{"data":{"id":"us-ky/krs-18a.2254","jurisdiction":"us-ky","citation":"KRS 18A.2254","heading":"Self -insured plan for public employees -- Contract for third -party","body":"administrator -- Formulary change -- Health reimbursement account, health\nflexible spending account, or health savings account -- Public employee health\ninsurance trust fund -- Annual audit -- Quarterly status reports.\n(1) Based on the recommendation of the secretary of the Personnel Cabinet, the\nsecretary of the Finance and Administration Cabinet, in lieu of contracting with one\n(1) or more insurers licensed to do busin ess in this state, shall procure, in\ncompliance with KRS 45A.080, 45A.085, and 45A.090, and reviewed by the\nGovernment Contract Review Committee pursuant to KRS 45A.705, a contract\nwith one (1) or more third -party administrators licensed to do business in the\nCommonwealth pursuant to KRS 304.9 -052 to administer a self -insured plan\noffered to the Public Employee Health Insurance Program for public employees.\nThe requirements for the self-insured plan shall be as follows:\n(a) 1. The secretary of the Personnel  Cabinet shall incorporate by reference in\nan administrative regulation, pursuant to KRS 13A.2251, the plan year\nhandbook distributed by the Department of Employee Insurance in the\nPersonnel Cabinet to public employees covered under the self -insured\nplan. The plan year handbook shall contain, at a minimum, the\npremiums, employee contributions, employer contributions, and a\nsummary of benefits, copays, coinsurance, and deductibles for each plan\nprovided to public employees covered under the self-insured plan;\n2. Notwithstanding any other provision of KRS Chapter 18A to the\ncontrary, the administrative regulation shall not be subject to review by\nthe Personnel Board prior to filing the administrative regulation with the\nLegislative Research Commission; and\n3. The secretary of the Personnel Cabinet shall file the administrative\nregulation for the self -insured plan with the Legislative Research\nCommission on or before September 15 of the year before each new\nplan year begins;\n(b) The self-insured plan offered by the program shall cover hospice care at least\nequal to the Medicare benefit;\n(c) The Personnel Cabinet shall provide written notice of any formulary change\nto employees covered under the self -insured plan who are directly impacted\nby the formulary change a nd to the Kentucky Group Health Insurance Board\nfifteen (15) days before implementation of any formulary change. If, after\nconsulting with his or her physician, the employee still disagrees with the\nformulary change, the employee shall have the right to appeal the change. The\nemployee shall have sixty (60) days from the date of the notice of the\nformulary change to file an appeal with the Personnel Cabinet. The cabinet\nshall render a decision within thirty (30) days from the receipt of the request\nfor an appeal. After a final decision is rendered by the Personnel Cabinet, the\nemployee shall have a right to file an appeal pursuant to the utilization review\nstatutes in KRS 304.17A -600 to 304.17A-633. During the appeal process, the\nemployee shall have the right to continue to take any drug prescribed by his or\nher physician that is the subject of the formulary changes;\n(d) The Personnel Cabinet shall develop the necessary capabilities to ensure that\nan independent review of each formulary change is conducted and  includes\nbut is not limited to an evaluation of the fiscal impact and therapeutic benefit\nof the formulary change. The independent review shall be conducted by\nknowledgeable medical professionals and the results of the independent\nreview shall be posted o n the Web sites of the Personnel Cabinet and the\nCabinet for Health and Family Services and made available to the public upon\nrequest within thirty (30) days of the notice from the Personnel Cabinet\nrequired in paragraph (c) of this subsection;\n(e) If the self -insured plan restricts pharmacy benefits to a drug formulary, the\nplan shall comply with and have an exceptions policy in accordance with KRS\n304.17A-535;\n(f) Premiums for all plans offered by the Public Employee Health Insurance\nProgram to employees shall be based on the experience of the entire group;\n(g) The plan year for the Public Employee Health Insurance Program, whether for\nfully insured or self-insured benefits, shall be on a calendar year basis; and\n(h) The self-insured plan shall comply with subsection (4) of this section.\n(2) (a) 1. In addition to any fully insured health benefit plans or self -insured\nplans, beginning January 1, 2015, the Personnel Cabinet shall offer a\nhealth reimbursement account or health flexible spending account for\npublic employees insured under the Public Employee Health Insurance\nProgram.\n2. The Personnel Cabinet may offer a health savings account in\nconjunction with a high deductible health plan option as defined by 26\nU.S.C. sec. 223(c)(2) or as an optional a ccount to which the Personnel\nCabinet may deposit funds of an employee who waives coverage in\naccordance with paragraph (b) of this subsection, provided the employee\nwho waives coverage is eligible to contribute to a health savings\naccount.\n(b) If a public employee waives coverage provided by his or her employer under\nthe Public Employee Health Insurance Program, the employer shall forward a\nmonthly amount to be determined by the secretary of the Personnel Cabinet\nfor that employee as an employer contributi on to the health reimbursement\naccount or health flexible spending account, but not less than one hundred\nseventy-five dollars ($175) per month, subject to any conditions or limitations\nimposed by the secretary to comply with applicable federal law.\n(c) The administrative fees associated with the employee's health savings\naccount, health reimbursement account, or health flexible spending account\nshall be an authorized expense to be charged to the public employee health\ninsurance trust fund.