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304.50-055 Plans for premium payment, assessments, and dividends -Approval by commissioner -- Investments -- Financing of payments by
governmental entities.
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A workers' compensation self-insured group shall establish plans for premium
payment, determination and collection of assessments, and for declaration and
payment of dividends or other disbursements, which shall be filed for prior
approval with the commissioner. Any change in the plans for premium
payment, assessments, or dividends shall be filed for prior approval with the
commissioner. Approval of plans for assessments and dividends does not
constitute approval of any particular assessment or dividend by the
commissioner.
Prior to the inception of each group member's self-insurance year, the trustees
shall collect from that member at least twenty-five percent (25%) of the
estimated premium for the ensuing year, except that in the case of a
self-insured group formed by governmental entities twenty-five percent (25%)
of the estimated premium for the ensuing year shall be collected no later than
thirty (30) days after the beginning of the self-insured group's self-insurance
year. The balance of the estimated premium shall be collected in either
quarterly or monthly installments as set forth in the enabling documents
described in KRS 304.50-030(2)(b) or 304.50-060(2)(b). Each group member's
payroll shall be audited annually and an adjustment to premium shall be made
accordingly.
A disbursement from a workers' compensation self-insured group fund shall be
for a purpose related to the self-insured group. A dividend shall not be
approved or paid until at least thirty-six (36) months after the expiration of the
self-insurance year and shall be paid from surplus funds not required for
payment of claims or other liabilities. The dividends shall be paid or credited to
members according to the reasonable classifications the trustees may
establish. A dividend shall not be paid which unfairly discriminates between
members of the same classifications. A dividend plan shall specify whether
past group members are eligible for the dividend. Payment of a dividend under
a dividend plan shall not be made unless the self-insured group has notified the
commissioner of its intent to make a dividend payment at least thirty (30) days
prior to the payment, and the commissioner has not disapproved the payment
within that time.
The formula to be used for collection of assessments shall be determined by
the trustees and approved by the commissioner. Assessments shall be fair and
equitable and shall not unfairly discriminate between members of the same
classification.
A trustee, fiscal agent, or service organization shall not utilize an asset of the
self-insured group for a purpose unrelated to workers' compensation. The
trustees shall maintain cash or cash equivalent accounts as may be prudently
necessary to pay expenses without having to liquidate long-term investments.
The trustees may invest funds in:
(a) United States Government bonds, United States Treasury notes,
Treasury bills, or other direct obligations guaranteed by the full faith and
credit of the United States Government or its agencies;
(b)
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Tax exempt obligations issued by the Commonwealth of Kentucky or its
agencies with a minimum rating of "A" by Standard & Poor;
(c) Obligations issued by a county, district, municipality, or other legal
authority within the Commonwealth with a minimum rating of "AA" by
Standard & Poor;
(d) Investment share accounts in a savings and loan association in the
Commonwealth whose deposits are insured by a federal agency;
(e) Certificates of deposit if issued by a duly chartered commercial bank;
(f) At the time of purchase, equity securities actively traded on the New York
or NASDAQ Stock Exchanges or other registered national securities
exchanges with no individual equity holding comprising greater than ten
percent (10%) of the equity portion of the portfolio reflected on the most
recent quarterly or annual statement of financial condition on file with the
commissioner.
1.
An investment in an individual equity holding shall not represent at
the time of purchase more than five percent (5%) of the total market
value of the security.
2.
At the time of purchase, investments in equity securities shall not
exceed twenty percent (20%) of the total market value of the
investment portfolio of the self-insured group reflected on the most
recent quarterly or annual statement of financial condition on file
with the commissioner;
(g) Corporate bonds if:
1.
The bond is issued, assumed, or guaranteed by a solvent institution
created or existing under the laws of the United States, or a state,
province, district, or territory;
2.
At the time of purchase, the corporate bond investments do not
exceed twenty-five percent (25%) of the total market value of the
investment portfolio reflected on the most recent quarterly or annual
statement of financial condition on file with the commissioner; and
3.
The bond has a minimum rating of "A" by Standard and Poor; and
(h) At the time of purchase, mutual funds and exchange traded funds if the
investments do not exceed twenty percent (20%) of the total market value
of the investment portfolio reflected on the most recent quarterly or annual
statement of financial condition on file with the commissioner.
Of the aggregate investments made by the trustees of the self-insured group
under this section:
(a) Not less than fifty percent (50%) of the total market value of the entire
investment portfolio shall be held in cash, cash equivalents, or securities
as described in subsection (6)(a) to (e) of this section; and
(b) A minimum of five percent (5%) of the total investment portfolio value
shall be maintained in cash or cash equivalent accounts or United States
Treasury and Federal Agency Securities with a remaining maturity of one
(1) year or less.
The commissioner may permit variation from the requirements of this section
for good cause.
(9) (a) Governmental entities that:
1.
Participate or have participated in a workers' compensation
self-insured group authorized by this subtitle; and
2.
Are assessed by the workers' compensation self-insured group to
cover an accrued deficit;
may finance the payment of the assessment over a period not to exceed
twenty (20) years.
(b) Financing obtained pursuant to paragraph (a) of this subsection may be
accomplished by:
1.
The issuance of bonds, notes, or other obligations; or
2.
A lease, installment payment agreement, or other similar
agreement.
(c) If the governmental entity fails to make a scheduled payment on the
financing obtained pursuant to paragraph (a) of this subsection, any
payments due to that governmental entity shall be withheld or intercepted
using the process established in KRS 160.160(5).
(10) Except as provided in subsection (9) of this section, all other provisions of the
Kentucky Revised Statutes applying to any financing obtained by a
governmental entity shall apply.
Effective:June 25, 2013
History: Amended 2013 Ky. Acts ch. 75, sec. 5, effective June 25, 2013. -Amended 2010 Ky. Acts ch. 24, sec. 1633, effective July 15, 2010. -- Amended
2008 Ky. Acts ch. 183, sec. 4, effective July 15, 2008. -- Created 2005 Ky. Acts
ch. 7, sec. 11, effective March 1, 2005.
Legislative Research Commission Note (3/1/2005). 2005 Ky. Acts ch. 7, which
creates this section, contains the enrolled text of Senate Bill 86 as amended by
a Senate committee substitute. In drafting the committee substitute, an
additional subsection was inserted into this section, but a reference to
"subsection (5)(a) of this section" in subsection (7) was not changed to reflect
this addition. Pursuant to KRS 7.136(1), the reference has been changed to
"subsection (6)(a) of this section" in codification.
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