KRS 18A.225: Health care insurance coverage -- Requirements of prospective carriers --

Analysis of carrier coverage data -- Agency's termination of participation --

Provision of amount of employer contribution -- Lapse of excess flexible

spending account fund s -- Advisory Committee of State Health Insurance

Subscribers -- No abortion coverage -- Appeal of formulary change -- Retiree's

participation -- Mail-order drug option coverage -- Nondiscrimination against

pharmacy in geographic coverage area -- Hearing aid coverage for minors --

Coverage for diagnosis and treatment of autism spectrum disorders -- Amino

acid-based elemental formula coverage -- Access to certain services in

contiguous counties -- Study of bid variation -- Regional rating bid scenario --

Optometric coverage -- Standards for provider participation -- Special

enrollment period for pregnancy. (Effective until January 1, 2027)

(1) (a) The term "employee" for purposes of this section means:

1. Any person, including an elected publ ic official, who is regularly

employed by any department, office, board, agency, or branch of state

government; or by a public postsecondary educational institution; or by

any city, urban -county, charter county, county, or consolidated local

government, whose legislative body has opted to participate in the state -

sponsored health insurance program pursuant to KRS 79.080; and who

is either a contributing member to any one (1) of the retirement systems

administered by the state, including but not limited to t he Kentucky

Retirement Systems, County Employees Retirement System, Kentucky

Teachers' Retirement System, the Legislators' Retirement Plan, or the

Judicial Retirement Plan; or is receiving a contractual contribution from

the state toward a retirement plan; or, in the case of a public

postsecondary education institution, is an individual participating in an

optional retirement plan authorized by KRS 161.567; or is eligible to

participate in a retirement plan established by an employer who ceases

participating in the Kentucky Employees Retirement System pursuant to

KRS 61.522 whose employees participated in the health insurance plans

administered by the Personnel Cabinet prior to the employer's effective

cessation date in the Kentucky Employees Retirement System;

2. Any certified or classified employee of a local board of education or a

public charter school as defined in KRS 160.1590;

3. Any elected member of a local board of education;

4. Any person who is a present or future recipient of a retirement

allowance from the Kentucky Retirement Systems, County Employees

Retirement System, Kentucky Teachers' Retirement System, the

Legislators' Retirement Plan, the Judicial Retirement Plan, or the

Kentucky Community and Technical College System's optional

retirement plan authorized by KRS 161.567, except that a person who is

receiving a retirement allowance and who is age sixty -five (65) or older

shall not be included, with the exception of persons covered under KRS

61.702(2)(b)3. and 78.5536(2)(b)3., unless he or she is actively

employed pursuant to subparagraph 1. of this paragraph; and

5. Any eligible dependents and beneficiaries of participating employees

and retirees who are entitled to participate in the state -sponsored health

insurance program;

(b) The term "health benefit plan" for the purposes of this section means a health

benefit plan as defined in KRS 304.17A-005;

(c) The term "insurer" for the purposes of this section means an insurer as defined

in KRS 304.17A-005; and

(d) The term "managed care plan" for the purposes of this section means a

managed care plan as defined in KRS 304.17A-500.

(2) (a) The secretary of the Finance and Administration Cabinet, upon the

recommendation of the secretary of the Personnel Cabinet, shall procure, in

compliance with the provisions of KRS 45A.080, 45A.085, and 45A.090,

from one (1) or more insurers authorized to do business in this state, a group

health benefit plan that may include but not be limited to health maintenance

organization (HMO), preferred provider organization (PPO), point of service

(POS), and exclusive provider organization (EPO) benefit plans

encompassing all or any class or classes of employees. With the exception of

employers governed by the provisions of KRS Chapters 16, 18A, and 151B,

all employers of any class of employees or former employees shall enter into

a contract with the Personnel Cabinet prior to including that group in the state

health insurance group. The contracts shall include but not be limited to

designating the entity responsible for filing any federal forms, adoption of

policies required for proper plan administration, acceptance of the contractual

provisions with health insurance carriers or third -party administrators, and

adoption of the payment and rei mbursement methods necessary for efficient

administration of the health insurance program. Health insurance coverage

provided to state employees under this section shall, at a minimum, contain

the same benefits as provided under Kentucky Kare Standard as o f January 1,

1994, and shall include a mail -order drug option as provided in subsection

(13) of this section. All employees and other persons for whom the health care

coverage is provided or made available shall annually be given an option to

elect health care coverage through a self -funded plan offered by the

Commonwealth or, if a self -funded plan is not available, from a list of

coverage options determined by the competitive bid process under the

provisions of KRS 45A.080, 45A.085, and 45A.090 and made av ailable

during annual open enrollment.

