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HB 2044

abandonment; concealment of body; classification

57th Legislature - Second Regular Session Introduced by Selina Bliss

Requires TPAs to keep separate fiduciary accounts for each payor and promptly disclose Chapter 9/11 bankruptcies to the Insurance Commissioner.

Senate First Reading
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Bill Summary · HB 2044

HB 2044 — Summary (2025 Session)

Title: Requiring third‑party administrators to maintain separate fiduciary accounts for individual payors and to disclose bankruptcy petitions to the Insurance Commissioner

Purpose / Intent

To strengthen protections for funds held by third‑party administrators (TPAs) who administer life or health insurance programs by:
- Requiring TPAs to keep separate fiduciary accounts for each payor (e.g., employer or plan sponsor) so funds are not co‑mingled; and
- Requiring immediate disclosure to the Kansas Commissioner of Insurance when a TPA files (or a filing is made on its behalf) under Chapter 9 or Chapter 11 of the U.S. Bankruptcy Code.

The bill was requested by the Kansas Insurance Department following difficulties in 2024 when a TPA bankruptcy complicated returning or transferring client funds.

Key provisions

  • Amends K.S.A. 40‑3807 and 40‑3809 (and repeals the existing versions).
  • Fiduciary accounts
    • TPAs must deposit premiums, charges, collateral, loss reimbursements and returns in a fiduciary capacity.
    • A separate fiduciary account must be maintained for each payor; no account may contain funds held on behalf of multiple payors (prohibits co‑mingling).
    • Written agreements with payors must require periodic accountings and specify reporting.
    • TPAs must keep account records and, upon payor request, furnish copies of deposits/withdrawals relating to that payor.
    • Withdrawals from fiduciary accounts are limited to specified purposes (e.g., remittance to insurers, deposit to payor accounts, transfers to claims‑paying accounts, payment of earned commissions as authorized, return of premiums/collateral, or payment to other authorized service providers).
  • Bankruptcy disclosure
    • TPAs must immediately notify the Commissioner of Insurance at the time a Chapter 9 or Chapter 11 bankruptcy petition is filed by or on behalf of the administrator.
  • Effective date: upon publication in the Kansas Register.

Who is affected

  • Third‑party administrators of life and health coverage operating in Kansas.
  • Payors (employers, plan sponsors) whose funds are held/managed by TPAs.
  • Covered individuals (employees) indirectly, through reduced risk of service disruption.
  • Kansas Insurance Department / Commissioner of Insurance (receives disclosures; oversight role).
  • Insurers and successor administrators involved in transitions.

Fiscal impact

The Kansas Department of Insurance and Division of the Budget report no fiscal effect.

Procedural / timeline status (selected)

  • Introduced: Jan 23, 2025
  • House passed: Feb 7, 2025 (Yeas 105, Nays 9)
  • Senate passed as amended: Mar 18, 2025 (Yeas 40, Nays 0)
  • Nonconcurrence with amendments led to conference committee request; Motion to accede adopted Mar 20, 2025. Conferees appointed: Senators Dietrich, Fagg, Francisco.
  • Next step: Conference committee actions to reconcile House and Senate versions; final enactment upon publication in the Kansas Register.

Potential impact / implications

  • Makes it easier to identify and return or transfer payor funds if a TPA fails or files bankruptcy, reducing administrative disruption for employers and covered persons.
  • Increases recordkeeping and operational requirements for TPAs (account segregation, reporting, immediate bankruptcy notification).
  • Enforcement mechanisms would be through existing regulatory authority of the Commissioner (not changed by this bill).

Compiled from official sources — confirm details with the bill’s official record.

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