Session of 1998
                   
HOUSE BILL No. 2873
         
By Committee on Appropriations
         
2-11
            9             AN ACT concerning the Kansas public employees retirement system;
10             relating to plan of long-term disability benefits; amending K.S.A. 1997
11             Supp. 74-4927 and repealing the existing section.
12            
13       Be it enacted by the Legislature of the State of Kansas:
14           Section 1. K.S.A. 1997 Supp. 74-4927 is hereby amended to read as
15       follows: 74-4927. (1) The board may establish a plan of death and long-
16       term disability benefits to be paid to the members of the retirement
17       system as provided by this section. The long-term disability benefit shall
18       not be payable until the member has been prevented from carrying out
19       each and every duty pertaining to the member's employment as a result
20       of sickness or injury for a period of 180 days and the annual benefit shall
21       not exceed an amount equal to 662/3% of the member's annual rate of
22       compensation on the date such disability commenced and shall be payable
23       in equal monthly installments. In the event that a member's compensation
24       is not fixed at an annual rate but on an hourly, weekly, biweekly, monthly
25       or any other basis than annual, the board shall prescribe by rule and
26       regulation a formula for establishing a reasonable rate of annual compen-
27       sation to be used in determining the amount of the death or long-term
28       disability benefit for such member. Such plan shall provide that:
29           (A) For deaths occurring prior to January 1, 1987, the right to receive
30       such death benefit shall cease upon the member's attainment of age 70
31       or date of retirement whichever first occurs. The right to receive such
32       long-term disability benefit shall cease (i) for a member who becomes
33       eligible for such benefit before attaining age 60, upon the date that such
34       member attains age 65 or the date of such member's retirement, which-
35       ever first occurs, (ii) for a member who becomes eligible for such benefit
36       at or after attaining age 60, the date that such member has received such
37       benefit for a period of five years, upon the date that such member attains
38       age 70, or upon the date of such member's retirement, whichever first
39       occurs, (iii) for all disabilities incurred on or after January 1, 1987, for a
40       member who becomes eligible for such benefit at or after attaining age
41       70, the date that such member has received such benefit for a period of
42       12 months or upon the date of such member's retirement, whichever first
43       occurs, and (iv) for all disabilities incurred on or after January 1, 1987,

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  1       for a member who becomes eligible for such benefit at or after attaining
  2       age 75, the date that such member has received such benefit for a period
  3       of six months or upon the date of such member's retirement, whichever
  4       first occurs.
  5           (B) Long-term disability benefit payments shall be in lieu of any ac-
  6       cidental total disability benefit that a member may be eligible to receive
  7       under subsection (3) of K.S.A. 74-4916 and amendments thereto. Subject
  8       to limitations contained herein, such plan may provide that any amount
  9       which a member receives as a social security benefit or a disability benefit
10       or compensation from any source by reason of any employment including,
11       but not limited, to workers compensation benefits may be deducted from
12       the amount of insured disability benefit payments under such plan, except
13       that not more than 50% of such workers compensation benefits shall be
14       deducted   (tri-stars)erefrom from such amount of insured disability benefit pay-
15       ments under such plan, nor shall any amount of any such social security
16       benefit be deducted from such amount of insured disability benefit pay-
17       ments under such plan when such member is a quadriplegic. Such insured
18       disability payments shall accrue from the later of the 181st day of total
19       disability or the first day upon which the member ceases to draw com-
20       pensation from the employer. If the social security benefit, workers com-
21       pensation benefit, other income or wages or other disability benefit by
22       reason of employment, or any part thereof, is paid in a lump sum, the
23       amount of the reduction shall be calculated on a monthly basis over the
24       period of time for which the lump sum is given. In no case shall a member
25       who is entitled to receive insured disability benefits receive less than $50
26       per month. As used in this section, ``workers compensation benefits''
27       means the total award of disability benefit payments under the workers
28       compensation act notwithstanding any payment of attorney fees from
29       such benefits as provided in the workers compensation act.
30           (C) The plan may include other provisions relating to qualifications
31       for benefits; schedules and graduation of benefits; limitations of eligibility
32       for benefits by reason of termination of employment or membership;
33       conversion privileges; limitations of eligibility for benefits by reason of
34       leaves of absence, military service or other interruptions in service; lim-
35       itations on the condition of long-term disability benefit payment by reason
36       of improved health; requirements for medical examinations or reports; or
37       any other reasonable provisions as established by rule and regulation of
38       uniform application adopted by the board.
39           (D) On and after April 30, 1981, the board may provide under the
40       plan for the continuation of long-term disability benefit payments to any
41       former member who forfeits the entitlement to continued service credit
42       under the retirement system or continued assistance in the purchase of
43       retirement annuities under K.S.A. 74-4925 and amendments thereto and

