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AN ACT relating to in line of duty disability benefits and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 61.702 is amended to read as follows: 3
(1) For purposes of this section: 4
(a) "Hospital and medical insurance plan" may include, at the board's discretion, 5
any one (1) or more of the following: 6
1. Any hospital and medical expense policy or certificate, provider-7
sponsored integrated health delivery network, self-insured medical plan, 8
health maintenance organization contract, or other health benefit plan; 9
2. Any health savings account as permitted by 26 U.S.C. sec. 223 or health 10
reimbursement arrangement or a similar account as may be permitted by 11
26 U.S.C. sec. 105 or 106. Such arrangement or account, at the board's 12
discretion, may reimburse any medical expense permissible under 26 13
U.S.C. sec. 213; or 14
3. A medical insurance reimbursement program established by the board 15
through the promulgation of administrative regulation under which 16
members purchase individual health insurance coverage through a health 17
insurance exchange established under 42 U.S.C. sec. 18031 or 18041; 18
(b) "Monthly contribution rate" is the amount determined by the board based 19
upon the requirements of subsection (4)(a) to (d) of this section, except that 20
for members who began participating in the system on or after July 1, 2003, 21
the term shall mean the amount determined in subsection (4)(e) of this 22
section; and 23
(c) "Months of service" means the total months of combined service used to 24
determine benefits under the system, except service added to determine 25
disability benefits or service otherwise prohibited from being used to 26
determine retiree health benefits under KRS 16.505 to 16.652 or 61.510 to 27 UNOFFICIAL COPY 24 RS BR 1498
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61.705 shall not be counted as "months of service." For current and former 1
employees of the Council on Postsecondary Education who were employed 2
prior to January 1, 1993, and who earn at least fifteen (15) years of service 3
credit in the Kentucky Employees Retirement System, "months of service" 4
shall also include vested service in another retirement system other than the 5
Kentucky Teachers' Retirement System sponsored by the Council on 6
Postsecondary Education. 7
(2) (a) 1. The board of trustees of the system shall arrange by appropriate contract 8
or on a self-insured basis to provide a group hospital and medical 9
insurance plan coverage for: 10
a. Present and future recipients of a retirement allowance from the 11
Kentucky Employees Retirement System and the State Police 12
Retirement System; and 13
b. The spouse and each qualified dependent of a recipient who is a 14
former member or the beneficiary, provided the spouse and 15
dependent meet the requirements to participate in the hospital and 16
medical insurance plans established, contracted, or authorized by 17
the system. 18
2. Any recipient who chooses coverage under a hospital and medical 19
insurance plan shall pay, by payroll deduction from the retirement 20
allowance, electronic funds transfer, or by another method, the 21
difference between the premium cost of the hospital and medical 22
insurance plan coverage selected and the monthly contribution rate to 23
which he or she would be entitled under this section. 24
(b) 1. For present and future recipients of a retirement allowance from the 25
system who are not eligible for Medicare and for those recipients 26
described in subparagraph 3.b. of this paragraph, the board may 27 UNOFFICIAL COPY 24 RS BR 1498
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authorize these participants to be included in the Kentucky Employees 1
Health Plan as provided by KRS 18A.225 to 18A.2287 and shall provide 2
benefits for recipients in the plan equal to those provided to state 3
employees having the same Medicare hospital and medical insurance 4
eligibility status. Notwithstanding the provisions of any other statute 5
except subparagraph 3.b. of this paragraph, system recipients shall be 6
included in the same class as current state employees for purposes of 7
determining medical insurance policies and premiums in the Kentucky 8
Employees Health Plan as provided by KRS 18A.225 to 18A.2287. 9
2. Regardless of age, if a recipient or the spouse or dependent child of a 10
recipient who elects coverage becomes eligible for Medicare, he or she 11
shall participate in the plans offered by the systems for Medicare 12
eligible recipients. Individuals participating in the Medicare eligible 13
plans may be required to obtain and pay for Medicare Part A and Part B 14
coverage, in order to participate in the Medicare eligible plans offered 15
by the system. 16
3. The system shall continue to provide the same hospital and medical 17
insurance plan coverage for recipients and qualifying dependents after 18
the age of sixty-five (65) as before the age of sixty-five (65), if: 19
a. The recipient is not eligible for Medicare coverage; or 20
b. The recipient would otherwise be eligible for Medicare coverage 21
but is subject to the Medicare Secondary Payer Act under 42 22
U.S.C. sec. 1395y(b) and has been reemployed by a participating 23
agency which offers the recipient a hospital and medical insurance 24
benefit or by a participating agency which is prevented from 25
offering a hospital and medical benefit to the recipient as a 26
condition of reemployment under KRS 70.293, 95.022, or 27 UNOFFICIAL COPY 24 RS BR 1498
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164.952. Individuals who are eligible, pursuant to this subdivision, 1
to be included in the Kentucky Employees Health Plan as provided 2
by KRS 18A.225 to 18A.2287 may be rated as a separate class 3
from other eligible employees and retirees for the purpose of 4
determining medical insurance premiums. 5
(c) For recipients of a retirement allowance who are not eligible for the same 6
level of hospital and medical benefits as recipients living in Kentucky having 7
the same Medicare hospital and medical insurance eligibility status, the board 8
shall provide a medical insurance reimbursement plan as described in 9
subsection (6) of this section. 10
(d) Notwithstanding anything in KRS Chapter 16 or 61 to the contrary, the board 11
of trustees, in its discretion, may take necessary steps to ensure compliance 12
with 42 U.S.C. secs. 300bb-1 et seq. 13
(3) (a) Each employer participating in the Kentucky Employees Retirement System 14
or the State Police Retirement System as provided in KRS 16.505 to 16.652 or 15
61.510 to 61.705 shall contribute to the insurance trust fund established under 16
KRS 61.701 the amount necessary to provide the monthly contribution rate as 17
provided for under this section. Such employer contribution rate shall be 18
developed by appropriate actuarial method as a part of the determination of 19
each respective employer contribution rate determined under KRS 61.565. 20
(b) 1. Each employer described in paragraph (a) of this subsection shall deduct 21
from the creditable compensation of each member whose membership 22
date begins on or after September 1, 2008, an amount equal to one 23
percent (1%) of the member's creditable compensation. The deducted 24
