Title 105 | Chapter 001 | Regulation 411
SUPERSEDED
This document is no longer current.
PREVIOUS VERSION
The previous document that this document is based upon is available.
FINANCE AND ADMINISTRATION CABINET
Kentucky Retirement Systems
(Amended After Comments)
105 KAR 1:411.Hospital and medical insurance for retired members and Kentucky Retirement Systems Insurance Fund Trust.
Section 1.
Definitions.(1)
"Agency" means:(a)
Prior to April 1, 2021, the Kentucky Retirement Systems, which administered the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System; and(b)
Beginning April 1, 2021, the Kentucky Public Pensions Authority, which is authorized to carry out the day-to-day administrative needs of the Kentucky Retirement Systems (comprised of the State Police Retirement System and the Kentucky Employees Retirement System) and the County Employees Retirement System.(2)
"Boards" means the Board of Trustees of the Kentucky Retirement Systems and the Board of Trustees of the County Employees Retirement System.(3)
"Complete" means all required sections of a form are filled out, the form has been fully executed by the recipient or the recipient's legal representative, and all supporting documentation required by the form is included with the form.(4)
"Dependent child" is defined in KRS 16.505(17) and 78.510(49).(5)
"Eligible spouse and dependent children" means spouses and dependent children who are eligible to receive all or a portion of their premiums paid for by the Boards in accordance with KRS 61.702 and 78.5536.(6)
"File" means a form or document has been received at the retirement office by mail, fax, secure email, in-person delivery, or via Self Service on the Web site maintained by the agency (if available).(7)
"MEM" means:(a)
A Medicare eligible member who is retired and reemployed with a participating employer which offers the member a hospital and medical insurance benefit, or by a participating employer which is prevented from offering a hospital and medical benefit to the member as a condition of reemployment under KRS 70.293, 95.022, or 164.952; and(b)
A Medicare eligible member who is retired and whose spouse meets the following criteria:1.
The spouse is also a2.
The spouse is reemployed with a participating employer which offers the spouse a hospital and medical insurance benefit, or by a participating employer which is prevented from offering a hospital and medical benefit to the spouse as a condition of reemployment under KRS 70.293, 95.022, or 164.952; and3.
The spouse's(8)
"Member" is defined in KRS 16.505(21), 61.510(8), and 78.510(8).(9)
"Monthly contribution rate" means:(a)
The amount determined by the boards as the maximum contribution the systems will pay toward the premium of a retired member who began participating in the systems on or before June 30, 2003; or(b)
For a retired member who began participating in the system on or after July 1, 2003, the amount per month earned by the retired member based on years of service as provided in KRS 61.702(4)(e) and 78.5536(4)(e).(10)
"Premium" means the monthly dollar cost required to provide hospital and medical insurance plan coverage for a recipient, a recipient's spouse, or a disabled or dependent child.(11)
"Provide" when used in reference to a form or other document, means the agency makes a form or document available on its Web site (if appropriate) or, upon request by a recipient or other person, by mail, fax, secure email, or via Self Service on the Web site maintained by the agency (if available).(12)
"Qualifying event" means a change in life circumstances that meet the agency's requirement for a member to alter an existing hospital and medical insurance plan, or sign up for a new one outside of new or open enrollment when the alteration is consistent with the change; the agency shall provide a list of qualifying events annually to the members.(13)
"Recipient" is defined in KRS 16.505(26), 61.510(27), and 78.510(26).(14)
"Retired member" is defined in KRS 16.505(11), 61.510(24), and 78.510(23).(15)
"Retirement allowance" is defined in KRS 16.505(12), 61.510(16), and 78.510(16).(16)
"Retirement office" is defined in KRS 16.505(28), 61.510(31), and 78.510(29).(17)
"Systems" means the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System.Section 2.
Trust Fund.(1)
Pursuant to KRS 61.701, fund assets shall be dedicated for use toward health benefits, as provided in KRS 61.702 and 78.5536, and as permitted under 26 U.S.C. 105 and 106 of the United States Internal Revenue Code, to retired recipients and employees of employers participating in the systems. Certain dependents or beneficiaries shall be included, such as qualified beneficiaries as described in 42 U.S.C. 300bb-8(3) of the United States Public Health Service Act.(2)
The boards may adopt a trust agreement and take all action authorized by KRS 61.701(6).Section 3.
Contribution Rates.(1)
(a)
The boards shall adopt monthly contribution rates as follows:1.
Medicare eligible coverage;2.
Non-Medicare eligible coverage; and3.
MEM coverage.(b)
The boards may choose to adopt a monthly contribution rate for MEM coverage that is separate from the monthly contribution rate the Boards adopts for Medicare and non-Medicare eligible coverage, or may choose to adopt a monthly contribution rate that is the same for Non-Medicare eligible coverage and MEM coverage.(2)
The boards shall adopt a contribution plan for each monthly contribution rate in subsection (1) of this section.(3)
The boards may adopt separate contribution rates for:(a)
Tobacco and non-tobacco users, and(b)
Wellness or wellbeing promise completion and incompletion.Section 4.
Payments by the Boards.(1)
The monthly contribution rate paid by the boards towards premiums for a recipient or eligible spouse or dependent child shall not exceed the monthly contribution rate to which the recipient is entitled under KRS 61.702 and 78.5536.(2)
For a retired member who retired based on reciprocity with any other state-administered retirement system, the boards shall not pay more than a portion of the single monthly contribution rate for the hospital and medical insurance plan chosen by the retired member based on the retired member's service credit with the systems.(3)
(a)
A retired member who is not Medicare eligible or is a MEM may cross-reference health insurance coverage with a spouse enrolled in the same hospital and medical insurance plan.(b)
A retired member identified in paragraph (a) of this subsection who has hazardous service and a membership date prior to July 1, 2003 may be able to use any unused portion of the monthly contribution rate the retired member is entitled to receive toward the premium cost attributable to the spouse, if the spouse's portion of the premium is not fully paid by the boards pursuant to KRS 61.702 and 78.5536.(4)
Pursuant to KRS 61.702(4)(d), 61.702(4)(e)5., 78.5536(4)(d), and 78.5536(4)(e)5., funds from the insurance trust fund or the 401(h) accounts provided for in KRS 61.702(3)(b) and 78.5536(3)(b) shall be used to pay a percentage of the monthly contribution rate for family coverage for eligible spouses and dependent children as defined in KRS 16.505(17) and 78.510(49).(5)
(a)
Members not eligible for Medicare who began participation in the system on or after July 1, 2003 and have accrued an additional full year of service as a participating employee beyond his or her career threshold may receive an additional five (5) dollar(b)
1.
If a member who is eligible for an additional five (5) dollar2.
If a member who is eligible for an additional five (5) dollar contribution pursuant to paragraph (a) of this subsection has service in multiple systems operated by the agency, and not all of the systems in which the member participates meet the requirements of KRS 61.702(4)(e)6.b.iii. and 78.5536(4)(e)6.b.iii, only those systems that meet the requirements of KRS 61.702(4)(e)6.b.iii. and 78.5536(4)(e)6.b.iii shall pay a portion of the additional five (5) dollar contribution based on the percentage of the member's service in each system.Section 5.
