Enacting the Kansas municipal self-funded medical and prescription drug insurance pool act and establishing certain reserve, maximum exposure funding and reporting requirements for municipal self-funded medical and prescription drug insurance pools.

Session of 2026
SENATE BILL No. 528
By Committee on Federal and State Affairs
3-5
AN ACT concerning insurance; enacting the Kansas municipal self-funded
health and prescription drug insurance pool act; relating to group-
funded pools; establishing certain reserve, maximum exposure funding
and reporting requirements for municipal self-funded medical and
prescription drug insurance pools; amending K.S.A. 12-2618 and 12-
2621 and K.S.A. 2025 Supp. 12-2620 and repealing the existing
sections.
Be it enacted by the Legislature of the State of Kansas:
New Section 1. The amendments made to K.S.A. 12-2618 and 12-
2621, and amendments thereto, and K.S.A. 2025 Supp. 12-2620, and
amendments thereto, by this act shall be known and may be cited as the
Kansas municipal self-funded health and prescription drug insurance pool
act.
Sec. 2. K.S.A. 12-2618 is hereby amended to read as follows: 12-
2618. Application for a certificate of authority to operate a pool shall be
made to the commissioner of insurance not less than 60 days prior to the
proposed inception date of the pool. The application shall include the
following:
(a) A copy of the bylaws of the proposed pool, a copy of the articles
of incorporation, if any, and a copy of all agreements and rules of the
proposed pool. If any of the bylaws, articles of incorporation, agreements
or rules are changed, the pool shall notify the commissioner within 30 days
after such change.
(b) Designation of the initial board of trustees and administrator.
When there is a change in the membership of the board of trustees or
change of administrator, the pool shall notify the commissioner within 30
days after such change.
(c) The address where the books and records of the pool will be
maintained at all times. If this address is changed, the pool shall notify the
commissioner within 30 days after such change.
(d) Evidence that the annual Kansas gross premium of the pool will
be not less than $250,000 for each of the categories described in
subparagraphs paragraphs (1) through (4) of this subsection: (1) All
property insurance under article 9 of chapter 40 of the Kansas Statutes
Annotated, and amendments thereto, except motor vehicle physical
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SB 528 2
damage; (2) motor vehicle liability and physical damage insurance; (3)
workers' compensation and employers' liability insurance; (4) all casualty
insurance under article 11 of chapter 40 of the Kansas Statutes Annotated ,
and amendments thereto, except insurance under categories paragraphs
(2) and (3) above; (5) group sickness and accident insurance if at the date
of issue the annual gross premium for such coverage will be not less than
$1,000,000; and (6) group life insurance if at the date of issue the coverage
will insure at least 60% of the eligible participants or the total number of
persons covered will exceed 600. The pool shall notify the commissioner
within 30 days if the minimum premium qualification or participation
requirement is less than that specified in this subsection for any of the
above categories of insurance in paragraphs (1) through (5).
(e) An agreement binding the group and each member thereof to
comply with the provisions of the workers compensation act if such
coverage is to be provided by the pool. For all lines of coverage, all
members of the pool shall be jointly liable for the payment of claims to the
extent of the assets of the pool.
(f) A copy of the procedures adopted by the pool to provide services
with respect to underwriting matters and, with respect to the categories
identified in subsection types of insurance specified in subsection (d)(1)
through (4), safety engineering.
(g) A copy of the procedures adopted by the pool to provide claims
adjusting and accumulation of income and expense and loss data.
(h) (1) A confirmation that specific and aggregate excess insurance
provided by an insurance company holding a Kansas certificate of
authority or reinsurance approved by the commissioner is or will be in
effect concurrent with the assumption of risk by the pool, as selected by
the board of trustees of the pool, or adequate surplus funds as approved by
the commissioner, in the pool. The pool shall notify the commissioner
within 30 days of any change in the specific or aggregate excess insurance
or reinsurance carried by the pool. For the purposes hereof, "surplus
funds" shall mean means retained earnings of the pool after reserves have
been established for all known and incurred but not reported losses of the
pool and after all other liabilities of the pool, including unearned premium
reserves, have been deducted from total assets. The term "adequate surplus
funds" shall mean means the amount necessary for the pool to fund its
self-insured obligations.