amounts shall, at the discretion of the board, be credited to accounts 25
established pursuant to 26 U.S.C. sec. 401(h), within the funds 26
established in KRS 16.510 and 61.515, or the insurance trust fund 27 UNOFFICIAL COPY 24 RS BR 1498
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established under KRS 61.701. Notwithstanding the provisions of this 1
paragraph, a transfer of assets between the accounts established pursuant 2
to 26 U.S.C. sec. 401(h), within the funds established in KRS 16.510 3
and 61.515, and the insurance trust fund established under KRS 61.701 4
shall not be allowed. 5
2. The employer shall file the contributions as provided by subparagraph 1. 6
of this paragraph at the retirement office in accordance with KRS 7
61.675. Any interest or penalties paid on any delinquent contributions 8
shall be credited to accounts established pursuant to 26 U.S.C. sec. 9
401(h), within the funds established in KRS 16.510 and 61.515, or the 10
insurance trust fund established under KRS 61.701. Notwithstanding 11
any minimum compensation requirements provided by law, the 12
deductions provided by this paragraph shall be made, and the 13
compensation of the member shall be reduced accordingly. 14
3. Each employer shall submit payroll reports, contributions lists, and other 15
data as may be required by administrative regulation promulgated by the 16
board of trustees pursuant to KRS Chapter 13A. 17
4. Every member shall be deemed to consent and agree to the deductions 18
made pursuant to this paragraph, and the payment of salary or 19
compensation less the deductions shall be a full and complete discharge 20
of all claims for services rendered by the person during the period 21
covered by the payment, except as to any benefits provided by KRS 22
16.505 to 16.652 or 61.510 to 61.705. No member may elect whether to 23
participate in, or choose the contribution amount to accounts established 24
pursuant to 26 U.S.C. sec. 401(h) within the funds established in KRS 25
16.510 and 61.515, or the insurance trust fund established under KRS 26
61.701. The member shall have no option to receive the contribution 27 UNOFFICIAL COPY 24 RS BR 1498
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required by this paragraph directly instead of having the contribution 1
paid to accounts established pursuant to 26 U.S.C. sec. 401(h) within the 2
funds established in KRS 16.510 and 61.515, or the insurance trust fund 3
established under KRS 61.701. No member may receive a rebate or 4
refund of contributions. If a member establishes a membership date 5
prior to September 1, 2008, pursuant to KRS 61.552(2) or (3), then this 6
paragraph shall not apply to the member and all contributions previously 7
deducted in accordance with this paragraph shall be refunded to the 8
member without interest. The contribution made pursuant to this 9
paragraph shall not act as a reduction or offset to any other contribution 10
required of a member or recipient under KRS 16.505 to 16.652 or 11
61.510 to 61.705. 12
5. The board of trustees, at its discretion, may direct that the contributions 13
required by this paragraph be accounted for within accounts established 14
pursuant to 26 U.S.C. sec. 401(h) within the funds established in KRS 15
16.510 and 61.515, or the insurance trust fund established under KRS 16
61.701, through the use of separate accounts. 17
(4) (a) The premium required to provide hospital and medical insurance plan 18
coverage under this section shall be paid wholly or partly from funds 19
contributed by: 20
1. The recipient of a retirement allowance, by payroll deduction from his 21
or her retirement allowance, or by other method; 22
2. The insurance trust fund established under KRS 61.701 or accounts 23
established pursuant to 26 U.S.C. sec. 401(h) within the funds 24
established in KRS 16.510 and 61.515; 25
3. Another state-administered retirement system, including the County 26
Employees Retirement System, under a reciprocal arrangement, except 27 UNOFFICIAL COPY 24 RS BR 1498
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that any portion of the premium paid from the funds specified by 1
subparagraph 2. of this paragraph under a reciprocal agreement shall not 2
exceed the amount that would be payable under this section if all the 3
member's service were in the systems administered by the Kentucky 4
Retirement Systems. If the board provides for cross-referencing of 5
insurance premiums, the employer's contribution for the working 6
member or spouse shall be applied toward the premium, and the 7
insurance trust fund established under KRS 61.701 or accounts 8
established pursuant to 26 U.S.C. sec. 401(h) within the funds 9
established in KRS 16.510 and 61.515 shall pay the balance; or 10
4. A combination of the fund sources described by subparagraphs 1. to 3. 11
of this paragraph. 12
Group rates under the hospital and medical insurance plan shall be made 13
available to the spouse, each dependent child, and each disabled child, 14
regardless of the disabled child's age, of a recipient who is a former member 15
or the beneficiary, if the premium for the hospital and medical insurance for 16
the spouse, each dependent child, and each disabled child, or beneficiary is 17
paid by payroll deduction from the retirement allowance, electronic funds 18
transfer, or by another method. For purposes of this subsection only, a child 19
shall be considered disabled if he or she has been determined to be eligible for 20
federal Social Security disability benefits or meets the dependent disability 21
standard established by the Department of Employee Insurance in the 22
Personnel Cabinet. 23
(b) For a member who began participating in the system prior to July 1, 2003, the 24
monthly contribution rate shall be paid by the system from the funds specified 25
under paragraph (a)2. of this subsection and shall be equal to a percentage of 26
the single premium to cover the retired member as follows: 27 UNOFFICIAL COPY 24 RS BR 1498
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1. One hundred percent (100%) of the monthly premium for single 1
coverage shall be paid for a retired member who had two hundred forty 2
(240) months of service or more upon retirement or for a retired member 3
who when he or she was an employee became disabled as a direct result 4
of an act in line of duty as defined in KRS 16.505 or as a result of a 5
duty-related injury as defined in KRS 61.621; 6
2. Seventy-five percent (75%) of the monthly premium for single coverage 7
shall be paid for a retired member who had less than two hundred forty 8
(240) months of service but at least one hundred eighty (180) months of 9
service upon retirement, provided such retired member agrees to pay the 10
remaining twenty-five percent (25%) by payroll deduction from his or 11
her retirement allowance, electronic funds transfer, or by another 12
method; 13
3. Fifty percent (50%) of the monthly premium for single coverage shall be 14
paid for a retired member who had less than one hundred eighty (180) 15
months of service but had at least one hundred twenty (120) months of 16
service upon retirement, provided such retired member agrees to pay the 17
remaining fifty percent (50%) by payroll deduction from his or her 18