(b) The policy or policies shall be approved by the commissioner of insurance

and may contain the provisions the commissioner of insurance approves,

whether or not otherwise permitted by the insurance laws.

(c) Any carrier bidding to offer health care coverage to employees shall agree to

provide coverage to all members of the state group, including active

employees and retirees and their eligible covered dependents and

beneficiaries, within the county or counties speci fied in its bid. Except as

provided in subsection (20) of this section, any carrier bidding to offer health

care coverage to employees shall also agree to rate all employees as a single

entity, except for those retirees whose former employers insure their active

employees outside the state -sponsored health insurance program and as

otherwise provided in KRS 61.702(2)(b)3.b. and 78.5536(2)(b)3.b.

(d) Any carrier bidding to offer health care coverage to employees shall agree to

provide enrollment, claims, and utilization data to the Commonwealth in a

format specified by the Personnel Cabinet with the understanding that the data

shall be owned by the Commonwealth; to provide data in an electronic form

and within a time frame specified by the Personnel Cabinet; a nd to be subject

to penalties for noncompliance with data reporting requirements as specified

by the Personnel Cabinet. The Personnel Cabinet shall take strict precautions

to protect the confidentiality of each individual employee; however,

confidentiality assertions shall not relieve a carrier from the requirement of

providing stipulated data to the Commonwealth.

(e) The Personnel Cabinet shall develop the necessary techniques and capabilities

for timely analysis of data received from carriers and, to the extent possible,

provide in the request -for-proposal specifics relating to data requirements,

electronic reporting, and penalties for noncompliance. The Commonwealth

shall own the enrollment, claims, and utilization data provided by each carrier

and shall develop methods to protect the confidentiality of the individual. The

Personnel Cabinet shall include in the October annual report submitted

pursuant to the provisions of KRS 18A.226 to the Governor, the General

Assembly, and the Chief Justice of the Supre me Court, an analysis of the

financial stability of the program, which shall include but not be limited to

loss ratios, methods of risk adjustment, measurements of carrier quality of

service, prescription coverage and cost management, and statutorily requi red

mandates. If state self -insurance was available as a carrier option, the report

also shall provide a detailed financial analysis of the self -insurance fund

including but not limited to loss ratios, reserves, and reinsurance agreements.

(f) If any agenc y participating in the state -sponsored employee health insurance

program for its active employees terminates participation and there is a state

appropriation for the employer's contribution for active employees' health

insurance coverage, then neither the agency nor the employees shall receive

the state -funded contribution after termination from the state -sponsored

employee health insurance program.

(g) Any funds in flexible spending accounts that remain after all reimbursements

have been processed shall be transferred to the credit of the state -sponsored

health insurance plan's appropriation account.

(h) Each entity participating in the state-sponsored health insurance program shall

provide an amount at least equal to the state contribution rate for the employer

portion of the health insurance premium. For any participating entity that used

the state payroll system, the employer contribution amount shall be equal to

but not greater than the state contribution rate.

(3) The premiums may be paid by the policyholder:

(a) Wholly from funds contributed by the employee, by payroll deduction or

otherwise;

(b) Wholly from funds contributed by any department, board, agency, public

postsecondary education institution, or branch of state, city, urban -county,

charter county, county, or consolidated local government; or

(c) Partly from each, except that any premium due for health care coverage or

dental coverage, if any, in excess of the premium amount contributed by any

department, board, agency, postsecondary education i nstitution, or branch of

state, city, urban -county, charter county, county, or consolidated local

government for any other health care coverage shall be paid by the employee.

(4) If an employee moves his or her place of residence or employment out of the

service area of an insurer offering a managed health care plan, under which he or

she has elected coverage, into either the service area of another managed health care

plan or into an area of the Commonwealth not within a managed health care plan

service ar ea, the employee shall be given an option, at the time of the move or

transfer, to change his or her coverage to another health benefit plan.

