Kentucky Administrative Regulations › Title 803 - LABOR CABINET › Chapter 25 - Department of Workers' Claims › Section 803 KAR 25:021 - Individual self-insurers

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				13B.140,
				342.0011,
				342.267,
				342.340,
				342.342,
				342.345,
				342.347,
				342.920
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				342.260(1) requires the
				commissioner of the Department of Workers' Claims to promulgate administrative
				regulations necessary to implement KRS Chapter 342.
				KRS
				342.340 and
				342.345
				require the commissioner to establish requirements for individual self-insured
				employers. This administrative regulation establishes minimum requirements for
				an individual employer who seeks to or is authorized to self-insure for the
				purpose of workers' compensation.
Section
			 1. Definitions.
(1) "Business
			 day" means any day except Saturday, Sunday, or any day which is a legal
			 holiday.
(2) "Calendar day" means
			 all days in a month, including Saturday, Sunday, and any day which is a legal
			 holiday.
(3) "Commissioner" is
			 defined by
			 KRS
			 342.0011(9).
(4) "Employer" means an employer subject to
			 KRS Chapter 342.
(5) "Guarantor"
			 means a parent entity:.
(a) That agrees it is
			 responsible for and shall meet any and all workers' compensation obligations of
			 the subsidiary when the subsidiary fails to meet its responsibilities as a
			 self-insured employer; and
(b)
			 Whose financial condition and affairs related to workers' compensation are the
			 basis upon which the subsidiary is authorized to self-insure.
(6) "Lapsed" means there is no
			 possibility of compensation under KRS Chapter 342 because the claim is barred
			 by time or otherwise.
(7) "Loss
			 Statement," or "loss run" means a statement of all claims stemming from a
			 self-insured employer's entire period of self-insurance in the form required by
			 the Department of Workers' Claims of:
(a) All
			 past known liabilities and amounts paid at a given point in time;
(b) Reserve estimates for all future
			 liabilities; and
(c) Known
			 liabilities and amounts paid or amounts anticipated to be paid for the
			 immediate prior calendar year.
(8) "Paid" means there is no possibility of
			 further compensation under KRS Chapter 342 because the employee and any
			 eligible dependent of the employee has been provided all compensation awarded
			 or that could possibly be awarded under KRS Chapter 342 with respect to a
			 compensable claim.
(9) "Period of
			 self-insurance" means the period an employer was authorized by the commissioner
			 to pay directly the compensation provided in KRS Chapter 342 in the amount,
			 manner, and when due.
(10)
			 "Reserve" means an estimate by the employer of the undiscounted total
			 compensation to be paid over the entire life of a claim, which may be limited
			 to a specific portion of the entire compensation when so designated; a medical
			 reserve would refer to the medical compensation to be paid through the entire
			 life of the claim.
(11) "Security"
			 means a required deposit by an employer authorized to self-insure, acceptable
			 to the commissioner and in the amount he directs, that provides the
			 commissioner immediate access to security proceeds sufficient to make direct
			 payment of compensation in claims arising from the employer's period of
			 self-insurance until each claim for compensation has been fully paid, fully
			 settled, or lapsed, so there is no possibility of further liability.
(12) "Security proceeds" means:
(a) Security in the form of cash money paid
			 by an issuer of security from its own property in response to the
			 commissioner's call or demand; or
(b) Cash money deposited directly with the
			 commissioner in a financial institution's account.
(13) "Self-Insurance" or "Self-Insure" means
			 the nontransferable status of an employer:
(a)
			 That secured its liability for workers' compensation by depositing with the
			 commissioner acceptable security, in the amount directed by the commissioner,
			 to secure the payment of compensation provided by KRS Chapter 342 until every
			 claim for compensation has been fully paid, fully settled, or lapsed, so that
			 there is no possibility of further liability; and
(b) That has been authorized by the
			 commissioner to pay directly the compensation provided in KRS Chapter 342, in
			 the amount, manner, and when due, rather than the employer insuring and keeping
			 insured his liability for compensation in an entity authorized to transact the
			 business of workers' compensation insurance in this state;
(14) "Self-Insured Employer" means an
			 employer currently authorized by the commissioner to self-insure and is
			 synonymous with the term "self-insurer" as that term is defined in
			 KRS
			 342.0011.
(15) "Service organization" or "third party
			 administrator," means a person or entity which provides services including
			 claims adjustment, safety engineering, computation of statistics, preparation
			 of loss statements, preparation of any other required self-insurance report,
			 and other services that may be required by a self-insured employer.
(16) "Settled" means there is no possibility
			 of future compensation arising from an injury because the employee has
			 bargained for and received money for all compensation the employee and any
			 eligible dependent could be awarded under KRS Chapter 342 for that injury and
			 the bargain has been approved by an administrative law judge.
(17) "Specific excess insurance" means a
			 contract or policy of insurance whereby a self-insured employer is indemnified
			 for amounts paid in excess of a specific dollar amount stemming from one (1)
			 injury or exposure for which compensation is provided in this
			 chapter.