{"data":{"id":"us-ky/krs-61.702","jurisdiction":"us-ky","citation":"KRS 61.702","heading":"Group hospital and medical insurance plan -- Inclusion in Kentucky","body":"Employees Health Plan -- Employee and employer contributions -- Minimum\nservice requirements -- Members with service in other retirement systems --\nExemption from premium tax -- Administrative regulation.\n(1) For purposes of this section:\n(a) \"Hospital and medical insurance plan\" may include, at the board's discretion,\nany one (1) or more of the following:\n1. Any hospital and medical expense policy or certificate, provid er-\nsponsored integrated health delivery network, self -insured medical plan,\nhealth maintenance organization contract, or other health benefit plan;\n2. Any health savings account as permitted by 26 U.S.C. sec. 223 or health\nreimbursement arrangement or a similar account as may be permitted by\n26 U.S.C. sec. 105 or 106. Such arrangement or account, at the board's\ndiscretion, may reimburse any medical expense permissible under 26\nU.S.C. sec. 213; or\n3. A medical insurance reimbursement program established by t he board\nthrough the promulgation of administrative regulation under which\nmembers purchase individual health insurance coverage through a health\ninsurance exchange established under 42 U.S.C. sec. 18031 or 18041;\n(b) \"Monthly contribution rate\" is the amo unt determined by the board based\nupon the requirements of subsection (4)(a) to (d) of this section, except that\nfor members who began participating in the system on or after July 1, 2003,\nthe term shall mean the amount determined in subsection (4)(e) of t his\nsection; and\n(c) \"Months of service\" means the total months of combined service used to\ndetermine benefits under the system, except service added to determine\ndisability benefits or service otherwise prohibited from being used to\ndetermine retiree heal th benefits under KRS 16.505 to 16.652 or 61.510 to\n61.705 shall not be counted as \"months of service.\" For current and former\nemployees of the Council on Postsecondary Education who were employed\nprior to January 1, 1993, and who earn at least fifteen (15 ) years of service\ncredit in the Kentucky Employees Retirement System, \"months of service\"\nshall also include vested service in another retirement system other than the\nKentucky Teachers' Retirement System sponsored by the Council on\nPostsecondary Education.\n(2) (a) 1. The board of trustees of the system shall arrange by appropriate contract\nor on a self -insured basis to provide a group hospital and medical\ninsurance plan coverage for:\na. Present and future recipients of a retirement allowance from the\nKentucky Employees Retirement System and the State Police\nRetirement System; and\nb. The spouse and each qualified dependent of a recipient who is a\nformer member or the beneficiary, provided the spouse and\ndependent meet the requirements to participate in the hospital and\nmedical insurance plans established, contracted, or authorized by\nthe system.\n2. Any recipient who chooses coverage under a hospital and medical\ninsurance plan shall pay, by payroll deduction from the retirement\nallowance, electronic funds transfer, or by another method, the\ndifference between the premium cost of the hospital and medical\ninsurance plan coverage selected and the monthly contribution rate to\nwhich he or she would be entitled under this section.\n(b) 1. For present and future recipients of a retirement allowance from the\nsystem who are not eligible for Medicare and for those recipients\ndescribed in subparagraph 3.b. of this paragraph, the board may\nauthorize these participants to be included in the Kentucky Employees\nHealth Plan as provided by KRS 18A.225 to 18A.2287 and shall provide\nbenefits for recipients in the plan equal to those provided to state\nemployees having the same Medicare hospital and medical insuranc e\neligibility status. Notwithstanding the provisions of any other statute\nexcept subparagraph 3.b. of this paragraph, system recipients shall be\nincluded in the same class as current state employees for purposes of\ndetermining medical insurance policies an d premiums in the Kentucky\nEmployees Health Plan as provided by KRS 18A.225 to 18A.2287.\n2. Regardless of age, if a recipient or the spouse or dependent child of a\nrecipient who elects coverage becomes eligible for Medicare, he or she\nshall participate in the plans offered by the systems for Medicare\neligible recipients. Individuals participating in the Medicare eligible\nplans may be required to obtain and pay for Medicare Part A and Part B\ncoverage, in order to participate in the Medicare eligible plans of fered\nby the system.