{"data":{"id":"us-ky/krs-304.42-030","jurisdiction":"us-ky","citation":"KRS 304.42-030","heading":"Scope of subtitle.","body":"(1) This subtitle shall provide coverage for the policies and contracts specified in\nsubsection (2) of this section:\n(a) To persons who, regardless of where they reside (except for nonresident\ncertificate holders or enrollees under group policies or contracts) , are the\nbeneficiaries, assignees, or payees, including health care providers rendering\nservices covered under a health insurance policy, contract, or certificate, of the\npersons covered under paragraph (b) of this subsection.\n(b) To persons who are the o wners of or certificate holders or enrollees under\nsuch policies or contracts, other than structured settlement annuities, who:\n1. Are residents; or\n2. Are not residents, but only under the following conditions:\na. The member insurer which issued the polic ies or contracts is\ndomiciled in this state;\nb. The states in which the persons reside have associations similar to\nthe association created by this subtitle; and\nc. The persons are not eligible for coverage by an association in any\nother state due to the f act that the insurer or health maintenance\norganization was not licensed in the state at the time specified in\nthe state's guaranty association law.\n(c) For structured settlement annuities covered in subsection (2) of this section,\nparagraphs (a) and (b) of this subsection shall not apply and this subtitle shall,\nexcept as provided in paragraphs (d) and (e) of this subsection, provide\ncoverage to a person who is a payee under a structured settlement annuity, or\nbeneficiary of a payee if the payee is decease d, if the payee is a resident,\nregardless of where the contract owner resides. If the payee is not a resident,\nthis subtitle shall provide coverage but only under both of the following\nconditions:\n1. a. The contract owner of the structured settlement annui ty is a\nresident; or\nb. The contract owner of the structured settlement annuity is not a\nresident, but the insurer that issued the structured settlement\nannuity is domiciled in this state and the state in which the contract\nowner resides has an association similar to the association created\nby this subtitle; and\n2. Neither the payee, the beneficiary, nor the contract owner is eligible for\ncoverage by the association of the state in which the payee or contract\nowner resides.\n(d) This subtitle shall not provide coverage to:\n1. A person who is a payee or beneficiary of a contract owner resident of\nthis state, if the payee or beneficiary is afforded any coverage by the\nassociation of another state; or\n2. A person who  acquires rights to receive payments through a structured\nsettlement factoring transaction as defined in 26 U.S.C. sec.\n5891(c)(3)(A), regardless of whether the transaction occurred before or\nafter the section became effective.\n(e) This subtitle is intende d to provide coverage to a person who is a resident of\nthis state and, in special circumstances, to a nonresident. In order to avoid\nduplicate coverage, if a person who would otherwise receive coverage in this\nsubtitle is provided coverage under the laws o f any other state, the person\nshall not be provided coverage under this subtitle. In determining the\napplication of the provisions of this paragraph in situations where a person\ncould be covered by the association of more than one (1) state, whether as an\nowner, payee, enrollee, beneficiary, or assignee, this subtitle shall be\nconstrued in conjunction with other state laws to result in coverage by only\none (1) association.\n(2) (a) This subtitle shall provide coverage to the persons specified in subsection ( 1)\nof this section for policies and contracts of direct, nongroup life insurance,\nhealth insurance, which for purposes of this subtitle includes health\nmaintenance organization subscriber contracts and certificates, or annuities\nand supplemental contracts to any of these and for certificates issued under\ndirect group policies and contracts.\n(b) This subtitle shall not provide coverage for:\n1. Any portion of a policy or contract not guaranteed by the member\ninsurer, or under which the risk is borne by the policy or contract owner;\n2. Any policy or contract of reinsurance, unless assumption certificates\nhave been issued pursuant to the reinsurance policy or contract;\n3. Except as otherwise provided in paragraph (c) of this subsection, any\nportion of a policy o r contract to the extent that the rate of interest on\nwhich it is based:\na. Averaged over the period of four (4) years prior to the date on\nwhich the association becomes obligated with respect to such\npolicy or contract, exceeds a rate of interest determin ed by\nsubtracting two (2) percentage points from Moody's corporate\nbond yield average averaged for that same four (4) year period or\nfor such lesser period if the policy or contract was issued less than\nfour (4) years before the association became obligated; and\nb. On and after the date on which the association becomes obligated\nwith respect to the policy or contract, exceeds the rate of interest\ndetermined by subtracting three (3) percentage points from\nMoody's corporate bond yield average as most recently available;\n4. Any portion of a policy or contract issued to a plan or program of an\nemployer, association, or other person to provide life, health, or annuity\nbenefits to its employees, members, or others to the extent that such plan\nor program is self -funded or uninsured including, but not limited to,\nbenefits payable by an employer, association, or other person under:\na. A multiple employer welfare arrangement as defined in 29 U.S.C.