(2) (A) Any municipal insurance pool seeking to provide medical and
prescription drug coverage on a self-funded basis shall demonstrate to the
commissioner that such pool is funded to the maximum exposure of the
pool's annual claims liability.
(B) The maximum claim exposure shall be determined utilizing
multiple years of claims data trended into the current year and shall, at a
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SB 528 3
minimum, be equivalent to a 12/18 aggregate stop-loss contract.
(C) No group failing to meet the reserve requirements provided in
K.S.A. 12-2621, and amendments thereto, shall be eligible to self-fund
pursuant to this paragraph.
(D) Each municipal self-funded medical and prescription drug pool
shall submit an annual certification to the Kansas department of insurance
verifying that the pool has been funded to the maximum exposure for the
plan year.
(E) As used in this subsection, "maximum exposure" means the total
potential financial liability for the pool, including stop-loss coverage costs
and thresholds, administrative costs and any other financial obligations
associated with the operation of the self-funded pool.
(i) After evaluating the application the commissioner shall notify the
applicant if the plan submitted is inadequate, fully explaining to the
applicant what additional requirements must be met. If the application is
denied, the applicant shall have 10 days to make an application for hearing
by the commissioner after the denial notice is received. A record shall be
made of such hearing, and the cost thereof shall be assessed against the
applicant requesting the hearing.
(j) Any other relevant factors the commissioner may deem necessary.
Sec. 3. K.S.A. 2025 Supp. 12-2620 is hereby amended to read as
follows: 12-2620. (a) All certificates granted hereunder shall be perpetual
unless sooner suspended or revoked by the commissioner or the attorney
general.
(b) Whenever the commissioner shall deem it necessary the
commissioner may make, or direct to be made, an examination of the
affairs and the financial condition of any pool. Each pool shall submit a
certified independent audited financial statement not later than 180 days
after the end of the fiscal year. The financial statement shall include
outstanding reserves for claims and for claims incurred but not reported.
Each pool shall file reports as to income, expenses and loss data at such
times and in such manner as the commissioner shall require. Any pool that
does not use rates developed by an approved rating organization shall file
with the commissioner an actuarial certification that such rates are
actuarially sound. Whenever it appears to the commissioner from such
examination or other satisfactory evidence that the ability to pay current
and future claims of any such pool is impaired, or that it is doing business
in violation of any of the laws of this state, or that its affairs are in an
unsound condition so as to endanger its ability to pay or cause to be paid
claims in the amount, manner and time due, the commissioner shall, before
filing such report or making the same public, grant such pool upon
reasonable notice a hearing, and, if on such hearing the report be
confirmed, the commissioner may require any of the actions allowed under
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K.S.A. 40-222b, and amendments thereto, or suspend the certificate of
authority for such pool until its ability to pay current and future claims
shall have been fully restored and the laws of the state fully complied with.
The commissioner may, if there is an unreasonable delay in restoring the
ability to pay claims of such pool and in complying with the law or if
rehabilitation or corrective action taken under K.S.A. 40-222b, and
amendments thereto, is unsuccessful, revoke the certificate of authority of
such pool to do business in this state. Upon revoking any such certificate
the commissioner shall communicate the fact to the attorney general,
whose duty it shall be to commence and prosecute an action in the proper
court to dissolve such pool or to enjoin the same such pool from doing or
transacting business in this state. The commissioner of insurance may call
a hearing under K.S.A. 40-222b, and amendments thereto, and the
provisions thereof shall apply to group-funded pools.
(c) On an annual basis, or within 30 days of any change thereto in the
administrator or the administrator's qualifications , each pool shall supply
to the commissioner the name and qualifications of the designated
administrator of the pools and the terms of the specific and aggregate
excess insurance contracts of the pool.