retirement allowance, electronic funds transfer, or by another method; or 19
4. Twenty-five percent (25%) of the monthly premium for single coverage 20
shall be paid for a retired member who had less than one hundred twenty 21
(120) months of service but had at least forty-eight (48) months of 22
service upon retirement, provided such retired member agrees to pay the 23
remaining seventy-five percent (75%) by payroll deduction from his or 24
her retirement allowance, electronic funds transfer, or by another 25
method. 26
(c) Notwithstanding paragraph (b) of this subsection, for a member participating 27 UNOFFICIAL COPY 24 RS BR 1498
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in the system prior to July 1, 2003, who: 1
1. Dies as a direct result of an act in line of duty as defined in KRS 16.505 2
or dies as a result of a duty-related injury as defined in KRS 61.621, the 3
monthly premium shall be paid for his or her spouse so long as the 4
spouse remains eligible for a monthly retirement benefit; 5
2. Becomes totally and permanently disabled as defined in KRS 16.582 as 6
a direct result of an act in line of duty as defined in KRS 16.505, 7
receives a satisfactory determination of a hazardous disability that is a 8
direct result of an act in line of duty as defined in KRS 16.505, or 9
becomes disabled as a result of a duty-related injury as defined in KRS 10
61.621 and is eligible for the benefits provided by KRS 61.621(5)(a), the 11
monthly premium shall be paid for his or her spouse so long as the 12
member and the spouse individually remain eligible for a monthly 13
retirement benefit; and 14
3. Dies as a direct result of an act in line of duty as defined in KRS 16.505, 15
dies as a result of a duty-related injury as defined in KRS 61.621, 16
becomes totally and permanently disabled as defined in KRS 16.582 as a 17
direct result of an act in line of duty as defined in KRS 16.505, receives 18
a satisfactory determination of a hazardous disability that is a direct 19
result of an act in line of duty as defined in KRS 16.505, or becomes 20
disabled as a result of a duty-related injury as defined in KRS 61.621 21
and is eligible for the benefits provided by KRS 61.621(5)(a), the 22
monthly premium shall be paid for each dependent child as defined in 23
KRS 16.505, so long as the member remains eligible for a monthly 24
retirement benefit, unless deceased, and each dependent child 25
individually remains eligible under KRS 16.505. 26
(d) 1. For a member who began participating in the system prior to July 1, 27 UNOFFICIAL COPY 24 RS BR 1498
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2003, who was determined to be in a hazardous position in the Kentucky 1
Employees Retirement System or in a position in the State Police 2
Retirement System, the funds specified under paragraph (a)2. of this 3
subsection shall also pay a percentage of the monthly contribution rate 4
sufficient to fund the premium costs for hospital and medical insurance 5
coverage for the spouse and for each dependent child of a recipient. 6
2. The percentage of the monthly contribution rate paid for the spouse and 7
each dependent child of a recipient who was in a hazardous position in 8
accordance with subparagraph 1. of this paragraph shall be based solely 9
on the member's service in a hazardous position using the formula in 10
paragraph (b) of this subsection. 11
(e) For members who begin participating in the system on or after July 1, 2003: 12
1. Participation in the insurance benefits provided under this section shall 13
not be allowed until the member has earned at least one hundred twenty 14
(120) months of service in the state-administered retirement systems, 15
except that for members who begin participating in the system on or 16
after September 1, 2008, participation in the insurance benefits provided 17
under this section shall not be allowed until the member has earned at 18
least one hundred eighty (180) months of service credited under KRS 19
16.543(1) or 61.543(1), or another state-administered retirement system. 20
2. A member who meets the minimum service requirements as provided by 21
subparagraph 1. of this paragraph shall upon retirement be eligible for 22
the following monthly contribution rate to be paid on his or her behalf 23
from the funds specified under paragraph (a)2. of this subsection: 24
a. For members with service in a nonhazardous position, a monthly 25
insurance contribution of ten dollars ($10) for each year of service 26
as a participating employee in a nonhazardous position; and 27 UNOFFICIAL COPY 24 RS BR 1498
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b. For members with service in a hazardous position or who 1
participate in the State Police Retirement System, a monthly 2
insurance contribution of fifteen dollars ($15) for each year of 3
service as a participating employee in a hazardous position or the 4
State Police Retirement System. 5
c. Upon the death of the retired member, the beneficiary, if the 6
beneficiary is the member's spouse, shall be entitled to a monthly 7
insurance contribution of ten dollars ($10) for each year of service 8
the member attained as a participating employee in a hazardous 9
position. 10
3. The minimum service requirement to participate in benefits as provided 11
by subparagraph 1. of this paragraph shall be waived for a member who 12
receives a satisfactory determination of a hazardous disability that is a 13
direct result of an act in line of duty as defined in KRS 16.505, and the 14
premium for the member, the member's spouse, and for each 15
dependent child as defined in KRS 16.505 shall be paid in full by the 16
systems[member shall be entitled to the benefits payable under this 17
subsection as though the member had twenty (20) years of service in a 18
hazardous position]. 19
4. The minimum service required to participate in benefits as provided by 20
subparagraph 1. of this paragraph shall be waived for a member who is 21
disabled as a result of a duty-related injury as defined in KRS 61.621 22
and is eligible for the benefits provided by KRS 61.621(5)(b), and the 23
member shall be entitled to the benefits payable under this subsection as 24
though the member had twenty (20) years of service in a nonhazardous 25
position. 26
5. Notwithstanding the provisions of this paragraph, the minimum service 27 UNOFFICIAL COPY 24 RS BR 1498
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requirement to participate in benefits as provided by subparagraph 1. of 1
this paragraph shall be waived for a for a member who dies as a direct 2
result of an act in line of duty as defined in KRS 16.505, who becomes 3
totally and permanently disabled as defined in KRS 16.582 as a direct 4
result of an act in line of duty as defined in KRS 16.505, who dies as a 5
result of a duty-related injury as defined in KRS 61.621, or who 6
becomes disabled as a result of a duty-related injury as defined in KRS 7
61.621 and is eligible for the benefits provided by KRS 61.621(5)(a), 8
and the premium for the member, the member's spouse, and for each 9
dependent child as defined in KRS 16.505 shall be paid in full by the 10
systems so long as the member, member's spouse, or dependent child 11
individually remains eligible for a monthly retirement benefit. 12