Premiums Paid by Recipient.(1)
Any premium amount that is not paid or payable by the insurance trust fund established under KRS 61.701 or a 401(h) account in accordance KRS 61.702 and 78.5536 shall be deducted from the monthly retirement allowance of the recipient.(2)
(a)
If the amount of a premium is not fully paid by the insurance trust fund established under KRS 61.701, a 401(h) account, and the recipient's monthly retirement allowance, then the recipient shall pay the balance of the premium monthly by electronic transfer of funds by filing a complete Form 6131, Bank Draft Authorization for Direct Pay Accounts, at the retirement office.(b)
If a complete Form 6131, Bank Draft Authorization for Direct Pay Accounts, is required and is not filed at the retirement office, then the recipient, their spouse, and any disabled or dependent children shall not be enrolled in a hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536.(c)
1.
If the electronic transfer of funds based on a complete Form 6131, Bank Draft Authorization for Direct Pay Accounts, on file at the retirement office fails, then the agency shall provide an invoice to the recipient.2.
If a recipient fails to remit the balance of the premium by the date provided on the invoice, then the enrollment of the recipient, their spouse, and any disabled or dependent children in the hospital and medical insurance plan shall be cancelled the month after the last month the recipient paid the premium.(d)
If the hospital and medical insurance plan coverage of a recipient, their spouse, or any disabled or dependent children is cancelled pursuant to this subsection, the recipient shall not be eligible to enroll in a hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536 until the next open enrollment period for hospital and medical insurance plan coverage.Section 6.
Eligibility to Participate in Hospital and Medical Insurance Plans.(1)
A person shall not be eligible to participate in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536 until the person is a recipient of a monthly retirement allowance, except as provided in KRS 16.576(4).(2)
A person who retires under disability retirement shall not be eligible to participate in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536 until the month the person receives his or her first monthly retirement allowance payment.(3)
A recipient's spouse, disabled child, or dependent child shall not be eligible to participate in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536 unless the recipient is participating in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536.(4)
An alternate payee shall not be eligible for participation in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536.Section 7.
Participation in a Hospital and Medical Insurance Plan.(1)
A recipient, spouse, or disabled or dependent child who is Medicare eligible, except individuals identified in subsection (2) of this section, shall participate in the hospital and medical insurance plan established for Medicare eligible recipients pursuant to KRS 61.702 and 78.5536.(2)
MEMs, and spouses of MEMs and disabled or dependent children of MEMs who are Medicare eligible, shall participate in the group hospital and medical insurance plan established for MEMs pursuant to KRS 61.702(2)(b)3.b. and 78.5536(2)(b)3.b..(3)
A recipient, spouse, or disabled or dependent child who is not Medicare eligible shall participate in a non-Medicare eligible group hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536.(4)
If a recipient, spouse, or disabled or dependent child is eligible for Medicare but the other persons enrolled in a group hospital and medical insurance plan are not, then the recipient, spouse, or disabled or dependent child who is not eligible for Medicare may continue to participate in the non-Medicare eligible group hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536.(5)
Members identified in subsections (1) through (4) of this section may waive enrollment in the hospital and medical insurance plan by filing:(a)
A completed form 6200, KPPA Health Plans for Medicare Eligible Persons, for Medicare eligible recipients, or(b)
A completed form 6200, Retiree Health Insurance Enrollment/Change Form, for MEMs and non-Medicare eligible recipients.(6)
Members identified in subsections (1) through (4) of this section who do not enroll in or waive the hospital and medical insurance plan shall be automatically enrolled in an appropriate default plan in accordance with Section 9 of this administrative regulation.Section 8.
Required Forms.(1)
If the Boards use the group hospital and medical insurance provided by the Kentucky Department of Employee Insurance to provide health insurance coverage for its non-Medicare eligible recipients, spouses, disabled or dependent children, and MEMs, then the agency shall provide these recipients and MEMs with the Form 6200, Retiree Health Insurance Enrollment/Change Form, required for enrollment, waiver, or changes to the group hospital and medical insurance plan.(2)
On behalf of the Boards, the agency shall arrange hospital and medical insurance coverage for Medicare eligible recipients, spouses, and disabled or dependent children, except MEMs. The agency shall provide these recipients with the Form 6200, KPPA Health Plans for Medicare Eligible Persons, required for enrollment, waiver, or changes to the hospital and medical insurance plans.(3)
The agency shall provide the Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, for recipients to complete to receive health insurance contributions toward an eligible spouse and dependent children who are between the ages of eighteen (18) and twenty-two (22).Section 9.
Default Plans.(1)
The boards shall adopt a default plan for new retired members upon initial enrollment, and for recipients who do not file a complete insurance enrollment form during annual open enrollment, when required.(2)
The Boards shall adopt a default plan for retired members and recipients who are Medicare eligible, and a default plan for retired members and recipients who are non-Medicare eligible and recipients who are subject to 42 U.S.C. 1395y.Section 10.
Initial and Annual Enrollment and Qualifying Events.(1)
(a)
The recipient shall file complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month the initial retirement allowance is paid.(b)
If the recipient fails to file the complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month prior to the month the initial retirement allowance is paid, the retired member shall be automatically enrolled in the appropriate default plan adopted by the Boards as described in Section 9 of this administrative regulation.(c)
If the recipient identified in paragraph (a) of this subsection files the completed insurance enrollment forms as described in Section 8 of this administrative regulation by the last day of the month in which he or she receives his or her initial retirement allowance payment, the retired member will be enrolled in the selection indicated on the form effective the first day of the following month.(2)
If a recipient has a qualifying event, the recipient shall file the complete insurance enrollment forms as described in subsections (1) or (2) of Section 8 of this administrative regulation at the retirement office within the time period prescribed by state and federal law and the health insurance plan documents.(3)
(a)
The recipient shall file the complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month of the annual open enrollment period when enrollment is mandatory.(b)
If the recipient fails to file the complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month of the annual open enrollment period when enrollment is mandatory, the recipient shall be automatically enrolled in the default plan adopted by the boards as described in Section 9 of this administrative regulation.(c)
When enrollment is not mandatory, the recipient, and the recipient's spouse and disabled or dependent children as applicable, will remain in the same plan with the same level of coverage as the previous plan year.(4)
(a)
1.
In order to receive health insurance contributions toward an eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22), the recipient shall file a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, by November 30th of the calendar year prior to the calendar year in which coverage is effective, regardless of whether enrollment is mandatory or not mandatory.2.
If a qualifying event results in a new eligible spouse or dependent child, in order to receive health insurance contributions toward the eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22), the recipient shall file a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions.(b)
1.
If the recipient does not file a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, in accordance with paragraph (a) of this subsection, health insurance contributions shall not be paid toward the premiums for an eligible spouse or dependent children unless a complete Form 6256 is filed at the retirement office in the calendar year in which coverage is in effect.2.
If the recipient files a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, between December 1 and December 31 of the calendar year prior to the calendar year in which coverage is effective, then health insurance contributions may be paid for an eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22) as of January of the calendar year in which coverage is effective. If the health insurance contributions are not paid for an eligible spouse or a dependent child as of January of the calendar year in which coverage is effective, then health insurance contributions shall be paid starting in February of the calendar year in which coverage is effective and the recipient shall also be reimbursed for the January health insurance contributions for the eligible spouse or dependent child.3.
If the recipient files a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, prior to December 31 of the calendar year in which coverage is in effect, health insurance contributions shall be paid toward premiums for an eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22) in any month in the calendar year in which coverage is effective after the Form 6256 is filed at the retirement office. If a complete Form 6256 is filed at the retirement office prior to December 31 of the calendar year in which coverage is in effect, the recipient shall also be reimbursed for up to three (3) months of health insurance contributions for the eligible spouse and dependent children.Section 11.