(5) No payment of premium by any department, board, agency, public postsecondary

educational institution, or branc h of state, city, urban -county, charter county,

county, or consolidated local government shall constitute compensation to an

insured employee for the purposes of any statute fixing or limiting the

compensation of such an employee. Any premium or other expe nse incurred by any

department, board, agency, public postsecondary educational institution, or branch

of state, city, urban -county, charter county, county, or consolidated local

government shall be considered a proper cost of administration.

(6) The policy or policies may contain the provisions with respect to the class or classes

of employees covered, amounts of insurance or coverage for designated classes or

groups of employees, policy options, terms of eligibility, and continuation of

insurance or coverage after retirement.

(7) Group rates under this section shall be made available to the disabled child of an

employee regardless of the child's age if the entire premium for the disabled child's

coverage is paid by the state employee. A child shall be cons idered disabled if he or

she has been determined to be eligible for federal Social Security disability benefits.

(8) The health care contract or contracts for employees shall be entered into for a

period of not less than one (1) year.

(9) The secretary sha ll appoint thirty -two (32) persons to an Advisory Committee of

State Health Insurance Subscribers to advise the secretary or the secretary's

designee regarding the state -sponsored health insurance program for employees.

The secretary shall appoint, from a list of names submitted by appointing

authorities, members representing school districts from each of the seven (7)

Supreme Court districts, members representing state government from each of the

seven (7) Supreme Court districts, two (2) members represent ing retirees under age

sixty-five (65), one (1) member representing local health departments, two (2)

members representing the Kentucky Teachers' Retirement System, and three (3)

members at large. The secretary shall also appoint two (2) members from a lis t of

five (5) names submitted by the Kentucky Education Association, two (2) members

from a list of five (5) names submitted by the largest state employee organization of

nonschool state employees, two (2) members from a list of five (5) names submitted

by the Kentucky Association of Counties, two (2) members from a list of five (5)

names submitted by the Kentucky League of Cities, and two (2) members from a

list of names consisting of five (5) names submitted by each state employee

organization that has tw o thousand (2,000) or more members on state payroll

deduction. The advisory committee shall be appointed in January of each year and

shall meet quarterly.

(10) Notwithstanding any other provision of law to the contrary, the policy or policies

provided to e mployees pursuant to this section shall not provide coverage for

obtaining or performing an abortion, nor shall any state funds be used for the

purpose of obtaining or performing an abortion on behalf of employees or their

dependents.

(11) Interruption of an established treatment regime with maintenance drugs shall be

grounds for an insured to appeal a formulary change through the established appeal

procedures approved by the Department of Insurance, if the physician supervising

the treatment certifies that the change is not in the best interests of the patient.

(12) Any employee who is eligible for and elects to participate in the state health

insurance program as a retiree, or the spouse or beneficiary of a retiree, under any

one (1) of the state-sponsored retirement systems shall not be eligible to receive the

state health insurance contribution toward health care coverage as a result of any

other employment for which there is a public employer contribution. This does not

preclude a retiree and an active e mployee spouse from using both contributions to

the extent needed for purchase of one (1) state sponsored health insurance policy

for that plan year.

(13) (a) The policies of health insurance coverage procured under subsection (2) of

this section shall inc lude a mail -order drug option for maintenance drugs for

state employees. Maintenance drugs may be dispensed by mail order in

accordance with Kentucky law.

(b) A health insurer shall not discriminate against any retail pharmacy located

within the geographic coverage area of the health benefit plan and that meets

the terms and conditions for participation established by the insurer, including

price, dispensing fee, and copay requirements of a mail -order option. The

retail pharmacy shall not be required to dispense by mail.

(c) The mail -order option shall not permit the dispensing of a controlled

substance classified in Schedule II.

(14) The policy or policies provided to state employees or their dependents pursuant to

this section shall provide coverage for obtaining a hearing aid and acquiring hearing

aid-related services for insured individuals under eighteen (18) years of age, subject

to a cap of one thousand four hundred dollars ($1,400) every thirty -six (36) months

pursuant to KRS 304.17A-132.

(15) Any policy provided to state employees or their dependents pursuant to this section

shall provide coverage for the diagnosis and treatment of autism spectrum disorders

consistent with KRS 304.17A-142.