6. Except as provided by subparagraphs 3. and[subparagraph] 5. of this 13
paragraph, the monthly insurance contribution amount shall be 14
increased: 15
a. On July 1 of each year by one and one-half percent (1.5%). The 16
increase shall be cumulative and shall continue to accrue after the 17
member's retirement for as long as a monthly insurance 18
contribution is payable to the retired member or beneficiary but 19
shall not apply to any increase in the contribution attributable to 20
the increase specified by subdivision b. of this subparagraph; and 21
b. On January 1 of each year by five dollars ($5) for members who 22
have accrued an additional full year of service as a participating 23
employee beyond the career threshold, subject to the following 24
restrictions: 25
i. The additional insurance contribution provided by this 26
subdivision shall only be applied to the monthly contribution 27 UNOFFICIAL COPY 24 RS BR 1498
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amounts provided under subparagraph 2.a. and b. of this 1
paragraph; 2
ii. The additional insurance contribution provided by this 3
subdivision shall only be payable towards the health plans 4
offered by the system to retirees who are not eligible for 5
Medicare or for reimbursements provided to retirees not 6
eligible for Medicare pursuant to subsection (6)(a)2. of this 7
section; and 8
iii. In order for the annual increase to occur as provided by this 9
subdivision, the funding level of retiree health benefits for 10
the system in which the employee is receiving the additional 11
insurance contribution shall be at least ninety percent (90%) 12
as of the most recent actuarial valuation and be projected by 13
the actuary to remain ninety percent (90%) for the year in 14
which the increase is provided. 15
7. The benefits of this paragraph provided to a member whose participation 16
begins on or after July 1, 2003, shall not be considered as benefits 17
protected by the inviolable contract provisions of KRS 16.652 or 18
61.692. The General Assembly reserves the right to suspend or reduce 19
the benefits conferred in this paragraph if in its judgment the welfare of 20
the Commonwealth so demands. 21
8. An employee whose membership date is on or after September 1, 2008, 22
who retires and is reemployed in a regular full-time position required to 23
participate in the system or the County Employees Retirement System 24
shall not be eligible for health insurance coverage or benefits provided 25
by this section and shall take coverage with his or her employing agency 26
during the period of reemployment in a regular full-time position. 27 UNOFFICIAL COPY 24 RS BR 1498
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9. For purposes of this paragraph: 1
a. "Career threshold" for a member with service in a nonhazardous 2
position means twenty-seven (27) years of service credited under 3
KRS 16.543(1), 61.543(1), 78.615(1), or another state-4
administered retirement system and for a member with service in a 5
hazardous position means the service requirements specified by 6
KRS 16.577(2) or (3) or 16.583(6)(b), as applicable; and 7
b. "Funding level" means the actuarial value of assets divided by the 8
actuarially accrued liability expressed as a percentage that is 9
determined and reported by the system's actuary in the annual 10
actuarial valuation. 11
(f) For members with service in another state-administered retirement system 12
who select hospital and medical insurance plan coverage through the system: 13
1. The system shall compute the member's combined service, including 14
service credit in another state-administered retirement system, and 15
calculate the portion of the member's premium monthly contribution rate 16
to be paid by the funds specified under paragraph (a)2. of this subsection 17
according to the criteria established in paragraphs (a) to (e) of this 18
subsection. Each state-administered retirement system shall pay 19
annually to the insurance trust fund established under KRS 61.701 the 20
portion of the system's cost of the retiree's monthly contribution for 21
single coverage for hospital and medical insurance plan which shall be 22
equal to the percentage of the member's number of months of service in 23
the other state-administered retirement plan divided by his or her total 24
combined service and in conjunction with the reciprocal agreement 25
established between the system and the other state-administered 26
retirement systems. The amounts paid by the other state-administered 27 UNOFFICIAL COPY 24 RS BR 1498
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retirement plans and by the Kentucky Retirement Systems from funds 1
specified under paragraph (a)2. of this subsection shall not be more than 2
one hundred percent (100%) of the monthly contribution adopted by the 3
respective boards of trustees; 4
2. A member may not elect coverage for hospital and medical benefits 5
through more than one (1) of the state-administered retirement systems; 6
and 7
3. A state-administered retirement system shall not pay any portion of a 8
member's monthly contribution for medical insurance unless the 9
member is a recipient or annuitant of the plan. 10
(5) Premiums paid for hospital and medical insurance coverage procured under 11
authority of this section shall be exempt from any premium tax which might 12
otherwise be required under KRS Chapter 136. The payment of premiums by the 13
funds described by subsection (4)(a)2. of this section shall not constitute taxable 14
income to an insured recipient. No commission shall be paid for hospital and 15
medical insurance procured under authority of this section. 16
(6) (a) The board shall promulgate an administrative regulation to establish a medical 17
insurance reimbursement plan to provide reimbursement for hospital and 18
medical insurance plan premiums of recipients of a retirement allowance who: 19
1. Are not eligible for the same level of hospital and medical benefits as 20
recipients living in Kentucky and having the same Medicare hospital 21
and medical insurance eligibility status; or 22
2. Are eligible for retiree health subsidies as provided by subsection (4)(d) 23
of this section, except for those recipients eligible for full premium 24
subsidies under subsection (4)(e)5. of this section. The reimbursement 25
program as provided by this subparagraph shall be available to the 26
recipient regardless of the hospital and medical insurance plans offered 27 UNOFFICIAL COPY 24 RS BR 1498
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by the systems. 1
(b) An eligible recipient shall file proof of payment for hospital and medical 2
insurance plan coverage with the retirement office. Reimbursement to eligible 3
recipients shall be made on a quarterly basis. The recipient shall be eligible 4
for reimbursement of substantiated medical insurance premiums for an 5
amount not to exceed the total monthly contribution rate determined under 6
subsection (4) of this section. 7
(c) For purposes of recipients described by paragraph (a)1. of this subsection, the 8
plan shall not be made available if all recipients are eligible for the same 9
coverage as recipients living in Kentucky. 10
Section 2. KRS 78.5536 is amended to read as follows: 11