Changes in Spouse and Disabled or Dependent Child Eligibility.(1)
Recipients, spouses, and disabled or dependent children shall notify the agency of any change that may affect the eligibility of the spouse, disabled child, or dependent child to enroll in a hospital and medical insurance plan offered by the agency or the eligibility of the spouse or dependent child to have all or a portion of their premiums paid for by the boards in accordance with KRS 61.702 and 78.5536.(2)
(a)
The recipient shall be required to repay any premiums that were paid by the boards after the spouse or dependent child ceased to be eligible to have all or portion of their premiums paid in accordance with KRS 61.702 and 78.5536.(b)
If the agency is unable to recover from the recipient the full amount of premiums paid in accordance with paragraph (a) of this subsection, the agency may withhold any remaining amount from the recipient's monthly retirement allowance payment.(c)
If the agency is not able to recover the full amount of the premiums paid in accordance with paragraphs (a) and (b) of this subsection, the agency may recover any remaining amount from the spouse or dependent child.Section 12.
Medical Insurance Reimbursement Plan for Recipients Living Outside of Kentucky.(1)
A recipient may participate in the medical insurance reimbursement plan pursuant to KRS 61.702(6) and 78.5536(6) if the recipient lives in an area outside of the coverage of the group hospital and medical insurance plans offered by the agency.(2)
The medical insurance reimbursement plan shall be available in any month the recipient:(a)
Resides outside of Kentucky,(b)
Is not eligible for the same level of hospital and medical benefits as recipients who resided inside of Kentucky with the same Medicare status, and(c)
Has paid hospital and medical insurance plan premiums capable of being reimbursed.(3)
Recipients eligible to participate in the medical insurance reimbursement plan shall be reimbursed up to the applicable monthly contribution rate for premiums paid for hospital and medical coverage less any premiums paid by the recipient's employer.(4)
(a)
In order to receive the applicable reimbursement, an eligible recipient shall file a Form 6240, Application for Out of State Reimbursement for Medical Insurance, and as applicable Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, at the retirement office with one (1) or more of the following as proof of coverage and payment of premiums for hospital and medical insurance that covers the entire time period for the requested reimbursement:1.
Form 6241, Employer Certification of Health Insurance for Health Insurance Reimbursement Plan, completed by the employer;2.
Form 6242, Insurance Agency/Company Certification of Health Insurance for Health Insurance Reimbursement Plan, completed by the insurance agency or company;3.
A signed statement from the employer listing individual(s) covered, dates of hospital and medical insurance coverage, amount of premiums deducted from wages, and the cost of the single coverage; or4.
A signed statement or invoice from the insurance company listing individual(s) covered, the dates and cost of single hospital and medical insurance coverage, along with proof of payment such as a receipt or bank statement clearly indicating payment for the statement or invoice provided.(b)
1.
If any provided documentation is deemed insufficient by the agency, the agency may request additional proof of medical and hospital insurance coverage or payment.2.
The agency may verify the recipient's eligibility for reimbursement for hospital and medical insurance by requesting verification of coverage and payments directly from the insurance company indicated on the Form 6240, Application for Out of State Reimbursement for Medical Insurance.(5)
An eligible recipient may file for reimbursement quarterly each calendar year in accordance with subsection (4) of this section.(6)
If the eligible recipient files for reimbursement in accordance with subsection (4) of this section, the eligible recipient shall be reimbursed on the following schedule:(a)
In February, when all documentation is filed at the retirement office by January 20;(b)
In May, when all documentation is filed at the retirement office by April 20;(c)
In August, when all documentation is filed at the retirement office by July 20; or(d)
In November, when all documentation is filed at the retirement office by October 20.(7)
The agency shall not reimburse an eligible recipient for premiums for a calendar year in which the eligible recipient failed to file a request for reimbursement in accordance with subsection (4) of this section by March 20 of the following calendar year.(8)
(a)
If a recipient receives a payment from the agency that does not qualify as a premium reimbursement, the recipient shall return the payment to the agency at the retirement office.(b)
If the recipient fails to return the payment, the agency may withhold the payment from the recipient's monthly retirement allowance payment.Section 13.
Dollar Contribution Medical Insurance Reimbursement Plan for Recipients Hired on or after July 1, 2003.(1)
Beginning January 1, 2023, a recipient with a hire date on or after July 1, 2003 may participate in the hospital and medical insurance dollar contribution reimbursement plan pursuant to KRS 61.702(6) and 78.5536(6), if the recipient chooses to purchase a hospital and medical insurance plan not provided by the systems.(2)
Recipients eligible to participate in the dollar contribution medical insurance reimbursement plan shall be reimbursed up to the applicable monthly contribution rate for premiums paid for hospital and medical coverage less any premiums paid by the recipient's employer.(3)
(a)
In order to receive the applicable reimbursement, an eligible recipient shall file a Form 6280, Application for Dollar Contribution Reimbursement for Medical Insurance, at the retirement office with one (1) or more of the following as proof of payment of premiums for hospital and medical insurance coverage that covers the entire time period for the requested reimbursement:1.
Form 6281, Employer Certification of Health Insurance for Dollar Contribution Reimbursement Plan, completed by the employer;2.
Form 6282, Insurance Agency/Company Certification of Health Insurance for Dollar Contribution Reimbursement Plan, completed by the insurance agency or company;3.
A signed statement from the employer listing individual(s) covered, dates of hospital and medical insurance coverage, amount of premiums deducted from wages, and the cost of the single coverage; or4.
A signed statement or invoice from the insurance company listing the individual(s) covered, dates, and cost of single hospital and medical insurance coverage; along with proof of payment such as a receipt or bank statement clearly indicating payment for the statement or invoice provided.(b)
1.
If any provided documentation is deemed insufficient by the agency, the agency may request additional proof of medical and hospital insurance coverage or payment.2.
The agency may verify the recipient's eligibility for reimbursement for hospital and medical insurance by requesting verification of coverage and payments directly from the insurance company indicated on the Form 6280, Application for Dollar Contribution Reimbursement for Medical Insurance.(4)
An eligible recipient may file for reimbursement in accordance with subsection (3) of this section, quarterly each calendar year.(5)
If the eligible recipient files a request for reimbursement in accordance with subsection (3) of this section, the eligible recipient shall be reimbursed on the following schedule:(a)
In February, when all documentation is filed at the retirement office by January 20;(b)
In May, when all documentation is filed at the retirement office by April 20;(c)
In August, when all documentation is filed at the retirement office by July 20; or(d)
In November, when all documentation is filed at the retirement office by October 20.(6)
The agency shall not reimburse an eligible recipient for premiums for a calendar year in which the eligible recipient failed to file a request for reimbursement in accordance with subsection (3) of this section by March 20 of the following calendar year.(7)
(a)
If a recipient receives a payment from the agency that does not qualify as a premium reimbursement, the recipient shall return the payment to the agency at the retirement office.(b)
If the recipient fails to return the payment, the agency may withhold the payment from the recipient's monthly retirement allowance payment.Section 14.
