{"data":{"id":"us-ky/krs-342.908","jurisdiction":"us-ky","citation":"KRS 342.908","heading":"Default or insolvency of fund member -- Assumption of obligations by","body":"fund -- Assessments to finance funds -- Limitation on income distributions --\nEffect of payment on liability to fund for reimbursement -- Rules for special\nfund assessments for calendar years 2027 and 2028.  (Effective July 15, 2026)\n(1) The commissioner shall notify a guaranty fund if the commissioner has knowledge\nthat any member of the guaranty fund has failed to timely pay workers'\ncompensation benefits required by this chapt er or if a court of competent\njurisdiction has declared the member to be bankrupt or insolvent.\n(2) In the event of issuance of a certificate of default, the commissioner shall call all\nsecurity and transfer it to the appropriate guaranty fund created purs uant to this\nsection. The commissioner shall also immediately notify, by certified mail, the\nguaranty fund and order the guaranty fund to assume the workers' compensation\nobligations of the member required in this chapter. The guaranty fund shall\ncommence payment of these obligations within fourteen (14) days of receipt of\nnotification and order of the commissioner. Payment shall be made to claimants\nwhose entitlement to benefits can be ascertained by the guaranty fund with or\nwithout proceedings before the  Department of Workers' Claims or a court of\ncompetent jurisdiction. Upon assumption of the obligations of a member by a\nguaranty fund, the guaranty fund shall have the right to immediate possession of\nany security, and the custodian, surety, or issuer of any irrevocable letter of credit\nshall turn over the security, proceeds of the surety bond, or letter of credit to the\nguaranty fund, together with the interest that has accrued since the date of the\nmember's insolvency. The guaranty fund may administer pa yment of benefits or it\nmay retain a third party to do so.\n(3) Notwithstanding any other provision of law, any cash, securities, irrevocable letters\nof credit, specific excess or aggregate excess insurance proceeds, or any other\nsecurity deposited or posted in accordance with this section shall be used first, when\ndue, to pay workers' compensation claims. After the security has been exhausted,\nthe payment of workers' compensation claims from member assessments may be\nmade. Where the guaranty fund member-assessment account is used to pay workers'\ncompensation claims on an emergency or an interim basis, pending receipt by the\nguaranty fund of security which is due but not yet received, the member -assessment\naccount shall be reimbursed for payment from the secu rity when it is received, and\nthe priorities stated above shall thereafter apply.\n(4) (a) To the extent necessary to secure funds for the initial establishment of each\nguaranty fund member -assessment account, the board of directors of each\nguaranty fund created pursuant to this section shall levy assessments based on\nthe premium of each individual self -insured employer, as defined and\ncalculated pursuant to KRS 342.0011(28), for members of the Kentucky\nindividual self -insurers guaranty fund and for the Kent ucky coal employers\nself-insurance guaranty fund, and KRS 342.0011(24) for the Kentucky group\nself-insurance guaranty fund, but no such assessments shall ever exceed, in\nthe aggregate, from all members of a single guaranty fund, an amount in\nexcess of one million dollars ($1,000,000) at any given time.\n(b) The assessments shall be made at a maximum annual assessment of:\n1. One-half of one percent (0.5%) of the premium for each member of the\nKentucky individual self -insurance guaranty fund as defined and\ncalculated pursuant to KRS 342.0011(28);\n2. Two percent (2%) of the premium for each member of the Kentucky\ncoal employers guaranty fund as defined and calculated pursuant to KRS\n342.0011(28); and\n3. Three-fourths of one percent (0.75%) of the premium for each member\nof the Kentucky group self -insurance guaranty fund as defined and\ncalculated pursuant to KRS 342.0011(24).\n(5) The initial assessment for each guaranty fund created pursuant to this section shall\nbe for an amount equal to five hundred thousand dollars ($500,000), to be levied\nand collected within a one (1) year period. There shall be no reassessments against\nany member unless the current balance of such guaranty fund created pursuant this\nsection is i nsufficient after deducting the amount paid for or reserved for\noutstanding claims and for administrative and other costs in managing the guaranty\nfund at which point the board of directors shall raise assessments sufficient to bring\nthe minimum amount of the guaranty fund to five hundred thousand dollars\n($500,000) or such other amount not to exceed, in any event, one million dollars\n($1,000,000) based upon a maximum annual assessment for each guaranty fund.\n(6) A guaranty fund created pursuant to this sec tion shall pay no dividends, rebates,\ninterest, or otherwise distribute income from the guaranty fund to any of its\nmembers, unless the guaranty fund has the assets prescribed in subsection (5) of this\nsection and the distributions are approved by the commissioner.\n(7) The commissioner shall be provided with any relevant information by the employer,\nany excess insurer, any third party administrator, or any issuer of any irrevocable\nletter of credit, issuer of any surety bond, or custodian of any security ne cessary for\nthe commissioner to carry out the commissioner's obligations under this chapter,\nand the commissioner shall provide this information to the guaranty fund as\nnecessary to carry out its obligations.\n(8) The payment of benefits by a guaranty fund does not release any person or entity\nfrom any liability to the individual guaranty fund for full reimbursement.\n(9) (a) As used in this subsection:\n1. \"Annual special fund assessment\" means the assessment imposed upon a\nmember fund pursuant to KRS 342.122(1)(b);\n2. \"Division\" means the Division of Workers' Compensation Funds in the\nDepartment of Workers' Claims;\n3. \"Group fund\" means the Kentucky group self-insurance fund established\npursuant to KRS 342.906(2); and\n4. \"Member fund\" means a member or former  member of the Kentucky\ngroup self -insurance fund that is assessed under subsection (4) of this\nsection on or after January 1, 2026, for liabilities incurred while a\nmember.\n(b) Notwithstanding any provision of KRS 342.122 to the contrary, or any other\nprovision of this chapter or other law, for calendar years beginning January 1,\n2027, and January 1, 2028:\n1. The amount of the annual special fund assessment imposed upon a\nmember fund shall be retained by the member fund and paid to the\ncredit of the group fund for the purpose of satisfying the group fund's\noutstanding workers' compensation claims; and\n2. A member fund shall pay the amounts of its annual special fund\nassessment to the group fund on the schedule set forth in KRS\n342.122(2)(a) and (b) and shal l provide the division with notice of the\nassessments paid.\n(c) This subsection shall not apply to any special fund assessment for any\ncalendar year beginning after December 31, 2028.","path":["KRS Chapter 342"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57848","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:32Z","sha256":"888394a76ea7e2e576e08ecb7dd250bb03288ad55d4b9ad68e04e3ea27a8aed3","source_id":"us-ky","stale":false,"prev":"us-ky/krs-342.906","next":"us-ky/krs-342.910"},"notice":"GroundRules: Original legal text. Not legal advice."}