(1) For purposes of this section: 12
(a) "Hospital and medical insurance plan" may include, at the board's discretion, 13
any one (1) or more of the following: 14
1. Any hospital and medical expense policy or certificate, provider-15
sponsored integrated health delivery network, self-insured medical plan, 16
health maintenance organization contract, or other health benefit plan; 17
2. Any health savings account as permitted by 26 U.S.C. sec. 223 or health 18
reimbursement arrangement or a similar account as may be permitted by 19
26 U.S.C. sec. 105 or 106. Such arrangement or account, at the board's 20
discretion, may reimburse any medical expense permissible under 26 21
U.S.C. sec. 213; or 22
3. A medical insurance reimbursement program established by the board 23
through the promulgation of administrative regulation under which 24
members purchase individual health insurance coverage through a health 25
insurance exchange established under 42 U.S.C. sec. 18031 or 18041; 26
(b) "Monthly contribution rate" shall be the amount determined by the board 27 UNOFFICIAL COPY 24 RS BR 1498
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based upon the requirements of subsection (4)(a) to (d) of this section, except 1
that for members who began participating in the system on or after July 1, 2
2003, the term shall mean the amount determined in subsection (4)(e) of this 3
section; and 4
(c) "Months of service" shall mean the total months of combined service used to 5
determine benefits under the system, except service added to determine 6
disability benefits or service otherwise prohibited from being used to 7
determine retiree health benefits under KRS 78.510 to 78.852 shall not be 8
counted as "months of service." 9
(2) (a) 1. The board of trustees of the system shall arrange by appropriate contract 10
or on a self-insured basis to provide a group hospital and medical 11
insurance plan coverage for: 12
a. Present and future recipients of a retirement allowance from the 13
County Employees Retirement System; and 14
b. The spouse and each qualified dependent of a recipient who is a 15
former member or the beneficiary, provided the spouse and 16
dependent meet the requirements to participate in the hospital and 17
medical insurance plans established, contracted, or authorized by 18
the system. 19
2. Any recipient who chooses coverage under a hospital and medical 20
insurance plan shall pay, by payroll deduction from the retirement 21
allowance, electronic funds transfer, or by another method, the 22
difference between the premium cost of the hospital and medical 23
insurance plan coverage selected and the monthly contribution rate to 24
which he or she would be entitled under this section. 25
(b) 1. For present and future recipients of a retirement allowance from the 26
system who are not eligible for Medicare and for those recipients 27 UNOFFICIAL COPY 24 RS BR 1498
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described in subparagraph 3.b. of this paragraph, the board may 1
authorize these participants to be included in the Kentucky Employees 2
Health Plan as provided by KRS 18A.225 to 18A.2287 and shall provide 3
benefits for recipients in the plan equal to those provided to state 4
employees having the same Medicare hospital and medical insurance 5
eligibility status. Notwithstanding the provisions of any other statute 6
except subparagraph 3.b. of this paragraph, system recipients shall be 7
included in the same class as current state employees for purposes of 8
determining medical insurance policies and premiums in the Kentucky 9
Employees Health Plan as provided by KRS 18A.225 to 18A.2287. 10
2. Regardless of age, if a recipient or the spouse or dependent child of a 11
recipient who elects coverage becomes eligible for Medicare, he or she 12
shall participate in the plans offered by the systems for Medicare 13
eligible recipients. Individuals participating in the Medicare eligible 14
plans may be required to obtain and pay for Medicare Part A and Part B 15
coverage in order to participate in the Medicare eligible plans offered by 16
the system. 17
3. The system shall continue to provide the same hospital and medical 18
insurance plan coverage for recipients and qualifying dependents after 19
the age of sixty-five (65) as before the age of sixty-five (65), if: 20
a. The recipient is not eligible for Medicare coverage; or 21
b. The recipient would otherwise be eligible for Medicare coverage 22
but is subject to the Medicare Secondary Payer Act under 42 23
U.S.C. sec. 1395y(b) and has been reemployed by a participating 24
agency which offers the recipient a hospital and medical insurance 25
benefit or by a participating agency which is prevented from 26
offering a hospital and medical benefit to the recipient as a 27 UNOFFICIAL COPY 24 RS BR 1498
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condition of reemployment under KRS 70.293, 95.022, or 1
164.952. Individuals who are eligible, pursuant to this subdivision, 2
to be included in the Kentucky Employees Health Plan as provided 3
by KRS 18A.225 to 18A.2287 may be rated as a separate class 4
from other eligible employees and retirees for the purpose of 5
determining medical insurance premiums. 6
(c) For recipients of a retirement allowance who are not eligible for the same 7
level of hospital and medical benefits as recipients living in Kentucky having 8
the same Medicare hospital and medical insurance eligibility status, the board 9
shall provide a medical insurance reimbursement plan as described in 10
subsection (6) of this section. 11
(d) Notwithstanding anything in KRS Chapter 78 to the contrary, the board of 12
trustees, in its discretion, may take necessary steps to ensure compliance with 13
42 U.S.C. secs. 300bb-1 et seq. 14
(3) (a) Each employer participating in the County Employees Retirement System as 15
provided in KRS 78.510 to 78.852 shall contribute to the insurance trust fund 16
established by KRS 61.701 the amount necessary to provide the monthly 17
contribution rate as provided for under this section. Such employer 18
contribution rate shall be developed by appropriate actuarial method as a part 19
of the determination of each respective employer contribution rate determined 20
under KRS 78.635. 21
(b) 1. Each employer described in paragraph (a) of this subsection shall deduct 22
from the creditable compensation of each member whose membership 23
date begins on or after September 1, 2008, an amount equal to one 24
percent (1%) of the member's creditable compensation. The deducted 25
amounts shall, at the discretion of the board, be credited to accounts 26
established pursuant to 26 U.S.C. sec. 401(h), within the funds 27 UNOFFICIAL COPY 24 RS BR 1498
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established in KRS 78.520, or the insurance trust fund established under 1
KRS 61.701. Notwithstanding the provisions of this paragraph, a 2
transfer of assets between the accounts established pursuant to 26 U.S.C. 3
sec. 401(h), within the funds established in KRS 78.520, and the 4
insurance trust fund established under KRS 61.701 shall not be allowed. 5
2. The employer shall file the contributions as provided by subparagraph 1. 6
of this paragraph at the retirement office in accordance with KRS 7