Incorporation by Reference.(1)
The following material is incorporated by reference:(a)
Form 6131, "Bank Draft Authorization for Direct Pay Accounts", April 2021;(b)
Form 6200, "KPPA Health Plans for Medicare Eligible Persons", September 2022;(c)
Form 6200 "Retiree Health Insurance Enrollment/Change Form", September 2022;(d)
Form 6256, "(e)
Form 6240, "Application for Out of State Reimbursement for Medical Insurance," September 2022;(f)
Form 6241, "Employer Certification of Health Insurance for Health Insurance Reimbursement Plan", September 2022;(g)
Form 6242, "Insurance Agency/Company Certification of Health Insurance for Health Insurance Reimbursement Plan", September 2022;(h)
Form 6280, "Application for Dollar Contribution Reimbursement for Medical Insurance", September 2022;(i)
Form 6281, "Employer Certification of Health Insurance for Dollar Contribution Reimbursement Plan", September 2022;(j)
Form 6282, "Insurance Agency/Company Certification of Health Insurance for Dollar Contribution Reimbursement Plan", September 2022;(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m., or on the agency's Web site at kyret.ky.gov.DAVID L. EAGER, Executive Director
APPROVED BY AGENCY: January 4, 2023
FILED WITH LRC: January 5, 2023 at 12:50 p.m.
CONTACT PERSON: Jessica Beaubien, Policy Specialist, Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky 40601, phone (502) 696-8570, fax (502) 696-8801, email Legal.Non-Advocacy@kyret.ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Jessica Beaubien
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes procedures for the administration of the health and hospital insurance benefits provided by the Kentucky Retirement Systems and the County Employees Retirement System, as well as establishes eligibility requirements, necessary documentation for proof of insurance, deadlines for filing for reimbursement, and forms.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to establish procedures for the administration of the health and hospital insurance benefits provided by the Kentucky Retirement Systems and the County Employees Retirement System, as well as establishes eligibility requirements, necessary documentation for proof of insurance, and forms. In addition, this administrative regulation satisfies the requirements in KRS 61.702(6) and 78.5536(6) to promulgate an administrative regulation to establish medical insurance reimbursement programs for members who began participating in the system on or after July 1, 2003 and purchase their own hospital and medical insurance, and for retirees who are not eligible for the same level of hospital and medical benefits as recipients living in Kentucky.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
KRS 61.505(1)(g) authorizes the Kentucky Public Pensions Authority to promulgate administrative regulations on behalf of the Kentucky Retirement Systems and the County Employees Retirement System that are consistent with KRS 61.510 to 61.705, 16.505 to 16.652, and 78.510 to 78.852. KRS 61.702 and 78.5536 provide for the systems operated by the Kentucky Public Pensions Authority to offer hospital and medical insurance coverage to recipients (including retired members and some beneficiaries of deceased members), their spouses, and their disabled or dependent children, this administrative regulation conforms to the authorizing statute by establishing procedures for the administration of the health and hospital insurance benefits by the systems. Additionally, this administrative regulation satisfies the requirements in KRS 61.702(6) and 78.5536(6) to promulgate an administrative regulation to establish medical insurance reimbursement programs for members who began participating in the system on or after July 1, 2003 and purchase their own hospital and medical insurance, and for retirees who are not eligible for the same level of hospital and medical benefits as recipients living in Kentucky.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation assists in the effective administration of the statutes by establishing procedures for the administration of the health and hospital insurance benefits provided by the Kentucky Retirement Systems and the County Employees Retirement System, as well as establishes eligibility requirements, necessary documentation for proof of insurance, deadlines for filing for reimbursement, and forms in accordance with KRS 61.702 and 78.5536.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
This is a new administrative regulation, not an amendment to an existing regulation.
(b) The necessity of the amendment to this administrative regulation:
This is a new administrative regulation, not an amendment to an existing regulation.
(c) How the amendment conforms to the content of the authorizing statutes:
This is a new administrative regulation, not an amendment to an existing regulation.
(d) How the amendment will assist in the effective administration of the statutes:
This is a new administrative regulation, not an amendment to an existing regulation.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
One (1) entity that provides day-to-day operations for three (3) public pensions systems: Kentucky Public Pensions Authority (the public pension systems are the Kentucky Employees Retirement System, the County Employees Retirement System, and the State Police Retirement System). Potentially, as many as 401,043 individuals who are members of the Kentucky Employees Retirement System, County Employees Retirement System, and State Police Retirement System, and the spouses, disabled or dependent children, and beneficiaries of these members.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
This administrative regulation requires the Boards of Trustees responsible for the governance of the Kentucky Employees Retirement System, County Employees Retirement System, and State Police Retirement System to adopt monthly contribution rates that comply with KRS 61.702 and 78.5536. The Kentucky Public Pensions Authority must administer the health and hospital insurance plans as well as the reimbursement programs required by KRS 61.702 and 78.5536.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
The cost of compliance with this administrative regulation for the Kentucky Public Pensions Authority and the systems for which it provides day-to-day operations should be negligible, as this administrative regulation is already being administered as written.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
The Kentucky Public Pensions Authority and the systems for which it provides day-to-day operations will have greater assurance that the statutory requirements for administering the health and hospital insurance benefits and reimbursement programs are met. (5) Provide an estimate of how much it will cost to implement this administrative regulation:
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
The costs associated with the implementation of this administrative regulation should be negligible.
(b) On a continuing basis:
The costs associated with the implementation of this administrative regulation should be negligible.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Administrative expenses of the Kentucky Public Pensions Authority are paid from the Retirement Allowance Account (trust and agency funds).
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
There is no increase in fees or funding required.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This administrative regulation does not establish any fees or directly or indirectly increase any fees.
(9) TIERING: Is tiering applied?
Tiering is not applied. All regulated entities are subject to the same processes and procedures.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
This administrative regulation impacts the Kentucky Public Pensions Authority and the three systems for which it provides day-to-day operations (the County Employees Retirement System, the Kentucky Employees Retirement System, and the State Police Retirement System).
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 61.505(1)(g), 61.702, 78.5536.
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
This administrative regulation will not significantly affect revenues of a state or local government agency.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
None.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
None.
(c) How much will it cost to administer this program for the first year?
The cost to Kentucky Public Pensions Authority to administer this administrative regulation should be negligible because this administrative regulation is already being administered as written.
(d) How much will it cost to administer this program for subsequent years?
The cost to Kentucky Public Pensions Authority to administer this administrative regulation should be negligible because this administrative regulation is already being administered as written.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
None.
Expenditures (+/-):
None.
Other Explanation:
The fiscal impact of this administrative regulation should be negligible because this administrative regulation is already being administered as written.
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
None.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
None.
(c) How much will it cost the regulated entities for the first year?
Unknown.
(d) How much will it cost the regulated entities for subsequent years?
Unknown.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
None.
Expenditures (+/-):
Unknown.
Other Explanation:
The fiscal impact of this administrative regulation should be negligible because this administrative regulation is already being administered as written.
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)]. This administrative regulation will not have a "major economic impact" because this administrative regulation is already being administered as written.
FINANCE AND ADMINISTRATION CABINET
Kentucky Retirement Systems
(Amended After Comments)
105 KAR 1:411.Hospital and medical insurance for retired members and Kentucky Retirement Systems Insurance Fund Trust.
Section 1.