\n3. The system shall continue to provide the same hospital and medical\ninsurance plan coverage for recipients and qualifying dependents after\nthe age of sixty-five (65) as before the age of sixty-five (65), if:\na. The recipient is not eligible for Medicare coverage; or\nb. The recipient would otherwise be eligible for Medicare coverage\nbut is subject to the Medicare Secondary Payer Act under 42\nU.S.C. sec. 1395y(b) and has been reemployed by a participating\nagency which offers the recipient a hospital and medical insurance\nbenefit or by a participating agency which is prevented from\noffering or which does not offer a hospital and medical benefit to\nthe recipient as a condition of reemployment under KRS 70.293,\n95.022, or 164.952. Individua ls who are eligible, pursuant to this\nsubdivision, to be included in the Kentucky Employees Health\nPlan as provided by KRS 18A.225 to 18A.2287 may be rated as a\nseparate class from other eligible employees and retirees for the\npurpose of determining medical insurance premiums.\n(c) For recipients of a retirement allowance who are not eligible for the same\nlevel of hospital and medical benefits as recipients living in Kentucky having\nthe same Medicare hospital and medical insurance eligibility status, the boa rd\nshall provide a medical insurance reimbursement plan as described in\nsubsection (6) of this section.\n(d) Notwithstanding anything in KRS Chapter 16 or 61 to the contrary, the board\nof trustees, in its discretion, may take necessary steps to ensure compl iance\nwith 42 U.S.C. sec. 300bb-1 et seq.\n(3) (a) Each employer participating in the Kentucky Employees Retirement System\nor the State Police Retirement System as provided in KRS 16.505 to 16.652 or\n61.510 to 61.705 shall contribute to the insurance trust fund established under\nKRS 61.701 the amount necessary to provide the monthly contribution rate as\nprovided for under this section. Such employer contribution rate shall be\ndeveloped by appropriate actuarial method as a part of the determination of\neach respective employer contribution rate determined under KRS 61.565.\n(b) 1. Each employer described in paragraph (a) of this subsection shall deduct\nfrom the creditable compensation of each member whose membership\ndate begins on or after September 1, 2008, an amount equal to one\npercent (1%) of the member's creditable compensation. The deducted\namounts shall, at the discretion of the board, be credited to accounts\nestablished pursuant to 26 U.S.C. sec. 401(h), within the funds\nestablished in KRS 16.510 and 61.5 15, or the insurance trust fund\nestablished under KRS 61.701. Notwithstanding the provisions of this\nparagraph, a transfer of assets between the accounts established pursuant\nto 26 U.S.C. sec. 401(h), within the funds established in KRS 16.510\nand 61.515, and the insurance trust fund established under KRS 61.701\nshall not be allowed.\n2. The employer shall file the contributions as provided by subparagraph 1.\nof this paragraph at the retirement office in accordance with KRS\n61.675. Any interest or penalties paid on any delinquent contributions\nshall be credited to accounts established pursuant to 26 U.S.C. sec.\n401(h), within the funds established in KRS 16.510 and 61.515, or the\ninsurance trust fund established under KRS 61.701. Notwithstanding\nany minimum c ompensation requirements provided by law, the\ndeductions provided by this paragraph shall be made, and the\ncompensation of the member shall be reduced accordingly.\n3. Each employer shall submit payroll reports, contributions lists, and other\ndata as may be required by administrative regulation promulgated by the\nboard of trustees pursuant to KRS Chapter 13A.\n4. Every member shall be deemed to consent and agree to the deductions\nmade pursuant to this paragraph, and the payment of salary or\ncompensation less the deductions shall be a full and complete discharge\nof all claims for services rendered by the person during the period\ncovered by the payment, except as to any benefits provided by KRS\n16.505 to 16.652 or 61.510 to 61.705. No member may elect whether to\nparticipate in, or choose the contribution amount to accounts established\npursuant to 26 U.S.C. sec. 401(h) within the funds established in KRS\n16.510 and 61.515, or the insurance trust fund established under KRS\n61.701. The member shall have no option to  receive the contribution\nrequired by this paragraph directly instead of having the contribution\npaid to accounts