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WeVote Research Nonpartisan
Bill Summary · HB 98

Overview

HB 98 (2026 Regular Session, Kentucky) makes changes to retiree health provisions within the Kentucky Retirement Systems, focusing on how health insurance coverage is provided, who pays for it, and under what conditions retirees and their dependents may participate in state health plans. The bill also creates a framework for actuarial monitoring and future legislative options.

Main purpose and intent

  • Modernize and codify how retiree health benefits are funded and administered for Kentucky Employees Retirement System (KERS) and State Police Retirement System retirees.
  • Align eligibility, premium contributions, and subsidies with service thresholds, Medicare eligibility, and hazardous versus nonhazardous service.
  • Provide a pathway for medical reimbursements and cross-system coordination, while preserving benefits for eligible retirees and their dependents.

Key provisions and changes

  • Section 1 amendments to KRS 61.702 define:

    • What constitutes a hospital and medical insurance plan (board-discretion options include traditional plans, HSAs/HRAs, and medical insurance reimbursement programs via a health exchange).
    • How “monthly contribution rate” is determined (with distinctions for those who began participation before vs. after July 1, 2003).
    • How “months of service” are counted for retiree health, including special rules for certain Council on Postsecondary Education employees and vesting considerations.

  • Health coverage for retirees and dependents:

    • The board must arrange group hospital and medical coverage for current/future retirees and their spouses/dependents who meet participation requirements.
    • Retirees pay the difference between the plan premium and the board-approved monthly contribution rate through payroll deductions or other means.

  • Eligibility and participation in plans:

    • Present/future retirees not Medicare-eligible (and certain other categories) may be included in the Kentucky Employees Health Plan with benefits equal to state employee levels.
    • Medicare-eligible retirees must participate in Medicare-consistent plans; some plans may require Medicare Part A/B coverage to participate.
    • For retirees over 65 who are not Medicare eligible (or meet special Medicare-related criteria), coverage continues as before, with potential premium rating adjustments.

  • Premium funding and contributions:

    • Employers must contribute to the insurance trust fund to support monthly contribution rates.
    • New employee contributions (post-2003/2008-trigger dates) are structured as a percentage of creditable compensation (1% for nonhazardous, 2% for hazardous, and higher combinations for State Police members), with rules about where deductions go (401(h) accounts, insurance trust fund) and require/permit compliance through payroll reporting and regulations.
    • Detailed tiered employer and member contributions determine who pays what portion of premiums, including specific rules for hazardous vs. nonhazardous service and career thresholds.

  • Premium subsidies and escalators:

    • For pre-2003 participants, the board covers substantial portions of premiums based on years of service, with staged percentage contributions and survivor/dependent provisions.
    • For post-2003 participants, a new framework establishes annual increases to monthly insurance contributions (1.5% annual increases) and a separate annual increase of $5 per full year of service above a career threshold, subject to funding adequacy (minimum 90% funded per actuarial valuation).

  • Reimbursement and exceptions:

    • A medical insurance reimbursement plan is available for certain retirees who do not receive the same level of benefits or who receive subsidies, with quarterly reimbursements up to the beneficiary’s monthly cap.

  • Section 2-4 other provisions:

    • Ongoing monitoring by the Public Pension Oversight Board with interim evaluation for potential future adjustments if actuarial improvements persist.
    • Effective dates: several provisions apply prospectively to 2027 or 2027–2028 timelines; specific timing for employee contributions starts July 1, 2027, and health premium changes begin January 1, 2027, with annual adjustments thereafter.

Affected groups

  • Current and future retirees of KERS and the State Police Retirement System.
  • Retiree spouses and dependents covered under the systems.
  • Employees contributing to the systems (and their employers) through required premium contributions.
  • Recipients eligible for Medicare and those not eligible for Medicare.
  • Retiree health funds and the insurance trust fund administered under KRS 61.701.

Procedural and timeline aspects

  • Provisions mandating prospective implementation:
    • Employee contribution changes apply to amounts due on/after July 1, 2027.
    • Premium contribution amounts and related escalators apply to health plans for plans beginning January 1, 2027, with annual adjustments thereafter.
  • Ongoing actuarial monitoring by the Public Pension Oversight Board during the 2026 Interim to assess potential legislative options if retiree health funds remain actuarially sound.

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

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