Definitions.(1)
"Agency" means:(a)
Prior to April 1, 2021, the Kentucky Retirement Systems, which administered the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System; and(b)
Beginning April 1, 2021, the Kentucky Public Pensions Authority, which is authorized to carry out the day-to-day administrative needs of the Kentucky Retirement Systems (comprised of the State Police Retirement System and the Kentucky Employees Retirement System) and the County Employees Retirement System.(2)
"Boards" means the Board of Trustees of the Kentucky Retirement Systems and the Board of Trustees of the County Employees Retirement System.(3)
"Complete" means all required sections of a form are filled out, the form has been fully executed by the recipient or the recipient's legal representative, and all supporting documentation required by the form is included with the form.(4)
"Dependent child" is defined in KRS 16.505(17) and 78.510(49).(5)
"Eligible spouse and dependent children" means spouses and dependent children who are eligible to receive all or a portion of their premiums paid for by the Boards in accordance with KRS 61.702 and 78.5536.(6)
"File" means a form or document has been received at the retirement office by mail, fax, secure email, in-person delivery, or via Self Service on the Web site maintained by the agency (if available).(7)
"MEM" means:(a)
A Medicare eligible member who is retired and reemployed with a participating employer which offers the member a hospital and medical insurance benefit, or by a participating employer which is prevented from offering a hospital and medical benefit to the member as a condition of reemployment under KRS 70.293, 95.022, or 164.952; and(b)
A Medicare eligible member who is retired and whose spouse meets the following criteria:1.
The spouse is also a member;2.
The spouse is reemployed with a participating employer which offers the spouse a hospital and medical insurance benefit, or by a participating employer which is prevented from offering a hospital and medical benefit to the spouse as a condition of reemployment under KRS 70.293, 95.022, or 164.952; and3.
The spouse's hospital and medical insurance plan coverage is provided by the retired member's benefits pursuant to KRS 61.702(2) and 78.5536(2).(8)
"Member" is defined in KRS 16.505(21), 61.510(8), and 78.510(8).(9)
"Monthly contribution rate" means:(a)
The amount determined by the boards as the maximum contribution the systems will pay toward the premium of a retired member who began participating in the systems on or before June 30, 2003; or(b)
For a retired member who began participating in the system on or after July 1, 2003, the amount per month earned by the retired member based on years of service as provided in KRS 61.702(4)(e) and 78.5536(4)(e).(10)
"Premium" means the monthly dollar cost required to provide hospital and medical insurance plan coverage for a recipient, a recipient's spouse, or a disabled or dependent child.(11)
"Provide" when used in reference to a form or other document, means the agency makes a form or document available on its Web site (if appropriate) or, upon request by a recipient or other person, by mail, fax, secure email, or via Self Service on the Web site maintained by the agency (if available).(12)
"Qualifying event" means a change in life circumstances that meet the agency's requirement for a member to alter an existing hospital and medical insurance plan, or sign up for a new one outside of new or open enrollment when the alteration is consistent with the change; the agency shall provide a list of qualifying events annually to the members.(13)
"Recipient" is defined in KRS 16.505(26), 61.510(27), and 78.510(26).(14)
"Retired member" is defined in KRS 16.505(11), 61.510(24), and 78.510(23).(15)
"Retirement allowance" is defined in KRS 16.505(12), 61.510(16), and 78.510(16).(16)
"Retirement office" is defined in KRS 16.505(28), 61.510(31), and 78.510(29).(17)
"Systems" means the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System.Section 2.
Trust Fund.(1)
Pursuant to KRS 61.701, fund assets shall be dedicated for use toward health benefits, as provided in KRS 61.702 and 78.5536, and as permitted under 26 U.S.C. 105 and 106 of the United States Internal Revenue Code, to retired recipients and employees of employers participating in the systems. Certain dependents or beneficiaries shall be included, such as qualified beneficiaries as described in 42 U.S.C. 300bb-8(3) of the United States Public Health Service Act.(2)
The boards may adopt a trust agreement and take all action authorized by KRS 61.701(6).Section 3.
Contribution Rates.(1)
(a)
The boards shall adopt monthly contribution rates as follows:1.
Medicare eligible coverage;2.
Non-Medicare eligible coverage; and3.
MEM coverage.(b)
The boards may choose to adopt a monthly contribution rate for MEM coverage that is separate from the monthly contribution rate the Boards adopts for Medicare and non-Medicare eligible coverage, or may choose to adopt a monthly contribution rate that is the same for Non-Medicare eligible coverage and MEM coverage.(2)
The boards shall adopt a contribution plan for each monthly contribution rate in subsection (1) of this section.(3)
The boards may adopt separate contribution rates for:(a)
Tobacco and non-tobacco users, and(b)
Wellness or wellbeing promise completion and incompletion.Section 4.
Payments by the Boards.(1)
The monthly contribution rate paid by the boards towards premiums for a recipient or eligible spouse or dependent child shall not exceed the monthly contribution rate to which the recipient is entitled under KRS 61.702 and 78.5536.(2)
For a retired member who retired based on reciprocity with any other state-administered retirement system, the boards shall not pay more than a portion of the single monthly contribution rate for the hospital and medical insurance plan chosen by the retired member based on the retired member's service credit with the systems.(3)
(a)
A retired member who is not Medicare eligible or is a MEM may cross-reference health insurance coverage with a spouse enrolled in the same hospital and medical insurance plan.(b)
A retired member identified in paragraph (a) of this subsection who has hazardous service and a membership date prior to July 1, 2003 may be able to use any unused portion of the monthly contribution rate the retired member is entitled to receive toward the premium cost attributable to the spouse, if the spouse's portion of the premium is not fully paid by the boards pursuant to KRS 61.702 and 78.5536.(4)
Pursuant to KRS 61.702(4)(d), 61.702(4)(e)5., 78.5536(4)(d), and 78.5536(4)(e)5., funds from the insurance trust fund or the 401(h) accounts provided for in KRS 61.702(3)(b) and 78.5536(3)(b) shall be used to pay a percentage of the monthly contribution rate for family coverage for eligible spouses and dependent children as defined in KRS 16.505(17) and 78.510(49).(5)
(a)
Members not eligible for Medicare who began participation in the system on or after July 1, 2003 and have accrued an additional full year of service as a participating employee beyond his or her career threshold may receive an additional five (5) dollar contribution toward monthly hospital and medical insurance premiums in accordance with KRS 61.702(4)(e)6.b. and 78.5536(4)(e)6.b.(b)
1.
If a member who is eligible for an additional five (5) dollar contribution pursuant to paragraph (a) of this subsection has service in multiple systems operated by the agency, each system in which the member participates that meets the requirements of KRS 61.702(4)(e)6.b.iii. and 78.5536(4)(e)6.b.iii shall pay a portion of the additional five (5) dollar contribution based on the percentage of the member's service in each system.2.
If a member who is eligible for an additional five (5) dollar contribution pursuant to paragraph (a) of this subsection has service in multiple systems operated by the agency, and not all of the systems in which the member participates meet the requirements of KRS 61.702(4)(e)6.b.iii. and 78.5536(4)(e)6.b.iii, only those systems that meet the requirements of KRS 61.702(4)(e)6.b.iii. and 78.5536(4)(e)6.b.iii shall pay a portion of the additional five (5) dollar contribution based on the percentage of the member's service in each system.Section 5.