established pursuant to 26 U.S.C. sec. 401(h) within the\nfunds established in KRS 16.510 and 61.515, or the insurance trust fund\nestablished u nder KRS 61.701. No member may receive a rebate or\nrefund of contributions. If a member establishes a membership date\nprior to September 1, 2008, pursuant to KRS 61.552(2) or (3), then this\nparagraph shall not apply to the member and all contributions previously\ndeducted in accordance with this paragraph shall be refunded to the\nmember without interest. The contribution made pursuant to this\nparagraph shall not act as a reduction or offset to any other contribution\nrequired of a member or recipient under KR S 16.505 to 16.652 or\n61.510 to 61.705.\n5. The board of trustees, at its discretion, may direct that the contributions\nrequired by this paragraph be accounted for within accounts established\npursuant to 26 U.S.C. sec. 401(h) within the funds established in  KRS\n16.510 and 61.515, or the insurance trust fund established under KRS\n61.701, through the use of separate accounts.\n(4) (a) The premium required to provide hospital and medical insurance plan\ncoverage under this section shall be paid wholly or partly f rom funds\ncontributed by:\n1. The recipient of a retirement allowance, by payroll deduction from his\nor her retirement allowance, or by other method;\n2. The insurance trust fund established under KRS 61.701 or accounts\nestablished pursuant to 26 U.S.C. sec . 401(h) within the funds\nestablished in KRS 16.510 and 61.515;\n3. Another state -administered retirement system, including the County\nEmployees Retirement System, under a reciprocal arrangement, except\nthat any portion of the premium paid from the funds sp ecified by\nsubparagraph 2. of this paragraph under a reciprocal agreement shall not\nexceed the amount that would be payable under this section if all the\nmember's service were in the systems administered by the Kentucky\nRetirement Systems. If the board pro vides for cross -referencing of\ninsurance premiums, the employer's contribution for the working\nmember or spouse shall be applied toward the premium, and the\ninsurance trust fund established under KRS 61.701 or accounts\nestablished pursuant to 26 U.S.C. sec . 401(h) within the funds\nestablished in KRS 16.510 and 61.515 shall pay the balance; or\n4. A combination of the fund sources described by subparagraphs 1. to 3.\nof this paragraph.\nGroup rates under the hospital and medical insurance plan shall be made\navailable to the spouse, each dependent child, and each disabled child,\nregardless of the disabled child's age, of a recipient who is a former member\nor the beneficiary, if the premium for the hospital and medical insurance for\nthe spouse, each dependent chi ld, and each disabled child, or beneficiary is\npaid by payroll deduction from the retirement allowance, electronic funds\ntransfer, or by another method. For purposes of this subsection only, a child\nshall be considered disabled if he or she has been determined to be eligible for\nfederal Social Security disability benefits or meets the dependent disability\nstandard established by the Department of Employee Insurance in the\nPersonnel Cabinet.\n(b) For a member who began participating in the system prior to Jul y 1, 2003, the\nmonthly contribution rate shall be paid by the system from the funds specified\nunder paragraph (a)2. of this subsection and shall be equal to a percentage of\nthe single premium to cover the retired member as follows:\n1. One hundred percent (100%) of the monthly premium for single\ncoverage shall be paid for a retired member who had two hundred forty\n(240) months of service or more upon retirement or for a retired member\nwho when he or she was an employee became disabled as  a direct result\nof an act in line of duty as defined in KRS 16.505 or as a result of a\nduty-related injury as defined in KRS 61.621;\n2. Seventy-five percent (75%) of the monthly premium for single coverage\nshall be paid for a retired member who had less t han two hundred forty\n(240) months of service but at least one hundred eighty (180) months of\nservice upon retirement, provided such retired member agrees to pay the\nremaining twenty-five percent (25%) by payroll deduction from his or\nher retirement allowa nce, electronic funds transfer, or by another\nmethod;\n3. Fifty percent (50%) of the monthly premium for single coverage shall be\npaid for a retired member who had less than one hundred eighty (180)\nmonths of service but had at least one hundred twenty (120 ) months of\nservice upon retirement, provided such retired member agrees to pay the\nremaining fifty percent (50%) by payroll deduction from his or her\nretirement allowance, electronic funds transfer, or by another method; or\n4. Twenty-five percent (25%) of the monthly premium for single coverage\nshall be paid for a retired member who had less than one hundred twenty\n(120) months of service but had at least forty -eight (48) months of\nservice upon retirement, provided such retired member agrees to pay the\nremaining seventy-five percent (75%) by payroll deduction from his or\nher retirement allowance, electronic funds transfer, or by another\nmethod.