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  1       to continued long-term disability benefit payments and continued death
  2       benefit coverage, by reason of the member's withdrawal of contributions
  3       from the retirement system or the repurchase of retirement annuities
  4       which were purchased with assistance received under K.S.A. 74-4925 and
  5       amendments thereto. Such long-term disability benefit payments may be
  6       continued until such individual dies, attains age 65 or is no longer disa-
  7       bled, whichever occurs first.
  8           (E) Any visually impaired person who is in training at and employed
  9       by a sheltered workshop for the blind operated by the secretary of social
10       and rehabilitation services and who would otherwise be eligible for the
11       insured disability benefit as described in this section shall not be eligible
12       to receive such benefit due to visual impairment as such impairment shall
13       be determined to be a preexisting condition.
14           (2) (A) In the event that a member becomes eligible for a long-term
15       disability benefit under the plan authorized by this section such member
16       shall be given participating service credit for the entire period of such
17       disability. Such member's final average salary shall be computed in ac-
18       cordance with subsection (17) of K.S.A. 74-4902 and amendments thereto
19       except that the years of participating service used in such computation
20       shall be the years of salaried participating service.
21           (B) In the event that a member eligible for a long-term disability
22       benefit under the plan authorized by this section shall be disabled for a
23       period of five years or more immediately preceding retirement, such
24       member's final average salary shall be adjusted upon retirement by the
25       actuarial salary assumption rates in existence during such period of dis-
26       ability. Effective July 1, 1993, such member's final average salary shall be
27       adjusted upon retirement by 5% for each year of disability after July 1,
28       1993.
29           (C) In the event that a member eligible for a long-term disability
30       benefit under the plan authorized by this section shall be disabled for a
31       period of five years or more immediately preceding death, such member's
32       current annual rate shall be adjusted by the actuarial salary assumption
33       rates in existence during such period of disability. Effective July 1, 1993,
34       such member's current annual rate shall be adjusted upon death by 5%
35       for each year of disability after July 1, 1993.
36           (3) (A) To carry out the legislative intent to provide, within the funds
37       made available therefor, the broadest possible coverage for members who
38       are in active employment or involuntarily absent from such active em-
39       ployment, the plan of death and long-term disability benefits shall be
40       subject to adjustment from time to time by the board within the limita-
41       tions of this section. The plan may include terms and provisions which
42       are consistent with the terms and provisions of group life and long-term
43       disability policies usually issued to those employers who employ a large

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  1       number of employees. The board shall have the authority to establish and
  2       adjust from time to time the procedures for financing and administering
  3       the plan of death and long-term disability benefits authorized by this
  4       section. Either the insured death benefit or the insured disability benefit
  5       or both such benefits may be financed directly by the system or by one
  6       or more insurance companies authorized and licensed to transact group
  7       life and group accident and health insurance in this state.
  8           (B) The board may contract with one or more insurance companies,
  9       which are authorized and licensed to transact group life and group acci-
10       dent and health insurance in Kansas, to underwrite or to administer or
11       to both underwrite and administer either the insured death benefit or the
12       insured disability benefit or both such benefits. Each such contract with
13       an insurance company under this subsection shall be entered into on the
14       basis of competitive bids solicited and administered by the board. Such
15       competitive bids shall be based on specifications prepared by the board.
16           (i) In the event the board purchases one or more policies of group
17       insurance from such company or companies to provide either the insured
18       death benefit or the insured disability benefit or both such benefits, the
19       board shall have the authority to subsequently cancel one or more of such
20       policies and, notwithstanding any other provision of law, to release each
21       company which issued any such canceled policy from any liability for
22       future benefits under any such policy and to have the reserves established
23       by such company under any such canceled policy returned to the system
24       for deposit in the group insurance reserve of the fund.
25           (ii) In addition, the board shall have the authority to cancel any policy
26       or policies of group life and long-term disability insurance in existence
27       on the effective date of this act and, notwithstanding any other provision
28       of law, to release each company which issued any such canceled policy
29       from any liability for future benefits under any such policy and to have
30       the reserves established by such company under any such canceled policy
31       returned to the system for deposit in the group insurance reserve of the
32       fund. Notwithstanding any other provision of law, no premium tax shall
33       be due or payable by any such company or companies on any such policy
34       or policies purchased by the board nor shall any brokerage fees or com-
35       missions be paid thereon.
36           (4) (A) The cost of the plan of death and long-term disability benefits
37       shall be paid from a special reserve hereby created in the fund, to be
38       known as the group insurance reserve. Each participating employer shall
39       appropriate and pay to the system in such manner as the board shall
40       prescribe in addition to the employee and employer retirement contri-
41       butions an amount equal to .6% of the amount of compensation on which
42       the members' contributions to the Kansas public employees retirement
43       system are based for deposit in the group insurance reserve of the Kansas