Premiums Paid by Recipient.(1)
Any premium amount that is not paid or payable by the insurance trust fund established under KRS 61.701 or a 401(h) account in accordance KRS 61.702 and 78.5536 shall be deducted from the monthly retirement allowance of the recipient.(2)
(a)
If the amount of a premium is not fully paid by the insurance trust fund established under KRS 61.701, a 401(h) account, and the recipient's monthly retirement allowance, then the recipient shall pay the balance of the premium monthly by electronic transfer of funds by filing a complete Form 6131, Bank Draft Authorization for Direct Pay Accounts, at the retirement office.(b)
If a complete Form 6131, Bank Draft Authorization for Direct Pay Accounts, is required and is not filed at the retirement office, then the recipient, their spouse, and any disabled or dependent children shall not be enrolled in a hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536.(c)
1.
If the electronic transfer of funds based on a complete Form 6131, Bank Draft Authorization for Direct Pay Accounts, on file at the retirement office fails, then the agency shall provide an invoice to the recipient.2.
If a recipient fails to remit the balance of the premium by the date provided on the invoice, then the enrollment of the recipient, their spouse, and any disabled or dependent children in the hospital and medical insurance plan shall be cancelled the month after the last month the recipient paid the premium.(d)
If the hospital and medical insurance plan coverage of a recipient, their spouse, or any disabled or dependent children is cancelled pursuant to this subsection, the recipient shall not be eligible to enroll in a hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536 until the next open enrollment period for hospital and medical insurance plan coverage.Section 6.
Eligibility to Participate in Hospital and Medical Insurance Plans.(1)
A person shall not be eligible to participate in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536 until the person is a recipient of a monthly retirement allowance, except as provided in KRS 16.576(4).(2)
A person who retires under disability retirement shall not be eligible to participate in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536 until the month the person receives his or her first monthly retirement allowance payment.(3)
A recipient's spouse, disabled child, or dependent child shall not be eligible to participate in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536 unless the recipient is participating in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536.(4)
An alternate payee shall not be eligible for participation in the hospital and medical insurance plans established pursuant to KRS 61.702 and 78.5536.Section 7.
Participation in a Hospital and Medical Insurance Plan.(1)
A recipient, spouse, or disabled or dependent child who is Medicare eligible, except individuals identified in subsection (2) of this section, shall participate in the hospital and medical insurance plan established for Medicare eligible recipients pursuant to KRS 61.702 and 78.5536.(2)
MEMs, and spouses of MEMs and disabled or dependent children of MEMs who are Medicare eligible, shall participate in the group hospital and medical insurance plan established for MEMs pursuant to KRS 61.702(2)(b)3.b. and 78.5536(2)(b)3.b..(3)
A recipient, spouse, or disabled or dependent child who is not Medicare eligible shall participate in a non-Medicare eligible group hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536.(4)
If a recipient, spouse, or disabled or dependent child is eligible for Medicare but the other persons enrolled in a group hospital and medical insurance plan are not, then the recipient, spouse, or disabled or dependent child who is not eligible for Medicare may continue to participate in the non-Medicare eligible group hospital and medical insurance plan established pursuant to KRS 61.702 and 78.5536.(5)
Members identified in subsections (1) through (4) of this section may waive enrollment in the hospital and medical insurance plan by filing:(a)
A completed form 6200, KPPA Health Plans for Medicare Eligible Persons, for Medicare eligible recipients, or(b)
A completed form 6200, Retiree Health Insurance Enrollment/Change Form, for MEMs and non-Medicare eligible recipients.(6)
Members identified in subsections (1) through (4) of this section who do not enroll in or waive the hospital and medical insurance plan shall be automatically enrolled in an appropriate default plan in accordance with Section 9 of this administrative regulation.Section 8.
Required Forms.(1)
If the Boards use the group hospital and medical insurance provided by the Kentucky Department of Employee Insurance to provide health insurance coverage for its non-Medicare eligible recipients, spouses, disabled or dependent children, and MEMs, then the agency shall provide these recipients and MEMs with the Form 6200, Retiree Health Insurance Enrollment/Change Form, required for enrollment, waiver, or changes to the group hospital and medical insurance plan.(2)
On behalf of the Boards, the agency shall arrange hospital and medical insurance coverage for Medicare eligible recipients, spouses, and disabled or dependent children, except MEMs. The agency shall provide these recipients with the Form 6200, KPPA Health Plans for Medicare Eligible Persons, required for enrollment, waiver, or changes to the hospital and medical insurance plans.(3)
The agency shall provide the Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, for recipients to complete to receive health insurance contributions toward an eligible spouse and dependent children who are between the ages of eighteen (18) and twenty-two (22).Section 9.
Default Plans.(1)
The boards shall adopt a default plan for new retired members upon initial enrollment, and for recipients who do not file a complete insurance enrollment form during annual open enrollment, when required.(2)
The Boards shall adopt a default plan for retired members and recipients who are Medicare eligible, and a default plan for retired members and recipients who are non-Medicare eligible and recipients who are subject to 42 U.S.C. 1395y.Section 10.
Initial and Annual Enrollment and Qualifying Events.(1)
(a)
The recipient shall file complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month the initial retirement allowance is paid.(b)
If the recipient fails to file the complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month prior to the month the initial retirement allowance is paid, the retired member shall be automatically enrolled in the appropriate default plan adopted by the Boards as described in Section 9 of this administrative regulation.(c)
If the recipient identified in paragraph (a) of this subsection files the completed insurance enrollment forms as described in Section 8 of this administrative regulation by the last day of the month in which he or she receives his or her initial retirement allowance payment, the retired member will be enrolled in the selection indicated on the form effective the first day of the following month.(2)
If a recipient has a qualifying event, the recipient shall file the complete insurance enrollment forms as described in subsections (1) or (2) of Section 8 of this administrative regulation at the retirement office within the time period prescribed by state and federal law and the health insurance plan documents.(3)
(a)
The recipient shall file the complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month of the annual open enrollment period when enrollment is mandatory.(b)
If the recipient fails to file the complete insurance enrollment forms as described in Section 8 of this administrative regulation at the retirement office by the last day of the month of the annual open enrollment period when enrollment is mandatory, the recipient shall be automatically enrolled in the default plan adopted by the boards as described in Section 9 of this administrative regulation.(c)
When enrollment is not mandatory, the recipient, and the recipient's spouse and disabled or dependent children as applicable, will remain in the same plan with the same level of coverage as the previous plan year.(4)
(a)
1.
In order to receive health insurance contributions toward an eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22), the recipient shall file a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, by November 30th of the calendar year prior to the calendar year in which coverage is effective, regardless of whether enrollment is mandatory or not mandatory.2.
If a qualifying event results in a new eligible spouse or dependent child, in order to receive health insurance contributions toward the eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22), the recipient shall file a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions.(b)
1.
If the recipient does not file a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, in accordance with paragraph (a) of this subsection, health insurance contributions shall not be paid toward the premiums for an eligible spouse or dependent children unless a complete Form 6256 is filed at the retirement office in the calendar year in which coverage is in effect.2.
If the recipient files a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, between December 1 and December 31 of the calendar year prior to the calendar year in which coverage is effective, then health insurance contributions may be paid for an eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22) as of January of the calendar year in which coverage is effective. If the health insurance contributions are not paid for an eligible spouse or a dependent child as of January of the calendar year in which coverage is effective, then health insurance contributions shall be paid starting in February of the calendar year in which coverage is effective and the recipient shall also be reimbursed for the January health insurance contributions for the eligible spouse or dependent child.3.