\nsec. 1144;\nb. A minimum premium group insurance plan;\nc. A stop-loss group insurance plan; or\nd. An administrative services only contract;\n5. Any portion of a policy or contract to the extent that it provides for:\na. Dividends or experience rating credits;\nb. Payment of any fees or allowances to any person, including the\npolicy or contract owner, in connection with the service to or\nadministration of such policy or contract; or\nc. Voting rights;\n6. Any policy or contract issued in this state by a member insurer at a time\nwhen it did not have a certificate of authority to issue  such policy or\ncontract in this state;\n7. Any unallocated annuity contract;\n8. A portion of a policy or contract to the extent that the assessments\nrequired by KRS 304.42 -090 with respect to the policy or contract are\npreempted by federal or state law;\n9. An obligation that does not arise under the express written terms of the\npolicy or contract issued by the member insurer to the enrollee,\ncertificate holder, policyholder, contract owner, or policy owner,\nincluding without limitation:\na. Claims based on marketing materials;\nb. Claims based on side letters, riders, or other documents that were\nissued by the member insurer without meeting applicable policy or\ncontract form filing or approval requirements;\nc. Misrepresentations of or regarding policy or contract benefits;\nd. Extracontractual claims; or\ne. A claim for penalties or consequential or incidental damages;\n10. A contractual agreement that establishes the member insurer's\nobligations to provide a book value accounting guaranty for defined\ncontribution benefit plan participants by reference to a portfolio of assets\nthat is owned by the benefit plan or its trustee which in each case is not\nan affiliate of the member insurer;\n11. A policy or contract providing any hospital, medical, prescription drug\nor other health care benefits pursuant to:\na. Medicare Part C or Part D, 42 U.S.C. secs. 1395w-21 to w-154;\nb. Medicaid, 42 U.S.C. secs. 1396 to 1396w-5; or\nc. Any regulations issued pursuant to the sections referenced in\nsubdivision a. or b. of this subparagraph; and\n12. Structured settlement annuity benefits to which a payee or beneficiary\nhas transferred his or her rights in a structured settlement factoring\ntransaction as defined in 26 U.S.C. sec. 5891(c)(3)(A), regardless of\nwhether the transaction occurre d before or after the section became\neffective.\n(c) The exclusion of coverage under paragraph (b)3. of this subsection shall not\napply to any portion of a policy or contract, including a rider, that provides\nlong-term care or any other health insurance benefits.\n(3) (a) The benefits that the association may become obligated to cover shall in no\nevent exceed the lesser of the contractual obligations for which the member\ninsurer is liable or would have been liable if it were not an impaired or\ninsolvent insurer, or with respect to any one (1) life, regardless of the number\nof policies or contracts:\n1. In life insurance, three hundred thousand dollars ($300,000) in death\nbenefits, but not more than one hundred thousand dollars ($100,000) net\ncash surrender and net cash withdrawal values for life insurance;\n2. For health insurance benefits:\na. One hundred thousand dollars ($100,000) for coverages not\ndefined as disability income insurance, health benefit plans, or\nlong-term care insurance, including any net cash surrender and net\ncash withdrawal values;\nb. Three hundred thousand dollars ($300,000) for disability income\ninsurance and long-term care insurance; and\nc. Five hundred thousand dollars ($500,000) for health benefit plans;\nand\n3. In annuity benefits, two hundred fifty thousand dollars ($250,000) in the\npresent value of annuity benefits, including net cash surrender and net\ncash withdrawal values; except with respect to each payee of a\nstructured settlement annuity or beneficiary or beneficiaries of the paye e\nif deceased, two hundred fifty thousand dollars ($250,000) in present\nvalue annuity benefits, in the aggregate, including net cash surrender and\nnet cash withdrawal values.\n(b) In no event shall the association be obligated to cover more than:\n1. An aggregate of three hundred thousand dollars ($300,000) in benefits\nwith respect to any one (1) life under subparagraphs 2. and 3. of\nparagraph (a) of this subsection, except with respect to benefits for\nhealth benefit plans as stated in paragraph (a) of this s ubsection, in\nwhich case the aggregate liability of the association shall not exceed five\nhundred thousand dollars ($500,000) with respect to any one (1)\nindividual; or\n2. With respect to one (1) owner of multiple nongroup policies of life\ninsurance, whether the policy owner is an individual, firm, corporation,\nor other person, and whether the persons insured are officers, managers,\nemployees, or other persons, more than five million dollars ($5,000,000)\nin benefits, regardless of the number of policies and  contracts held by\nthe owner.\n(c) The limitations set forth in this subsection are limitations on the benefits for\nwhich the association is obligated before taking into account either its\nsubrogation and assignment rights or the extent to which those benef its could\nbe provided out of the assets of the impaired or insolvent insurer attributable\nto covered policies. The costs of the association's obligations under this\nsubtitle may be met by the use of assets attributable to covered policies or\nreimbursed to the association in accordance with its subrogation and\nassignment rights.\n(d) For purposes of this subtitle, benefits provided  by a long-term care rider to a\nlife insurance policy or annuity contract shall be considered the same type of\nbenefits as the base life insurance policy or annuity contract to which it\nrelates.\n(4) In performing its obligations to provide coverage under K RS 304.42 -080, the\nassociation shall not be required to guarantee, assume, reinsure, reissue, or perform,\nor cause to be performed, assumed, reinsured, reissued, or performed, the\ncontractual obligations of the insolvent or impaired insurer under a covered  policy\nor contract that do not materially affect the economic values or economic benefits of\nthe covered policy or contract.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=48761","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:58Z","sha256":"6a62be2d9c91a1052d1a4084c44ea840e7ee547f86bdb88fd7f4918cbe02727f","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.42-020","next":"us-ky/krs-304.42-040"},"notice":"GroundRules: Original legal text. Not legal advice."}