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  1       public employees retirement fund.
  2           (B) The director of the budget and the governor shall include in the
  3       budget and in the budget request for appropriations for personal services
  4       a sum to pay the state's contribution to the group insurance reserve as
  5       provided by this section and shall present the same to the legislature for
  6       allowances and appropriation.
  7           (C) The provisions of subsection (4) of K.S.A. 74-4920 and amend-
  8       ments thereto shall apply for the purpose of providing the funds to make
  9       the contributions to be deposited to the group insurance reserve.
10           (D) Any dividend or retrospective rate credit allowed by an insurance
11       company or companies shall be credited to the group insurance reserve
12       and the board may take such amounts into consideration in determining
13       the amounts of the benefits under the plan authorized by this section.
14           (5) The death benefit provided under the plan of death and long-
15       term disability benefits authorized by this section shall be known and
16       referred to as insured death benefit. The long-term disability benefit pro-
17       vided under the plan of death and long-term disability benefits authorized
18       by this section shall be known and referred to as insured disability benefit.
19           (6) The board is hereby authorized to establish an optional death
20       benefit plan. Except as provided in subsection (7), such optional death
21       benefit plan shall be made available to all employees who are covered or
22       may hereafter become covered by the plan of death and long-term disa-
23       bility benefits authorized by this section. The cost of the optional death
24       benefit plan shall be paid by the applicant either by means of a system
25       of payroll deductions or direct payment to the board. The board shall
26       have the authority and discretion to establish such terms, conditions, spec-
27       ifications and coverages as it may deem to be in the best interest of the
28       state of Kansas and its employees which should include term death ben-
29       efits for the person's period of active state employment regardless of age,
30       but in no case, on and after January 1, 1989, shall the maximum allowable
31       coverage be less than $200,000. The cost of the optional death benefit
32       plan shall not be established on such a basis as to unreasonably discrim-
33       inate against any particular age group. The board shall have full admin-
34       istrative responsibility, discretion and authority to establish and continue
35       such optional death benefit plan and the director of accounts and reports
36       of the department of administration shall when requested by the board
37       and from funds appropriated or available for such purpose establish a
38       system to make periodic deductions from state payrolls to cover the cost
39       of the optional death benefit plan coverage under the provisions of this
40       subsection (6) and shall remit all deductions together with appropriate
41       accounting reports to the system. All funds received by the board,
42       whether in the form of direct payments, payroll deductions or otherwise,
43       shall be accounted for separately from all other funds of the retirement

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  1       system and shall be paid into a special reserve hereby created in the fund,
  2       to be known as the optional death benefit plan reserve, from which re-
  3       serve the board is authorized to make the appropriate payments and to
  4       pay the ongoing costs of administration of such optional death benefit
  5       plan as may be incurred in carrying out the provisions of this subsection
  6       (6).
  7           (7) Any employer other than the state of Kansas which is currently a
  8       participating employer of the Kansas public employees retirement system
  9       or is in the process of affiliating with the Kansas public employees retire-
10       ment system may also elect to affiliate for the purposes of subsection (6).
11       All such employers shall make application for affiliation with such system,
12       to be effective on January 1 next following application. Such optional
13       death benefit plan shall not be available for employees of employers spec-
14       ified under this subsection until after July 1, 1988.
15           Sec. 2. K.S.A. 1997 Supp. 74-4927 is hereby repealed.
16           Sec. 3. This act shall take effect and be in force from and after its
17       publication in the statute book.
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