{"data":{"id":"us-ky/krs-304.17a-812","jurisdiction":"us-ky","citation":"KRS 304.17A-812","heading":"Initial and continuing financial solvency requirements.","body":"(1) This section applies to a group applying for and holding a certificate of filing as a\nself-insured employer-organized association group.\n(2) To obtain and to maintain its certificate of filing, a self -insured employer-organized\nassociation group shall have  sufficient financial strength to pay all public or\nprofessional liabilities covered by the group, including known claims and expenses\nand incurred but unreported claims and expenses.\n(3) The commissioner shall require the following of a self -insured employer-organized\nassociation group:\n(a) An actuarial certification by a member of the American Academy of Actuaries\nof the adequacy of the proposed rates funding arrangements of the group;\n(b) Specific reinsurance ensuring the solvency of the funding arrangement;\n(c) A demonstration of capital and surplus as follows:\n1. Initial financial requirements. Every self -insured employer -organized\nassociation shall demonstrate initial capital and surplus equal to the\ngreater of:\na. Five hundred thousand dollars ($500,000);\nb. Two percent (2%) of projected annual contribution revenues on the\nfirst one hundred fifty million dollars ($150,000,000) of\ncontributions and one percent (1%) of projected annual\ncontributions on the contributions in excess of one hundred fifty\nmillion dollars ($150,000,000); or\nc. An amount equal to the sum of eight percent (8%) of projected\nannual health care expenditures except those paid on a capitated\nbasis or managed hospital payment basis and four percent (4%) of\nprojected annual hospital expenditures paid on a managed hospital\npayment basis, except the initial capital and surplus shall not be\nrequired to exceed the deductibility limits provided under 26\nU.S.C. secs. 419 and 419A, as amended.\n2. Continuing financial requirements. Every self -insured employer -\norganized association shall demonstrate ongoing capital and surplus\nequal to the greater of:\na. Five hundred thousand dollars ($500,000);\nb. Two percent (2%) of annual contribution revenues, as reported on\nthe most recent annual financial statement filed with the\ncommissioner, on the first one hundred fifty million dollars\n($150,000,000) of contributions and one percent (1%) of annual\npremiums on the contributions in excess of one hundred fifty\nmillion dollars ($150,000,000); or\nc. An amount equal to the sum of eight percent (8%) of projected\nannual health care expenditures except those paid on a capitated\nbasis or managed hospital payment basis  and four percent (4%) of\nannual hospital expenditures paid on a managed hospital payment\nbasis, as reported on the most recent financial statement filed with\nthe commissioner, except the continuing capital and surplus shall\nnot be required to exceed the d eductibility limits provided under\n26 U.S.C. secs. 419 and 419A, as amended; and\n(d) A fidelity bond for the administrator and a fidelity bond for the service\ncompany in forms and amounts prescribed by the commissioner.\n(4) The commissioner, if not satisfi ed with the financial strength of a self -insured\nemployer-organized association group, may require any or all of the following of a\nself-insured employer-organized association group:\n(a) Security in the form and amount prescribed by the commissioner as follows:\n1. A surety bond issued by a corporate surety authorized to transact\nbusiness in the Commonwealth of Kentucky; or\n2. Any financial security endorsement issued as part of an acceptable\nexcess insurance contract issued by an authorized insurer, which m ay be\nused to meet all or part of the security requirement.\nThe bond or financial security endorsement shall be solely for the benefit of\nthe insured creditors to pay claims and associated expenses and shall be\npayable upon the failure of the group to pay  professional or public liability\nclaims the group is legally obligated to pay. The commissioner may establish\nand adjust the requirements for the amount of security based on differences\namong groups in their size, types of business, years in existence, or  other\nrelevant factors.\n(b) Specific and aggregate excess insurance in a form and amount issued by an\ninsurer acceptable to the commissioner.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=49282","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:48Z","sha256":"a3b7051e8d5e1983c9098cbe4491d2e490bda846a3c83fd3eb1bca16c537aa37","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.17a-810","next":"us-ky/krs-304.17a-814"},"notice":"GroundRules: Original legal text. Not legal advice."}