(16) Any policy provided to state employees or their dependents pursuant to this section

shall provide coverage for obtaining amino acid -based elemental formula pursuant

to KRS 304.17A-258.

(17) If a state employee's residence and place of employment are in the same county,

and if the hospital located within that county does not offer surgical services,

intensive care services, obstetrical services, level II neonatal services, diagnostic

cardiac catheterization services, and magnetic resonance imaging services, the

employee may select a plan available in a contiguous county that does provide

those services, and the state contribution for the plan shall be the amount available

in the county where the plan selected is located.

(18) If a state employee's residence a nd place of employment are each located in

counties in which the hospitals do not offer surgical services, intensive care

services, obstetrical services, level II neonatal services, diagnostic cardiac

catheterization services, and magnetic resonance imagin g services, the employee

may select a plan available in a county contiguous to the county of residence that

does provide those services, and the state contribution for the plan shall be the

amount available in the county where the plan selected is located.

(19) The Personnel Cabinet is encouraged to study whether it is fair and reasonable and

in the best interests of the state group to allow any carrier bidding to offer health

care coverage under this section to submit bids that may vary county by county or

by larger geographic areas.

(20) Notwithstanding any other provision of this section, the bid for proposals for health

insurance coverage for calendar year 2004 shall include a bid scenario that reflects

the statewide rating structure provided in calendar year 2003 and a bid scenario that

allows for a regional rating structure that allows carriers to submit bids that may

vary by region for a given product offering as described in this subsection:

(a) The regional rating bid scenario shall not include a req uest for bid on a

statewide option;

(b) The Personnel Cabinet shall divide the state into geographical regions which

shall be the same as the partnership regions designated by the Department for

Medicaid Services for purposes of the Kentucky Health Care Pa rtnership

Program established pursuant to 907 KAR 1:705;

(c) The request for proposal shall require a carrier's bid to include every county

within the region or regions for which the bid is submitted and include but not

be restricted to a preferred provider organization (PPO) option;

(d) If the Personnel Cabinet accepts a carrier's bid, the cabinet shall award the

carrier all of the counties included in its bid within the region. If the Personnel

Cabinet deems the bids submitted in accordance with this subs ection to be in

the best interests of state employees in a region, the cabinet may award the

contract for that region to no more than two (2) carriers; and

(e) Nothing in this subsection shall prohibit the Personnel Cabinet from including

other requirements or criteria in the request for proposal.

(21) Any fully insured health benefit plan or self -insured plan issued or renewed on or

after July 12, 2006, to public employees pursuant to this section which provides

coverage for services rendered by a physician or osteopath duly licensed under KRS

Chapter 311 that are within the scope of practice of an optometrist duly licensed

under the provisions of KRS Chapter 320 shall provide the same payment of

coverage to optometrists as allowed for those services render ed by physicians or

osteopaths.

(22) Any fully insured health benefit plan or self -insured plan issued or renewed to

public employees pursuant to this section shall comply with:

(a) KRS 304.12-237;

(b) KRS 304.17A-270 and 304.17A-525;

(c) KRS 304.17A-600 to 304.17A-633;

(d) KRS 205.593;

(e) KRS 304.17A-700 to 304.17A-730;

(f) KRS 304.14-135;

(g) KRS 304.17A-580 and 304.17A-641;

(h) KRS 304.99-123;

(i) KRS 304.17A-138;

(j) KRS 304.17A-148;

(k) KRS 304.17A-163 and 304.17A-1631;

(l) KRS 304.17A-265;

(m) KRS 304.17A-261;

(n) KRS 304.17A-262;

(o) KRS 304.17A-145;

(p) KRS 304.17A-129;

(q) KRS 304.17A-133;

(r) KRS 304.17A-264; and

(s) Administrative regulations promulgated pursuant to statutes listed in this

subsection.

(23) (a) Any fully insured health benefit plan or self-insured plan issued or renewed to

public employees pursuant to this section shall provide a special enrollment

period to pregnant women who are eligible for coverage in accordance with

the requirements set forth in KRS 304.17-182.

(b) The Department of Employee Insurance shall, at or before the time a public

employee is initially offered the opportunity to enroll in t he plan or coverage,

provide the employee a notice of the special enrollment rights under this

subsection.

Effective: January 1, 2025