78.625. Any interest or penalties paid on any delinquent contributions 8
shall be credited to accounts established pursuant to 26 U.S.C. sec. 9
401(h), within the funds established in KRS 78.520, or the insurance 10
trust fund established under KRS 61.701. Notwithstanding any 11
minimum compensation requirements provided by law, the deductions 12
provided by this paragraph shall be made, and the compensation of the 13
member shall be reduced accordingly. 14
3. Each employer shall submit payroll reports, contributions lists, and other 15
data as may be required by administrative regulation promulgated by the 16
board of trustees pursuant to KRS Chapter 13A. 17
4. Every member shall be deemed to consent and agree to the deductions 18
made pursuant to this paragraph, and the payment of salary or 19
compensation less the deductions shall be a full and complete discharge 20
of all claims for services rendered by the person during the period 21
covered by the payment, except as to any benefits provided by KRS 22
78.510 to 78.852. No member may elect whether to participate in, or 23
choose the contribution amount to accounts established pursuant to 26 24
U.S.C. sec. 401(h) within the funds established in KRS 78.520, or the 25
insurance trust fund established under KRS 61.701. The member shall 26
have no option to receive the contribution required by this paragraph 27 UNOFFICIAL COPY 24 RS BR 1498
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directly instead of having the contribution paid to accounts established 1
pursuant to 26 U.S.C. sec. 401(h) within the funds established in KRS 2
78.520, or the insurance trust fund established under KRS 61.701. No 3
member may receive a rebate or refund of contributions. If a member 4
establishes a membership date prior to September 1, 2008, pursuant to 5
KRS 61.552(2) or (3), then this paragraph shall not apply to the member 6
and all contributions previously deducted in accordance with this 7
paragraph shall be refunded to the member without interest. The 8
contribution made pursuant to this paragraph shall not act as a reduction 9
or offset to any other contribution required of a member or recipient 10
under KRS 78.510 to 78.852. 11
5. The board of trustees, at its discretion, may direct that the contributions 12
required by this paragraph be accounted for within accounts established 13
pursuant to 26 U.S.C. sec. 401(h) within the funds established in KRS 14
78.520, or the insurance trust fund established under KRS 61.701, 15
through the use of separate accounts. 16
(4) (a) The premium required to provide hospital and medical insurance plan 17
coverage under this section shall be paid wholly or partly from funds 18
contributed by: 19
1. The recipient of a retirement allowance, by payroll deduction from his 20
or her retirement allowance, electronic funds transfer, or by other 21
method; 22
2. The insurance trust fund established by KRS 61.701 or accounts 23
established pursuant to 26 U.S.C. sec. 401(h) within the funds 24
established in KRS 78.520; 25
3. Another state-administered retirement system, including the systems 26
administered by Kentucky Retirement Systems, under a reciprocal 27 UNOFFICIAL COPY 24 RS BR 1498
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arrangement, except that any portion of the premium paid from the 1
funds specified by subparagraph 2. of this paragraph under a reciprocal 2
agreement shall not exceed the amount that would be payable under this 3
section if all the member's service were in the County Employees 4
Retirement System. If the board provides for cross-referencing of 5
insurance premiums, the employer's contribution for the working 6
member or spouse shall be applied toward the premium, and the 7
insurance trust fund established under KRS 61.701 or accounts 8
established pursuant to 26 U.S.C. sec. 401(h) within the funds 9
established in KRS 78.520, shall pay the balance; or 10
4. A combination of the fund sources described by subparagraph 1. to 3. of 11
this paragraph. 12
Group rates under the hospital and medical insurance plan shall be made 13
available to the spouse, each dependent child, and each disabled child, 14
regardless of the disabled child's age, of a recipient who is a former member 15
or the beneficiary, if the premium for the hospital and medical insurance for 16
the spouse, each dependent child, and each disabled child, or beneficiary is 17
paid by payroll deduction from the retirement allowance, electronic funds 18
transfer, or by another method. For purposes of this subsection only, a child 19
shall be considered disabled if he or she has been determined to be eligible for 20
federal Social Security disability benefits or meets the dependent disability 21
standard established by the Department of Employee Insurance in the 22
Personnel Cabinet. 23
(b) For a member who began participating in the system prior to July 1, 2003, the 24
monthly contribution rate shall be paid by the system from the funds specified 25
under paragraph (a)2. of this subsection and shall be equal to a percentage of 26
the single premium to cover the retired member as follows: 27 UNOFFICIAL COPY 24 RS BR 1498
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1. One hundred percent (100%) of the monthly premium for single 1
coverage shall be paid for a retired member who had two hundred forty 2
(240) months of service or more upon retirement or for a retired member 3
who when he or she was an employee was disabled as a direct result of 4
an act in line of duty as defined in KRS 78.510(48) or as a result of a 5
duty-related injury as defined in KRS 61.621; 6
2. Seventy-five percent (75%) of the monthly premium for single coverage 7
shall be paid for a retired member who had less than two hundred forty 8
(240) months of service but at least one hundred eighty (180) months of 9
service upon retirement, provided such retired member agrees to pay the 10
remaining twenty-five percent (25%) by payroll deduction from his or 11
her retirement allowance, electronic funds transfer, or by another 12
method; 13
3. Fifty percent (50%) of the monthly premium for single coverage shall be 14
paid for a retired member who had less than one hundred eighty (180) 15
months of service but had at least one hundred twenty (120) months of 16
service upon retirement, provided such retired member agrees to pay the 17
remaining fifty percent (50%) by payroll deduction from his or her 18
retirement allowance, electronic funds transfer, or by another method; or 19
4. Twenty-five percent (25%) of the monthly premium for single coverage 20
shall be paid for a retired member who had less than one hundred twenty 21
(120) months of service but had at least forty-eight (48) months of 22
service upon retirement, provided such retired member agrees to pay the 23
remaining seventy-five percent (75%) by payroll deduction from his or 24
her retirement allowance, electronic funds transfer, or by another 25
method. 26
(c) Notwithstanding paragraph (b) of this subsection, for a member participating 27 UNOFFICIAL COPY 24 RS BR 1498
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in the system prior to July 1, 2003, who: 1
1. Dies as a direct result of an act in line of duty as defined in KRS 78.510 2
