Citing the need to preserve remaining assets, the Kentucky Health Cooperative (KYHC) was placed in liquidation Jan. 15 at the request of the Kentucky Department of Insurance. The order was signed by Franklin Circuit Judge Phillip J. Shepherd.
KYHC was placed in rehabilitation on Oct. 29, and the Kentucky Department of Insurance began oversight of the day-to-day operations of the nonprofit health insurance company at that time.
“This is a regrettable situation, however, once we determined the degree of financial hazard, the decision to move to liquidation was an easy one,” said Kentucky Insurance Commissioner Brian Maynard, who was appointed by the state’s new governor, Matt Bevin. “To continue an attempt to rehabilitate the fund would increase the risk of loss, jeopardizing both creditors and policyholders.”
The news comes just a week after Bevin notified federal authorities that he was dismantling the state’s health exchange, kynect. The nonprofit insurance cooperative sold insurance policies on kynect.
The Associated Press reported that about 51,000 people had insurance through the cooperative, and many health care providers are still waiting to be paid. Money from the sale of the assets will be used to pay claims submitted by in-network providers. Policyholders who used out-of-network providers could be responsible for outstanding charges.
Under the supervision of Franklin Circuit Court, the special deputy liquidators will begin terminating any remaining business of KYHC and will distribute the remaining assets in the order outlined in Kentucky statute. The insurance department said every attempt will be made to pay all debts in full, but there is a possibility that some will be paid at a reduced rate or not at all.
Providers, agents and others with claims against KYHC will be notified. The deadline for filing claims will be Oct. 15, 2016.
All individual health insurance policies and most group plans terminated on Jan. 1, 2016. Any remaining KYHC policies will terminate no later than Jan. 31, 2016.
Documents are available on the Kentucky Department of Insurance and the KYHC websites.
Source: Kentucky Department of Insurance