\n(c) Notwithstanding paragraph (b) of this subsection, for a member participating\nin the system prior to July 1, 2003, who:\n1. Dies as a direct result of an act in line of duty as defined in KRS 16.505\nor dies as a result of a duty -related injury as defined in KRS 61.621, the\nmonthly premium shall be paid for his or her spouse so long as the\nspouse remains eligible for a monthly retirement benefit;\n2. Becomes totally and permanently disabled as defined in KRS 16.582 as\na direct result of an act in line of duty as defined in KRS 16.505 or\nbecomes disabled as a result of a duty -related injury as defined in KRS\n61.621 and is eligible for the benefits provided by KRS 61.621(5)(a), the\nmonthly premium shall be paid for his or her spouse so long as the\nmember and the spouse individually remain eligible for a monthly\nretirement benefit; and\n3. Dies as a direct result of an act in line of duty as defined in KRS 16.505,\ndies as a result of a duty -related injury as defined in KRS 61.621,\nbecomes totally and permanently disabled as defined in KRS 16.582 as a\ndirect result of an act in line of duty as defined in KRS 16.505, or\nbecomes disabled as a result of a duty -related injury as defined in KRS\n61.621 and is eligible for the benefits provided by KRS 61.621(5)(a), the\nmonthly premium shall be paid for each dependent child as defined in\nKRS 16.505, so long as the member remains eligi ble for a monthly\nretirement benefit, unless deceased, and each dependent child\nindividually remains eligible under KRS 16.505.\n(d) 1. For a member who began participating in the system prior to July 1,\n2003, who was determined to be in a hazardous position in the Kentucky\nEmployees Retirement System or in a position in the State Police\nRetirement System, or who is receiving a retirement allowance based on\nGeneral Assembly service, the funds specified under paragraph (a)2. of\nthis subsection shall also pay a percentage of the monthly contribution\nrate sufficient to fund the premium costs for hospital and medical\ninsurance coverage for the spouse and for each dependent child of a\nrecipient.\n2. The percentage of the monthly contribution rate paid for the spous e and\neach dependent child of a recipient who was in a hazardous position or\nwho is receiving a retirement allowance based on General Assembly\nservice in accordance with subparagraph 1. of this paragraph shall be\nbased solely on the member's service in a h azardous position using the\nformula in paragraph (b) of this subsection.\n(e) For members who begin participating in the system on or after July 1, 2003:\n1. Participation in the insurance benefits provided under this section shall\nnot be allowed until the m ember has earned at least one hundred twenty\n(120) months of service in the state -administered retirement systems,\nexcept that for members who begin participating in the system on or\nafter September 1, 2008, participation in the insurance benefits provided\nunder this section shall not be allowed until the member has earned at\nleast one hundred eighty (180) months of service credited under KRS\n16.543(1) or 61.543(1), or another state-administered retirement system.\n2. A member who meets the minimum service requirements as provided by\nsubparagraph 1. of this paragraph shall upon retirement be eligible for\nthe following monthly contribution rate to be paid on his or her behalf,\nor on behalf of the spouse or dependent of a member with service in a\nhazardous posi tion, from the funds specified under paragraph (a)2. of\nthis subsection:\na. For members with service in a nonhazardous position, a monthly\ninsurance contribution of ten dollars ($10) for each year of service\nas a participating employee in a nonhazardous position;\nb. For members with service in a hazardous position or who\nparticipate in the State Police Retirement System, a monthly\ninsurance contribution of fifteen dollars ($15) for each year of\nservice as a participating employee in a hazardous position or the\nState Police Retirement System; and\nc. Upon the death of the retired member, the beneficiary, if the\nbeneficiary is the member's spouse, shall be entitled to a monthly\ninsurance contribution of ten dollars ($10) for each year of service\nthe member atta ined as a participating employee in a hazardous\nposition.