If the recipient files a complete Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, prior to December 31 of the calendar year in which coverage is in effect, health insurance contributions shall be paid toward premiums for an eligible spouse or a dependent child who is between the ages of eighteen (18) and twenty-two (22) in any month in the calendar year in which coverage is effective after the Form 6256 is filed at the retirement office. If a complete Form 6256 is filed at the retirement office prior to December 31 of the calendar year in which coverage is in effect, the recipient shall also be reimbursed for up to three (3) months of health insurance contributions for the eligible spouse and dependent children.Section 11.
Changes in Spouse and Disabled or Dependent Child Eligibility.(1)
Recipients, spouses, and disabled or dependent children shall notify the agency of any change that may affect the eligibility of the spouse, disabled child, or dependent child to enroll in a hospital and medical insurance plan offered by the agency or the eligibility of the spouse or dependent child to have all or a portion of their premiums paid for by the boards in accordance with KRS 61.702 and 78.5536.(2)
(a)
The recipient shall be required to repay any premiums that were paid by the boards after the spouse or dependent child ceased to be eligible to have all or portion of their premiums paid in accordance with KRS 61.702 and 78.5536.(b)
If the agency is unable to recover from the recipient the full amount of premiums paid in accordance with paragraph (a) of this subsection, the agency may withhold any remaining amount from the recipient's monthly retirement allowance payment.(c)
If the agency is not able to recover the full amount of the premiums paid in accordance with paragraphs (a) and (b) of this subsection, the agency may recover any remaining amount from the spouse or dependent child.Section 12.
Medical Insurance Reimbursement Plan for Recipients Living Outside of Kentucky.(1)
A recipient may participate in the medical insurance reimbursement plan pursuant to KRS 61.702(6) and 78.5536(6) if the recipient lives in an area outside of the coverage of the group hospital and medical insurance plans offered by the agency.(2)
The medical insurance reimbursement plan shall be available in any month the recipient:(a)
Resides outside of Kentucky,(b)
Is not eligible for the same level of hospital and medical benefits as recipients who resided inside of Kentucky with the same Medicare status, and(c)
Has paid hospital and medical insurance plan premiums capable of being reimbursed.(3)
Recipients eligible to participate in the medical insurance reimbursement plan shall be reimbursed up to the applicable monthly contribution rate for premiums paid for hospital and medical coverage less any premiums paid by the recipient's employer.(4)
(a)
In order to receive the applicable reimbursement, an eligible recipient shall file a Form 6240, Application for Out of State Reimbursement for Medical Insurance, and as applicable Form 6256, Designation of Spouse and/or Dependent Child for Health Insurance Contributions, at the retirement office with one (1) or more of the following as proof of coverage and payment of premiums for hospital and medical insurance that covers the entire time period for the requested reimbursement:1.
Form 6241, Employer Certification of Health Insurance for Health Insurance Reimbursement Plan, completed by the employer;2.
Form 6242, Insurance Agency/Company Certification of Health Insurance for Health Insurance Reimbursement Plan, completed by the insurance agency or company;3.
A signed statement from the employer listing individual(s) covered, dates of hospital and medical insurance coverage, amount of premiums deducted from wages, and the cost of the single coverage; or4.
A signed statement or invoice from the insurance company listing individual(s) covered, the dates and cost of single hospital and medical insurance coverage, along with proof of payment such as a receipt or bank statement clearly indicating payment for the statement or invoice provided.(b)
1.
If any provided documentation is deemed insufficient by the agency, the agency may request additional proof of medical and hospital insurance coverage or payment.2.
The agency may verify the recipient's eligibility for reimbursement for hospital and medical insurance by requesting verification of coverage and payments directly from the insurance company indicated on the Form 6240, Application for Out of State Reimbursement for Medical Insurance.(5)
An eligible recipient may file for reimbursement quarterly each calendar year in accordance with subsection (4) of this section.(6)
If the eligible recipient files for reimbursement in accordance with subsection (4) of this section, the eligible recipient shall be reimbursed on the following schedule:(a)
In February, when all documentation is filed at the retirement office by January 20;(b)
In May, when all documentation is filed at the retirement office by April 20;(c)
In August, when all documentation is filed at the retirement office by July 20; or(d)
In November, when all documentation is filed at the retirement office by October 20.(7)
The agency shall not reimburse an eligible recipient for premiums for a calendar year in which the eligible recipient failed to file a request for reimbursement in accordance with subsection (4) of this section by March 20 of the following calendar year.(8)
(a)
If a recipient receives a payment from the agency that does not qualify as a premium reimbursement, the recipient shall return the payment to the agency at the retirement office.(b)
If the recipient fails to return the payment, the agency may withhold the payment from the recipient's monthly retirement allowance payment.Section 13.
Dollar Contribution Medical Insurance Reimbursement Plan for Recipients Hired on or after July 1, 2003.(1)
Beginning January 1, 2023, a recipient with a hire date on or after July 1, 2003 may participate in the hospital and medical insurance dollar contribution reimbursement plan pursuant to KRS 61.702(6) and 78.5536(6), if the recipient chooses to purchase a hospital and medical insurance plan not provided by the systems.(2)
Recipients eligible to participate in the dollar contribution medical insurance reimbursement plan shall be reimbursed up to the applicable monthly contribution rate for premiums paid for hospital and medical coverage less any premiums paid by the recipient's employer.(3)
(a)
In order to receive the applicable reimbursement, an eligible recipient shall file a Form 6280, Application for Dollar Contribution Reimbursement for Medical Insurance, at the retirement office with one (1) or more of the following as proof of payment of premiums for hospital and medical insurance coverage that covers the entire time period for the requested reimbursement:1.
Form 6281, Employer Certification of Health Insurance for Dollar Contribution Reimbursement Plan, completed by the employer;2.
Form 6282, Insurance Agency/Company Certification of Health Insurance for Dollar Contribution Reimbursement Plan, completed by the insurance agency or company;3.
A signed statement from the employer listing individual(s) covered, dates of hospital and medical insurance coverage, amount of premiums deducted from wages, and the cost of the single coverage; or4.
A signed statement or invoice from the insurance company listing the individual(s) covered, dates, and cost of single hospital and medical insurance coverage; along with proof of payment such as a receipt or bank statement clearly indicating payment for the statement or invoice provided.(b)
1.
If any provided documentation is deemed insufficient by the agency, the agency may request additional proof of medical and hospital insurance coverage or payment.2.
The agency may verify the recipient's eligibility for reimbursement for hospital and medical insurance by requesting verification of coverage and payments directly from the insurance company indicated on the Form 6280, Application for Dollar Contribution Reimbursement for Medical Insurance.(4)
An eligible recipient may file for reimbursement in accordance with subsection (3) of this section, quarterly each calendar year.(5)
If the eligible recipient files a request for reimbursement in accordance with subsection (3) of this section, the eligible recipient shall be reimbursed on the following schedule:(a)
In February, when all documentation is filed at the retirement office by January 20;(b)
In May, when all documentation is filed at the retirement office by April 20;(c)
In August, when all documentation is filed at the retirement office by July 20; or(d)
In November, when all documentation is filed at the retirement office by October 20.(6)
The agency shall not reimburse an eligible recipient for premiums for a calendar year in which the eligible recipient failed to file a request for reimbursement in accordance with subsection (3) of this section by March 20 of the following calendar year.(7)
(a)
If a recipient receives a payment from the agency that does not qualify as a premium reimbursement, the recipient shall return the payment to the agency at the retirement office.(b)
If the recipient fails to return the payment, the agency may withhold the payment from the recipient's monthly retirement allowance payment.Section 14.
