KRS 304.17B-021: Assessment of insurers -- Kentucky Access fund -- Reimbursement of

GAP losses -- Examination of insurers and stop -loss carriers to determine

accuracy of information provided.

(1) In addition to the other powers enumerated in KRS 304.17B -001 to 304.17B-031,

the Office of Health Data and Analytics shall assess insurers in the amounts

specified in this section. The assessment shall be used for the purpose of funding

GAP losses and Kentucky Access.

(a) The amount of the assessment for each calendar year shall be as follows:

1. From each stop -loss carrier, an amount that is equal to two dollars ($2)

upon each one hundred dollars ($100) of health insurance stop -loss

premiums;

2. From all insurers, an amount based on the total amount of all health

benefit plan premiums earned during the prior assessment period and

paid by all insurers who received any of the health benefit plan

premiums on which the annual assessment is based. The percentage rate

used for the annual assessment shall be the same perce ntage rate as

calculated in the GAP risk adjustment process for the six (6) month

period of July 1, 1998, through December 31, 1998;

3. If determined necessary by the office, a second assessment may be

assessed in the same manner as the annual assessment i n subparagraph

2. of this paragraph; and

4. In no event shall the sum of the first assessment provided for in

subparagraph 2. of this paragraph and the second assessment provided

for in subparagraph 3. of this paragraph be greater than one percent

(1%) of the total amount of all assessable health benefit plan premiums

earned during the prior assessment period.

(b) The first assessment shall be for the period from January 1, 2000, through

December 31, 2000, and shall be paid on or before March 31, 2001.

Subsequent annual assessments shall be paid on or before March 31 of the

year following the assessment period.

(2) Every supporting insurer shall report to the office, in a form and at the time as the

office may specify, the following information for the specified period:

(a) The insurer's total stop-loss premiums and health benefit plan premiums in the

individual, small group, large group, and association markets; and

(b) Other information as the office may require.

(3) As part of the assessment process, the office shall establish and maintain the

Kentucky Access fund. All funds shall be held at interest, in a single depository

designated in accordance with KRS 304.8-090(1) under a written trust agreement in

accordance with KRS 304.8 -095. All expense and revenue transactions of the fund

shall be posted to the Management Administrative Reporting System (MARS) and

its successors.

(4) The Kentucky Access fund shall be funded from the following sources:

(a) Premiums paid by Kentucky Access enrollees;

(b) The funds designated for Kentucky Access in the Kentucky Health Care

Improvement fund;

(c) Appropriations from the General Assembly;

(d) Annual assessments from supporting insurers;

(e) A second assessment from supporting insurers;

(f) Gifts, grants, or other voluntary contributions;

(g) Interest or other earnings on the investment of the moneys held in the account;

and

(h) Any funds remaining on January 1, 2001, in the guaranteed acceptance

program account may be transferred to the Kentucky Access fund.

(5) The office shall determine on behalf of Kentucky Access the premiums, the

expenses for administration, the incurred losses, taking into account investment

income and other amounts needed to satisfy reserves, estimated claim l iabilities,

and other obligations for each calendar year. The office shall also determine the

amount of the actual guaranteed acceptance program plan losses for each calendar

year. The office shall assess insurers as follows:

(a) On or before March 31 of e ach year, the amount set forth in subsection

(1)(a)1. and (1)(a)2. of this section.

(b) If the amount of actual guaranteed acceptance program plan losses exceeds

the assessment provided for in paragraph (a) of this subsection, a second

assessment shall be authorized under subsection (1)(a)3. of this section. If the

amount of GAP losses exceeds the assessments provided under subsection

(1)(a)1., subsection (1)(a)2., and subsection (1)(a)3. of this section, moneys

received and available from the Kentucky Heal th Care Improvement Fund

after the office determines available funding for Kentucky Access for the

current calendar year pursuant to subsection (6) of this section, shall be used

to reimburse GAP participating insurers for any actual guaranteed acceptance

program losses. If the amount of GAP losses exceeds the amount in the

Kentucky Health Care Improvement Fund after reserving sufficient funds for

Kentucky Access for the current year, each GAP participating insurer shall be

reimbursed up to the amount of it s proportional share of actual guaranteed

acceptance program plan losses from the fund. Effective for any assessment

on or after January 1, 2001, in calculating GAP losses, total premiums and

total claims of the GAP participating insurer shall be used. Act ual guaranteed

acceptance program losses shall be calculated as the difference between the

total GAP claims and the total GAP premiums on an aggregate basis.

(c) If GAP losses are fully covered by the assessment process provided for in

subsection (1)(a)1. and (1)(a)2. of this section and the second assessment

provided for in subsection (1)(a)3. of this section is not necessary to cover

GAP losses, and as determined by the office using reasonable actuarial

principles Kentucky Access funding is needed, a seco nd assessment provided

for in subsection (1)(a)3. of this section shall be completed.

(6) After the end of each calendar year, GAP losses shall be reimbursed only after the

office determines that appropriate funding is available for Kentucky Access for the

current calendar year. GAP losses shall be reimbursed after reserving sufficient

funds for Kentucky Access.

(7) With respect to a GAP participating insurer who reasonably will be expected both

to pay assessments and to receive payments from the assessment fund, the office

shall calculate the net amount owed to or to be received from the fund, and the

office shall only collect assessments for or make payments from the fund based

upon net amounts.

(8) Insurers paying an assessment may include in any health i nsurance rate filing the

amount of these assessments as provided for in Subtitle 17A of this chapter.

(9) Insurers shall pay any assessment amounts authorized in KRS 304.17B -001 to

304.17B-031 within thirty (30) days of receiving notice from the office of the

assessment amount.

(10) Any surpluses remaining in the Kentucky Access fund after completion of the

assessment process for a calendar year shall be maintained for use in the assessment

process for future calendar years and such funds shall not lapse. T he general fund

appropriations to the Kentucky Access fund shall not lapse.

(11) Assessments on health benefit plan premiums that are required under KRS

304.17B-001 to 304.17B -031 shall not be applied to premiums received by an

insurer for state employees, Medicaid recipients, Medicare beneficiaries, and

CHAMPUS insureds.

(12) The office shall direct that receipts of Kentucky Access be held at interest, and may

be used to offset future losses or to reduce plan premiums in accordance with the

terms of KRS 30 4.17B-001 to 304.17B -031. As used in this subsection, "future

losses" may include reserves for incurred but not reported claims.

(13) The office shall conduct examinations of insurers and stop -loss carriers reasonably

necessary to determine if the informat ion provided by the insurers or stop -loss

carriers is accurate.

(14) The insurer, as a condition of conducting health insurance business in Kentucky,

shall pay the assessments specified in KRS 304.17B-001 to 304.17B-031.

(15) The stop-loss carrier, as a condition of doing health insurance business in Kentucky,

shall pay the assessments specified in KRS 304.17B-001 to 304.17B-031.