Have received refunds since 2017
FRANKFORT, Ky. (KT) – The Kentucky Public Pensions Authority announced it will receive a refund of $18.3 million from Humana, the Authority’s Medicare Plan administrator, due to lower-than-expected retiree healthcare costs incurred during 2020.
The KPPA, formerly known as Kentucky Retirement Systems, manages all daily activities, including administrative support, investment management, benefits counseling, and retiree healthcare for the County Employees Retirement System, Kentucky Employees Retirement System, and State Police Retirement System.
The COVID-19 pandemic has reduced the typical number of non-urgent medical services performed by healthcare providers. In addition, KPPA retirees have used the different wellness programs offered through Humana and are living longer, healthier lives, resulting in lower healthcare costs for both Humana and the insurance trust. Together, these cost efficiencies create savings that are shared between KPPA and Humana in accordance with the terms of the Authority’s contract with the insurance provider.
“As the administrator of the KPPA health plan, Humana is pleased to partner with the Authority to improve the health and wellbeing of its retiree members while efficiently managing overall healthcare costs,” said Tim Snyder, Humana’s Group Medicare Senior Vice President. “While the pandemic caused lower-than-expected healthcare utilization in 2020 that resulted in this refund, we remain focused on ensuring every KPPA member has safe and ready access to the care and support they need.”
“With the receipt of the 2020 $18.3 million in refunds as a result of claims being less than expected, KPPA has now received more than $68 million in refunds since 2017,” said David Eager, Executive Director of the KPPA. “Our retirees deserve a lot of credit for making this happen through their health consciousness.”
Meanwhile, the KPPA says the financial strength of all five Insurance Funds continues to improve. As of the June 30, 2020, actuarial valuation, all except the Kentucky Employees Retirement System Nonhazardous Insurance Fund were at least 70 percent funded while the KERS Hazardous Insurance Fund has a funded ratio of over 100 percent.