\n3. The minimum service requirement to participate in benefits as provided\nby subparagraph 1. of this paragraph shall be waived for a member who\nreceives a satisfactory determination of a hazardous d isability that is a\ndirect result of an act in line of duty as defined in KRS 16.505, and the\nmember shall be entitled to the benefits payable under this subsection as\nthough the member had twenty (20) years of service in a hazardous\nposition.\n4. The minimum service required to participate in benefits as provided by\nsubparagraph 1. of this paragraph shall be waived for a member who is\ndisabled as a result of a duty -related injury as defined in KRS 61.621\nand is eligible for the benefits provided by KRS 61.6 21(5)(b), and the\nmember shall be entitled to the benefits payable under this subsection as\nthough the member had twenty (20) years of service in a nonhazardous\nposition.\n5. Notwithstanding the provisions of this paragraph, the minimum service\nrequirement to participate in benefits as provided by subparagraph 1. of\nthis paragraph shall be waived for a for a member who dies as a direct\nresult of an act in line of duty as defined in KRS 16.505, who becomes\ntotally and permanently disabled as defined in KRS 16 .582 as a direct\nresult of an act in line of duty as defined in KRS 16.505, who dies as a\nresult of a duty -related injury as defined in KRS 61.621, or who\nbecomes disabled as a result of a duty -related injury as defined in KRS\n61.621 and is eligible for th e benefits provided by KRS 61.621(5)(a),\nand the premium for the member, the member's spouse, and for each\ndependent child as defined in KRS 16.505 shall be paid in full by the\nsystems so long as the member, member's spouse, or dependent child\nindividually remains eligible for a monthly retirement benefit.\n6. Except as provided by subparagraph 5. of this paragraph, the monthly\ninsurance contribution amount shall be increased:\na. On July 1 of each year by one and one -half percent (1.5%). The\nincrease shall be cumulative and shall continue to accrue after the\nmember's retirement for as long as a monthly insurance\ncontribution is payable to the retired member or beneficiary but\nshall not apply to any increase in the contribution attributable to\nthe increase specified by subdivision b. of this subparagraph; and\nb. On January 1 of each year by five dollars ($5) for members who\nhave accrued an additional full year of service as a participating\nemployee beyond the career threshold, subject to the following\nrestrictions:\ni. The additional insurance contribution provided by this\nsubdivision shall only be applied to the monthly contribution\namounts provided under subparagraph 2.a. and b. of this\nparagraph;\nii. The additional insurance contribution provided by this\nsubdivision shall only be payable towards the health plans\noffered by the system to retirees who are not eligible for\nMedicare or for reimbursements provided to retirees not\neligible for Medicare pursuant to subsection (6)(a)2. of this\nsection; and\niii. In order for the annual increase to occur as provided by this\nsubdivision, the funding level of retiree health benefits for\nthe system in which the employee is receiving the additional\ninsurance contribution shall be at least ninety percent (90%)\nas of the most r ecent actuarial valuation and be projected by\nthe actuary to remain ninety percent (90%) for the year in\nwhich the increase is provided.\n7. The benefits of this paragraph provided to a member whose participation\nbegins on or after July 1, 2003, shall not be considered as benefits\nprotected by the inviolable contract provisions of KRS 16.652 or\n61.692. The General Assembly reserves the right to  suspend or reduce\nthe benefits conferred in this paragraph if in its judgment the welfare of\nthe Commonwealth so demands.\n8. An employee whose membership date is on or after September 1, 2008,\nwho retires and is reemployed in a regular full -time position required to\nparticipate in the system or the County Employees Retirement System\nshall not be eligible for health insurance coverage or benefits provided\nby this section and shall take coverage with his or her employing agency\nduring the period of reemployment in a regular full-time position.