or dies as a result of a duty-related injury as defined in KRS 61.621, the 3
monthly premium shall be paid for his or her spouse so long as the 4
spouse remains eligible for a monthly retirement benefit; 5
2. Becomes totally and permanently disabled as defined in KRS 78.5524 as 6
a direct result of an act in line of duty as defined in KRS 78.510, 7
receives a satisfactory determination of a hazardous disability that is a 8
direct result of an act in line of duty as defined in KRS 78.510, or 9
becomes disabled as a result of a duty-related injury as defined in KRS 10
61.621 and is eligible for the benefits provided by KRS 61.621(5)(a), the 11
monthly premium shall be paid for his or her spouse so long as the 12
member and the spouse individually remain eligible for a monthly 13
retirement benefit; and 14
3. Dies as a direct result of an act in line of duty as defined in KRS 78.510, 15
dies as a result of a duty-related injury as defined in KRS 61.621, 16
becomes totally and permanently disabled as defined in KRS 78.5524 as 17
a direct result of an act in line of duty as defined in KRS 78.510, 18
receives a satisfactory determination of a hazardous disability that is a 19
direct result of an act in line of duty as defined in KRS 78.510, or 20
becomes disabled as a result of a duty-related injury as defined in KRS 21
61.621 and is eligible for the benefits provided by KRS 61.621(5)(a), the 22
monthly premium shall be paid for each dependent child as defined in 23
KRS 78.510, so long as the member remains eligible for a monthly 24
retirement benefit, unless deceased, and each dependent child 25
individually remains eligible under KRS 78.510. 26
(d) 1. For a member who began participating in the system prior to July 1, 27 UNOFFICIAL COPY 24 RS BR 1498
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2003, who was determined to be in a hazardous position in the County 1
Employees Retirement System, the funds specified under paragraph 2
(a)2. of this subsection shall also pay a percentage of the monthly 3
contribution rate sufficient to fund the premium costs for hospital and 4
medical insurance coverage for the spouse and for each dependent child 5
of a recipient. 6
2. The percentage of the monthly contribution rate paid for the spouse and 7
each dependent child of a recipient who was in a hazardous position in 8
accordance with subparagraph 1. of this paragraph shall be based solely 9
on the member's service in a hazardous position using the formula in 10
paragraph (b) of this subsection, except that for any recipient of a 11
retirement allowance from the County Employees Retirement System 12
who was contributing to the system on January 1, 1998, for service in a 13
hazardous position, the percentage of the monthly contribution shall be 14
based on the total of hazardous service and any nonhazardous service as 15
a police or firefighter with the same agency, if that agency was 16
participating in the County Employees Retirement System but did not 17
offer hazardous duty coverage for its police and firefighters at the time 18
of initial participation. 19
(e) For members who begin participating in the system on or after July 1, 2003: 20
1. Participation in the insurance benefits provided under this section shall 21
not be allowed until the member has earned at least one hundred twenty 22
(120) months of service in the state-administered retirement systems, 23
except that for members who begin participating in the system on or 24
after September 1, 2008, participation in the insurance benefits provided 25
under this section shall not be allowed until the member has earned at 26
least one hundred eighty (180) months of service credited under KRS 27 UNOFFICIAL COPY 24 RS BR 1498
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78.615(1) or another state-administered retirement system. 1
2. A member who meets the minimum service requirements as provided by 2
subparagraph 1. of this paragraph shall upon retirement be eligible for 3
the following monthly contribution rate to be paid on his or her behalf 4
from the funds specified under paragraph (a)2. of this subsection: 5
a. For members with service in a nonhazardous position, a monthly 6
insurance contribution of ten dollars ($10) for each year of service 7
as a participating employee in a nonhazardous position; 8
b. For members with service in a hazardous position, a monthly 9
insurance contribution of fifteen dollars ($15) for each year of 10
service as a participating employee in a hazardous position; and 11
c. Upon the death of the retired member, the beneficiary, if the 12
beneficiary is the member's spouse, shall be entitled to a monthly 13
insurance contribution of ten dollars ($10) for each year of service 14
the member attained as a participating employee in a hazardous 15
position. 16
3. The minimum service requirement to participate in benefits as provided 17
by subparagraph 1. of this paragraph shall be waived for a member who 18
receives a satisfactory determination of a hazardous disability that is a 19
direct result of an act in line of duty as defined in KRS 78.510(48) and 20
the premium for the member, the member's spouse, and for each 21
dependent child as defined in KRS 78.510 shall be paid in full by the 22
systems so long as the member, member's spouse, or dependent child 23
individually remains eligible for a monthly retirement benefit[member 24
shall be entitled to the benefits payable under this subsection as though 25
the member had twenty (20) years of service in a hazardous position]. 26
4. The minimum service required to participate in benefits as provided by 27 UNOFFICIAL COPY 24 RS BR 1498
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subparagraph 1. of this paragraph shall be waived for a member who is 1
disabled as a result of a duty-related injury as defined in KRS 61.621 2
and is eligible for the benefits provided by KRS 61.621(5)(b), and the 3
member shall be entitled to the benefits payable under this subsection as 4
though the member had twenty (20) years of service in a nonhazardous 5
position. 6
5. Notwithstanding the provisions of this paragraph, the minimum service 7
requirement to participate in benefits as provided by subparagraph 1. of 8
this paragraph shall be waived for a member who dies as a direct result 9
of an act in line of duty as defined in KRS 78.510(48), who becomes 10
totally and permanently disabled as defined in KRS 78.5524 as a direct 11
result of an act in line of duty as defined in KRS 78.510, who dies as a 12
result of a duty-related injury as defined in KRS 61.621, or who 13
becomes disabled as a result of a duty-related injury as defined in KRS 14
61.621 and is eligible for the benefits provided by KRS 61.621(5)(a), 15
and the premium for the member, the member's spouse, and for each 16
dependent child as defined in KRS 78.510 shall be paid in full by the 17
systems so long as the member, member's spouse, or dependent child 18
individually remains eligible for a monthly retirement benefit. 19
6. Except as provided by subparagraphs 3. and 5.[subparagraph 4.] of this 20
paragraph, the monthly insurance contribution amount shall be 21
increased: 22
a. On July 1 of each year by one and one-half percent (1.5%). The 23
increase shall be cumulative and shall continue to accrue after the 24