\n(3) (a) The publ ic employee health insurance trust fund is established in the\nPersonnel Cabinet. The purpose of the public employee health insurance trust\nfund is to provide funds to pay medical claims and other costs associated with\nthe administration of the Public Emplo yee Health Insurance Program self -\ninsured plan under a competitively bid contract as provided by KRS Chapter\n45A and reviewed by the Government Contract Review Committee pursuant\nto KRS 45A.705. Unless authorized by the General Assembly, the trust fund\nshall not utilize funds for any other purpose and the trust fund receipts from\nprior plan years shall not be used to pay claims and expenses for current or\nsubsequent plan years, except as provided by paragraph (b) of this subsection.\n(b) In the event of a projected deficit in the trust fund balance of a prior plan year,\nthe secretary of the Finance and Administration Cabinet may declare an\nemergency and transfer up to twenty -five percent (25%) of another prior plan\nyear's balance to that plan year, provided t he Governor, all members of the\nGeneral Assembly, and Legislative Research Commission are notified at least\nthirty (30) days prior to the transfer. The Legislative Research Commission\nshall refer the notice to appropriate committees of jurisdiction for the ir\nreview.\n(c) The following moneys shall be directly deposited into the trust fund:\n1. Employer and employee premiums collected under the self-insured plan;\n2. Interest and investment returns earned by the self-insured plan;\n3. Rebates and refunds attributed to the self-insured plan; and\n4. All other receipts attributed to the self-insured plan.\n(d) Any balance remaining in the public employee health insurance trust fund at\nthe end of a fiscal year shall not lapse. Any balance remaining at the end of a\nfiscal year shall be carried forward to the next fiscal year and be used solely\nfor the purpose established in paragraphs (a) and (b) of this subsection. The\nbalance of funds in the public employee health insurance trust fund shall be\ninvested by the Office o f Financial Management consistent with the\nprovisions of KRS Chapter 42, and interest income shall be credited to the\ntrust fund. Any balance for a specific plan year and any subsequent interest\nincome for that specific plan year shall be accounted for separately.\n(e) The Auditor of Public Accounts shall be responsible for a financial audit of\nthe books and records of the trust fund. The audit shall be conducted in\naccordance with generally accepted accounting principles and shall be\ncompleted within ninety  (90) days of the close of the fiscal year. All audit\nreports shall be filed with the Governor, the President of the Senate, the\nSpeaker of the House of Representatives, and the secretary of the Personnel\nCabinet.\n(f) The secretary of the Personnel Cabinet  shall file a quarterly report on the\nstatus of the trust fund with the Governor, the Interim Joint Committee on\nAppropriations and Revenue, the Kentucky Group Health Insurance Board,\nand the Advisory Committee of State Health Insurance Subscribers. The fi rst\nstatus report shall be submitted no later than July 30, 2006, and subsequent\nreports shall be submitted no later than sixty (60) days following the end of\neach calendar quarter. The report shall include the following:\n1. The current balance of the trus t fund and the amount of the balance\nassociated with each plan year;\n2. A detailed description of all income to the trust fund since the last\nreport;\n3. A detailed description of any receipts due to the trust fund;\n4. A total amount of payments made for me dical and pharmacy claims\nfrom the trust fund by plan year;\n5. A detailed description of all payments made to the third -party\nadministrator of the self-insured plan by the trust fund;\n6. Current enrollment data, including monthly enrollment since the last\nreport, of the Public Employee Health Insurance Program self -insured\nplan;\n7. Any other information the secretary may include;\n8. Any other information requested by the Interim Joint Committee on\nAppropriations and Revenue concerning the operation of the Public\nEmployee Health Insurance Program self -funded plan or the trust fund;\nand\n9. In addition to the information required under s ubparagraphs 1. to 8. of\nthis paragraph, the quarterly report filed in July and January shall also\ninclude the following:\na. A projection of the medical claims incurred but not yet reported\nthat are considered liabilities to the trust fund;\nb. A statement of any other trust fund liabilities;\nc. A detailed calculation outlining proposed premium rates for the\nnext plan year, including base claims, trend assumptions,\nadministrative fees, and any proposed plan or benefit changes;\nd. A detailed description of th e current in -state and out -of-state\nnetworks provided under the plan, any changes to the networks\nsince the last report, and any proposed changes to the in -state or\nout-of-state networks during the next six (6) months; and\ne. Specific data regarding the third-party administrator's performance\nunder the contract. The data shall include the following:\ni. Any results or outcomes of disease management and\nwellness programs;\nii. Results of case management audits and educational and\ncommunication efforts; and\niii. Comparison of actual measurable results to contract\nperformance guarantees.\n(4) (a) Any fully insured health benefit plan, self -insured plan, or other health plan,\nas defined in KRS 304.17A -591, offered, issued, or renewed to public\nemployees under this section or KRS 18A.225 shall comply with KRS\n304.17A-591 to 304.17A -599, including any state cabinet, agency, or official\nthat contracts with a third -party administrator to administer any self -insured\nplan offered, issued, or renewed to public employees un der this section or\nKRS 18A.225.\n(b) The plan or plans referred to in paragraph (a) of this subsection shall be filed\nwith the commissioner of the Department of Insurance, and the commissioner\nshall review the plan or plans in accordance with KRS 304.14-120(6).","path":["KRS Chapter 18A"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=55769","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:48:40Z","sha256":"31125645b4bfb38cf6c3a94f76f482e5243c5a8181bfe156926e329c7e698902","source_id":"us-ky","stale":false,"prev":"us-ky/krs-18a.2253","next":"us-ky/krs-18a.2255"},"notice":"GroundRules: Original legal text. Not legal advice."}