Employers’ Responsibility for Health Insurance in Kentucky
There is no law in Kentucky that requires employers to provide group health insurance to their employees. While most employers do provide this benefit, there is no government regulation or entity forcing them to do so.
There are, however, state laws that require employer-provided policies to cover specific services. These required coverages are known as “mandated benefits.”
A full list of state-required benefits in Kentucky is available through the Center for Consumer Information and Insurance Oversight. The following are a few examples of benefits that employers must provide in their insurance policies:
- Home healthcare and hospice
- Autism spectrum disorders
- Hearing aids and related services
- Colorectal cancer screenings
- Reconstructive surgery
- Minimum inpatient post-delivery care for mothers and their newly born children
- Emergency medical conditions and emergency department services
The self-insurance exception
U.S. federal law prohibits states from regulating self-insured benefit plans. Thus, the mandated benefits and continuation and conversion provisions in Kentucky do not apply to any health insurance plan in which the employer pays for all of the benefits without the proceeds of an insurance policy.
An employer’s health plan is classified as self-insured if the risk of paying out claims is on the employer rather than the insurance provider. These plans can be contracted with third-party administrators — which can include insurance companies — to actually process the benefit claims. The third-party administrator then pays the claim before the employer provides reimbursement.
In many cases, self-insured plans involve coverage called “stop-loss” insurance, which covers particularly large claims. The purchase of this coverage does not lead to losing self-insured status and the exemption from state regulations.
Affordable Care Act
Finally, the enactment of the Affordable Care Act mandated the development of healthcare exchanges that provide individuals and small businesses with realistically affordable access to insurance coverage. Each state has some flexibility with creating exchanges that best meet their needs while still fulfilling the regulatory and statutory standards of the ACA. Kentucky’s exchange is the Kentucky Health Benefit Exchange.