the program during the last ten (10) years of employee's service if:
1. The employee does not waive coverage; and
2. The employee maintains coverage from the time the employer joined the
program plan and the termination or retirement date of the employee.
(e) Reimbursing employees not eligible for participation in the program plans upon
retirement for the dollar value of their insurance benefit from their respective
retirement system. The retired employee shall be able to utilize these dollars only to
obtain insurance coverage through a former employer, the private insurance market,
or some other means based on authorized contributions.
Section 9. The following KRS sections are repealed:
18A.2251 State employee health care plan buy-in. (Expired July 14, 1995)
304.17A-290 Prohibition against renewal of nonstate employees and small groups under
KRS 18A.2251 or 18A.2281.
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