\n9. For purposes of this paragraph:\na. \"Career threshold\" for a member with service in a nonhazardous\nposition means twenty -seven (27) years of service credited under\nKRS 16.543(1), 61.543(1), 78.615(1), or another stat e-\nadministered retirement system and for a member with service in a\nhazardous position means the service requirements specified by\nKRS 16.577(2) or (3) or 16.583(6)(b), as applicable; and\nb. \"Funding level\" means the actuarial value of assets divided by th e\nactuarially accrued liability expressed as a percentage that is\ndetermined and reported by the system's actuary in the annual\nactuarial valuation.\n(f) For members with service in another state -administered retirement system\nwho select hospital and medical insurance plan coverage through the system:\n1. The system shall compute the member's combined service, including\nservice credit in another state -administered retirement system, and\ncalculate the portion of the member's premium monthly contribution rate\nto be paid by the funds specified under paragraph (a)2. of this subsection\naccording to the criteria established in paragraphs (a) to (e) of this\nsubsection. Each state -administered retirement system shall pay\nannually to the insurance trust fund establish ed under KRS 61.701 the\nportion of the system's cost of the retiree's monthly contribution for\nsingle coverage for hospital and medical insurance plan which shall be\nequal to the percentage of the member's number of months of service in\nthe other state -administered retirement plan divided by his or her total\ncombined service and in conjunction with the reciprocal agreement\nestablished between the system and the other state -administered\nretirement systems. The amounts paid by the other state -administered\nretirement plans and by the Kentucky Retirement Systems from funds\nspecified under paragraph (a)2. of this subsection shall not be more than\none hundred percent (100%) of the monthly contribution adopted by the\nrespective boards of trustees;\n2. A member may n ot elect coverage for hospital and medical benefits\nthrough more than one (1) of the state -administered retirement systems;\nand\n3. A state -administered retirement system shall not pay any portion of a\nmember's monthly contribution for medical insurance unl ess the\nmember is a recipient or annuitant of the plan.\n(5) Premiums paid for hospital and medical insurance coverage procured under\nauthority of this section shall be exempt from any premium tax which might\notherwise be required under KRS Chapter 136. The  payment of premiums by the\nfunds described by subsection (4)(a)2. of this section shall not constitute taxable\nincome to an insured recipient. No commission shall be paid for hospital and\nmedical insurance procured under authority of this section.\n(6) (a) The board shall promulgate an administrative regulation to establish a medical\ninsurance reimbursement plan to provide reimbursement for hospital and\nmedical insurance plan premiums of recipients of a retirement allowance who:\n1. Are not eligible for the same level of hospital and medical benefits as\nrecipients living in Kentucky and having the same Medicare hospital\nand medical insurance eligibility status; or\n2. Are eligible for retiree health subsidies as provided by subsection (4)(e)\nof this section, e xcept for those recipients eligible for full premium\nsubsidies under subsection (4)(e)5. of this section. The reimbursement\nprogram as provided by this subparagraph shall be available to the\nrecipient regardless of the hospital and medical insurance plans offered\nby the systems.\n(b) An eligible recipient shall file proof of payment for hospital and medical\ninsurance plan coverage with the retirement office. Reimbursement to eligible\nrecipients shall be made on a quarterly basis. The recipient shall be eligi ble\nfor reimbursement of substantiated medical insurance premiums for an\namount not to exceed the total monthly contribution rate determined under\nsubsection (4) of this section.\n(c) For purposes of recipients described by paragraph (a)1. of this subsectio n, the\nplan shall not be made available if all recipients are eligible for the same\ncoverage as recipients living in Kentucky.","path":["KRS Chapter 61"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57505","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:16Z","sha256":"269615d252d6489912cc26e33308d317affe15653ae043112ca5ca235cccd3ce","source_id":"us-ky","stale":false,"prev":"us-ky/krs-61.701","next":"us-ky/krs-61.703"},"notice":"GroundRules: Original legal text. Not legal advice."}