Incorporation by Reference.(1)
The following material is incorporated by reference:(a)
Form 6131, "Bank Draft Authorization for Direct Pay Accounts", April 2021;(b)
Form 6200, "KPPA Health Plans for Medicare Eligible Persons", September 2022;(c)
Form 6200 "Retiree Health Insurance Enrollment/Change Form", September 2022;(d)
Form 6256, "Designation of Spouse and/or Dependent Child for Health Insurance Contributions", September 2022;(e)
Form 6240, "Application for Out of State Reimbursement for Medical Insurance," September 2022;(f)
Form 6241, "Employer Certification of Health Insurance for Health Insurance Reimbursement Plan", September 2022;(g)
Form 6242, "Insurance Agency/Company Certification of Health Insurance for Health Insurance Reimbursement Plan", September 2022;(h)
Form 6280, "Application for Dollar Contribution Reimbursement for Medical Insurance", September 2022;(i)
Form 6281, "Employer Certification of Health Insurance for Dollar Contribution Reimbursement Plan", September 2022;(j)
Form 6282, "Insurance Agency/Company Certification of Health Insurance for Dollar Contribution Reimbursement Plan", September 2022;(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m., or on the agency's Web site at kyret.ky.gov.DAVID L. EAGER, Executive Director
APPROVED BY AGENCY: January 4, 2023
FILED WITH LRC: January 5, 2023 at 12:50 p.m.
CONTACT PERSON: Jessica Beaubien, Policy Specialist, Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky 40601, phone (502) 696-8570, fax (502) 696-8801, email Legal.Non-Advocacy@kyret.ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Jessica Beaubien
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes procedures for the administration of the health and hospital insurance benefits provided by the Kentucky Retirement Systems and the County Employees Retirement System, as well as establishes eligibility requirements, necessary documentation for proof of insurance, deadlines for filing for reimbursement, and forms.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to establish procedures for the administration of the health and hospital insurance benefits provided by the Kentucky Retirement Systems and the County Employees Retirement System, as well as establishes eligibility requirements, necessary documentation for proof of insurance, and forms. In addition, this administrative regulation satisfies the requirements in KRS 61.702(6) and 78.5536(6) to promulgate an administrative regulation to establish medical insurance reimbursement programs for members who began participating in the system on or after July 1, 2003 and purchase their own hospital and medical insurance, and for retirees who are not eligible for the same level of hospital and medical benefits as recipients living in Kentucky.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
KRS 61.505(1)(g) authorizes the Kentucky Public Pensions Authority to promulgate administrative regulations on behalf of the Kentucky Retirement Systems and the County Employees Retirement System that are consistent with KRS 61.510 to 61.705, 16.505 to 16.652, and 78.510 to 78.852. KRS 61.702 and 78.5536 provide for the systems operated by the Kentucky Public Pensions Authority to offer hospital and medical insurance coverage to recipients (including retired members and some beneficiaries of deceased members), their spouses, and their disabled or dependent children, this administrative regulation conforms to the authorizing statute by establishing procedures for the administration of the health and hospital insurance benefits by the systems. Additionally, this administrative regulation satisfies the requirements in KRS 61.702(6) and 78.5536(6) to promulgate an administrative regulation to establish medical insurance reimbursement programs for members who began participating in the system on or after July 1, 2003 and purchase their own hospital and medical insurance, and for retirees who are not eligible for the same level of hospital and medical benefits as recipients living in Kentucky.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation assists in the effective administration of the statutes by establishing procedures for the administration of the health and hospital insurance benefits provided by the Kentucky Retirement Systems and the County Employees Retirement System, as well as establishes eligibility requirements, necessary documentation for proof of insurance, deadlines for filing for reimbursement, and forms in accordance with KRS 61.702 and 78.5536.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
This is a new administrative regulation, not an amendment to an existing regulation.
(b) The necessity of the amendment to this administrative regulation:
This is a new administrative regulation, not an amendment to an existing regulation.
(c) How the amendment conforms to the content of the authorizing statutes:
This is a new administrative regulation, not an amendment to an existing regulation.
(d) How the amendment will assist in the effective administration of the statutes:
This is a new administrative regulation, not an amendment to an existing regulation.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
One (1) entity that provides day-to-day operations for three (3) public pensions systems: Kentucky Public Pensions Authority (the public pension systems are the Kentucky Employees Retirement System, the County Employees Retirement System, and the State Police Retirement System). Potentially, as many as 401,043 individuals who are members of the Kentucky Employees Retirement System, County Employees Retirement System, and State Police Retirement System, and the spouses, disabled or dependent children, and beneficiaries of these members.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
This administrative regulation requires the Boards of Trustees responsible for the governance of the Kentucky Employees Retirement System, County Employees Retirement System, and State Police Retirement System to adopt monthly contribution rates that comply with KRS 61.702 and 78.5536. The Kentucky Public Pensions Authority must administer the health and hospital insurance plans as well as the reimbursement programs required by KRS 61.702 and 78.5536.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
The cost of compliance with this administrative regulation for the Kentucky Public Pensions Authority and the systems for which it provides day-to-day operations should be negligible, as this administrative regulation is already being administered as written.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
The Kentucky Public Pensions Authority and the systems for which it provides day-to-day operations will have greater assurance that the statutory requirements for administering the health and hospital insurance benefits and reimbursement programs are met. (5) Provide an estimate of how much it will cost to implement this administrative regulation:
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
The costs associated with the implementation of this administrative regulation should be negligible.
(b) On a continuing basis:
The costs associated with the implementation of this administrative regulation should be negligible.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Administrative expenses of the Kentucky Public Pensions Authority are paid from the Retirement Allowance Account (trust and agency funds).
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
There is no increase in fees or funding required.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This administrative regulation does not establish any fees or directly or indirectly increase any fees.
(9) TIERING: Is tiering applied?
Tiering is not applied. All regulated entities are subject to the same processes and procedures.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
This administrative regulation impacts the Kentucky Public Pensions Authority and the three systems for which it provides day-to-day operations (the County Employees Retirement System, the Kentucky Employees Retirement System, and the State Police Retirement System).
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 61.505(1)(g), 61.702, 78.5536.
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
This administrative regulation will not significantly affect revenues of a state or local government agency.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
None.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
None.
(c) How much will it cost to administer this program for the first year?
The cost to Kentucky Public Pensions Authority to administer this administrative regulation should be negligible because this administrative regulation is already being administered as written.
(d) How much will it cost to administer this program for subsequent years?
The cost to Kentucky Public Pensions Authority to administer this administrative regulation should be negligible because this administrative regulation is already being administered as written.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
None.
Expenditures (+/-):
None.
Other Explanation:
The fiscal impact of this administrative regulation should be negligible because this administrative regulation is already being administered as written.
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
None.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
None.
(c) How much will it cost the regulated entities for the first year?
Unknown.
(d) How much will it cost the regulated entities for subsequent years?
Unknown.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
None.
Expenditures (+/-):
Unknown.
Other Explanation:
The fiscal impact of this administrative regulation should be negligible because this administrative regulation is already being administered as written.
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)]. This administrative regulation will not have a "major economic impact" because this administrative regulation is already being administered as written.