member's retirement for as long as a monthly insurance 25
contribution is payable to the retired member or beneficiary but 26
shall not apply to any increase in the contribution attributable to 27 UNOFFICIAL COPY 24 RS BR 1498
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the increase specified by subdivision b. of this subparagraph; and 1
b. On January 1 of each year by five dollars ($5) for members who 2
have accrued an additional full year of service as a participating 3
employee beyond the career threshold, subject to the following 4
restrictions: 5
i. The additional insurance contribution provided by this 6
subdivision shall only be applied to the monthly contribution 7
amounts provided under subparagraph 2.a. and b. of this 8
paragraph; 9
ii. The additional insurance contribution provided by this 10
subdivision shall only be payable towards the health plans 11
offered by the system to retirees who are not eligible for 12
Medicare or for reimbursements provided to retirees not 13
eligible for Medicare pursuant to subsection (6)(a)2. of this 14
section; and 15
iii. In order for the annual increase to occur as provided by this 16
subdivision, the funding level of retiree health benefits for 17
the system in which the employee is receiving the additional 18
insurance contribution shall be at least ninety percent (90%) 19
as of the most recent actuarial valuation and be projected by 20
the actuary to remain ninety percent (90%) for the year in 21
which the increase is provided. 22
7. The benefits of this paragraph provided to a member whose participation 23
begins on or after July 1, 2003, shall not be considered as benefits 24
protected by the inviolable contract provisions of KRS 78.852. The 25
General Assembly reserves the right to suspend or reduce the benefits 26
conferred in this paragraph if in its judgment the welfare of the 27 UNOFFICIAL COPY 24 RS BR 1498
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Commonwealth so demands. 1
8. An employee whose membership date is on or after September 1, 2008, 2
who retires and is reemployed in a regular full-time position required to 3
participate in the system or the Kentucky Retirement Systems shall not 4
be eligible for health insurance coverage or benefits provided by this 5
section and shall take coverage with his or her employing agency during 6
the period of reemployment in a regular full-time position. 7
9. For purposes of this paragraph: 8
a. "Career threshold" for a member with service in a nonhazardous 9
position means twenty-seven (27) years of service credited under 10
KRS 16.543(1), 61.543(1), 78.615(1), or another state-11
administered retirement system and for a member with service in a 12
hazardous position means the service requirements specified by 13
KRS 78.5514(2)(a)2. or (3)(b), or 78.5516(6)(b), as applicable; 14
and 15
b. "Funding level" means the actuarial value of assets divided by the 16
actuarially accrued liability expressed as a percentage that is 17
determined and reported by the system's actuary in the annual 18
actuarial valuation. 19
(f) For members with service in another state-administered retirement system 20
who select hospital and medical insurance plan coverage through the system: 21
1. The system shall compute the member's combined service, including 22
service credit in another state-administered retirement system, and 23
calculate the portion of the member's premium monthly contribution rate 24
to be paid by the funds specified under paragraph (a)2. of this subsection 25
according to the criteria established in paragraphs (a) to (e) of this 26
subsection. Each state-administered retirement system shall pay 27 UNOFFICIAL COPY 24 RS BR 1498
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annually to the insurance trust fund established under KRS 61.701 the 1
portion of the system's cost of the retiree's monthly contribution for 2
single coverage for hospital and medical insurance plan which shall be 3
equal to the percentage of the member's number of months of service in 4
the other state-administered retirement plan divided by his or her total 5
combined service and in conjunction with the reciprocal agreement 6
established between the system and the other state-administered 7
retirement systems. The amounts paid by the other state-administered 8
retirement plans and by the County Employees Retirement System from 9
funds specified under paragraph (a)2. of this subsection shall not be 10
more than one hundred percent (100%) of the monthly contribution 11
adopted by the respective boards of trustees; 12
2. A member may not elect coverage for hospital and medical benefits 13
through more than one (1) of the state-administered retirement systems; 14
and 15
3. A state-administered retirement system shall not pay any portion of a 16
member's monthly contribution for medical insurance unless the 17
member is a recipient or annuitant of the plan. 18
(5) Premiums paid for hospital and medical insurance coverage procured under 19
authority of this section shall be exempt from any premium tax which might 20
otherwise be required under KRS Chapter 136. The payment of premiums by the 21
funds described by subsection (4)(a)2. of this section shall not constitute taxable 22
income to an insured recipient. No commission shall be paid for hospital and 23
medical insurance procured under authority of this section. 24
(6) (a) The board shall promulgate an administrative regulation to establish a medical 25
insurance reimbursement plan to provide reimbursement for hospital and 26
medical insurance plan premiums of recipients of a retirement allowance who: 27 UNOFFICIAL COPY 24 RS BR 1498
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1. Are not eligible for the same level of hospital and medical benefits as 1
recipients living in Kentucky and having the same Medicare hospital 2
and medical insurance eligibility status; or 3
2. Are eligible for retiree health subsidies as provided by subsection (4)(e) 4
of this section, except for those recipients eligible for full premium 5
subsidies under subsection (4)(e)5. of this section. The reimbursement 6
program as provided by this subparagraph shall be available to the 7
recipient regardless of the hospital and medical insurance plans offered 8
by the systems. 9
(b) An eligible recipient shall file proof of payment for hospital and medical 10
insurance plan coverage with the retirement office. Reimbursement to eligible 11
recipients shall be made on a quarterly basis. The recipient shall be eligible 12
for reimbursement of substantiated medical insurance premiums for an 13
amount not to exceed the total monthly contribution rate determined under 14
subsection (4) of this section. 15
(c) For purposes of recipients described by paragraph (a)1. of this subsection, the 16
plan shall not be made available if all recipients are eligible for the same 17
coverage as recipients living in Kentucky. 18
Section 3. Whereas protecting and honoring the public safety officers who have 19
given their health and their lives in service to the Commonwealth is a value held by all 20
Kentuckians, an emergency is declared to exist, and this Act takes effect upon its passage 21
and approval by the Governor or upon its otherwise becoming a law. 22