(d) (1) In addition to any other reporting requirement established
under this section, each municipal self-funded medical and prescription
drug insurance pool shall include in its annual statement:
(A) The total claims paid during the preceding year;
(B) the reserve fund balance required by K.S.A. 12-2621, and
amendments thereto, and any adjustments to such reserve;
(C) all administrative expenses incurred;
(D) the actuarial certification required by K.S.A. 12-2618, and
amendments thereto; and
(E) all documentation necessary to demonstrate compliance with
K.S.A. 12-2618, and amendments thereto.
(2) The commissioner of insurance may examine and audit the
financial records of any such pool in order to demonstrate compliance
with the subsection.
Sec. 4. K.S.A. 12-2621 is hereby amended to read as follows: 12-
2621. (a) With respect to the categories of coverage described in
subparagraphs (d)(1) through (4) of K.S.A. 12-2618(d)(1) through (4), and
amendments thereto, premium contributions to the pool shall be based
upon appropriate manual classification and rates, plus or minus applicable
experience credits or debits, and minus any advance discount approved by
the trustees, not to exceed 25% of manual premium. The pool shall use
rules, classifications and rates as promulgated by an approved rating
organization for workers compensation if the pool has been in operation
for less than five years. Such rates shall be the prospective loss costs, as
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authorized in K.S.A. 40-955, and amendments thereto, plus expenses
necessary to administer the pool. For purposes of subsection (b), the
prospective loss costs shall be presumed to be the 70% required to be
deposited in the claims fund. If the pool has been in operation for more
than five years, the board of trustees may determine such rates and
discounts as approved by the commissioner. Premium contributions to the
pool for all other lines of insurance shall be based on rates filed by a
licensed rating organization or on rates of certain companies filing rates
with the commissioner and approved by the commissioner for the pool. In
lieu of the foregoing, the board of trustees may determine such
classification, rates and discounts as approved by the commissioner.
Premium contributions to any pool providing life insurance or any pool
providing group sickness and accident insurance as described in K.S.A.
12-2617, and amendments thereto, shall be based on sound actuarial
principles.
(b) An amount equal to at least 70% of the annual premium shall be
maintained in a designated depository for the purpose of paying claims in
a claims fund account. If so approved by the commissioner of insurance,
the annual premium to be designated to such depository may be
determined to be the net amount of premium after all or a portion of the
specific and aggregate excess insurance premium costs have been paid.
This shall be called the claims fund account. If the pool has been in
operation for more than five years the commissioner may authorize
allocation of a different amount to the claims fund account, if solvency of
the pool would not be endangered. The remaining annual premium shall be
placed into a designated depository for the payment of taxes, fees and
administrative and other operational costs in an administrative fund
account.
(c) Any moneys for a fund year in excess of the amount necessary to
fulfill all obligations of the pool for that fund year, including any
obligation to retain adequate surplus funds, as defined by subsection (h) of
K.S.A. 12-2618, and amendments thereto, in lieu of specific and aggregate
excess insurance, may be declared to be refundable by the trustees not less
than 12 months after the end of the fund year. Any such refund shall be
paid only to those members who remained participants in the pool for an
entire year. Payment of previously earned refunds shall not be contingent
on continued membership in the pool.
(d) Municipal self-funded medical and prescription drug insurance
pools shall maintain a reserve equal to the greater of 20% of annual
claims liability or $4,000,000. Such reserve shall be maintained in a
segregated account and used for the payment of claims and administrative
expenses related to medical and prescription drug coverage. Such reserve
shall be reviewed annually by an actuary to ensure compliance with the
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requirements of this subsection.
Sec. 5. K.S.A. 12-2618 and 12-2621 and K.S.A. 2025 Supp. 12-2620
are hereby repealed.
Sec. 6. This act shall take effect and be in force from and after its
publication in the statute book.
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