Could a Kentucky state retiree working again receive a second public health contribution for cafeteria benefits?

Plain-English summary

The Kentucky Higher Education Student Loan Corporation asked about a state retiree who had health coverage through the Kentucky Employees Retirement System and then worked for the corporation. The employee proposed waiving health coverage from the new job and using that employer's health contribution for dental, vision, or dependent-care benefits in a cafeteria plan. The Attorney General said KRS 18A.225(13) barred receiving the additional public employer contribution. Redirecting it to a different benefit did not change what contribution the employee would receive.

The opinion did not bar the retiree from the cafeteria plan altogether. It said the employee could participate in other available benefits without receiving the extra public funds for them. Its question concerned the particular overlap between retiree state-health coverage and a later public employer contribution.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could a covered state retiree use a new public employer's health contribution for dental or vision benefits? A: The AG said no. The statute barred receipt of the additional public health contribution, regardless of which cafeteria-plan benefit it would buy.

Q: Did waiving health insurance at the new job change the answer? A: No. The retiree in the opinion proposed that arrangement, and the AG said it did not avoid the bar on receiving the second contribution.

Q: Was the retiree excluded from all cafeteria-plan benefits? A: No. The opinion expressly said participation in other benefits was possible without additional public funds.

Background and statutory framework

The opinion quoted KRS 18A.225(13) as saying a retiree who elected state health coverage “shall not be eligible to receive the state health insurance contribution toward health care coverage as a result of any other employment for which there is a public employer contribution.” The AG focused on “receive”: applying that contribution to non-health benefits did not alter its character as the prohibited second public contribution.

Citations and references

Statute: KRS 18A.225(13).

Source

• Landing page: https://kdla.access.preservica.com/uncategorized/IO_ea07d505-4cf1-4d74-a2c9-c9e6c3f2915c/
• Original PDF: https://kdla.access.preservica.com/download/file/IO_ea07d505-4cf1-4d74-a2c9-c9e6c3f2915c

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

OAG 06-003
October 12, 2006

Subject: Ineligibility of retiree participating in state employee health insurance program to receive state health in- surance contribution from subsequent employment

Requested by: Richard F. Casey, Esq., General Counsel Kentucky Higher Education Student Loan Corporation

Written by: James M. Herrick
Assistant Attorney General

Syllabus: A person participating in the state health insurance program as a retiree cannot receive an additional employer contribution toward other benefits in a “cafeteria plan” as a result of subsequent employ- ment by a public entity participating in the state health insurance plan.

Statute construed: KRS 18A.225(13)

OAG’s cited: OAG 98-4, OAG 82-282, OAG 87-48, OAG 83-151

Opinion of the Attorney General

KRS 18A.225 establishes Kentucky’s state-sponsored health in- surance program for public employees. As noted in OAG 98-4, many former state employees are eligible to receive health coverage under the state program through the Kentucky Retirement Systems. KRS 18A.225(13) states as follows:

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Any employee who is eligible for and elects to partici- pate in the state health insurance program as a retiree, or the spouse or beneficiary of a retiree, under any one (1) of the state-sponsored retirement systems shall not be eligi- ble to receive the state health insurance contribution to- ward health care coverage as a result of any other employ- ment for which there is a public employer contribution. This does not preclude a retiree and an active employee spouse from using both contributions to the extent needed for purchase of one (1) state sponsored health insurance policy for that plan year.

It is the first sentence of this subsection that is currently at issue.

The Kentucky Higher Education Student Loan Corporation (“KHESLC”) is an independent de jure municipal corporation and politi- cal subdivision of the Commonwealth, created and established by KRS 164A.050 and described in OAG 82-282 as a “hybrid public bod[y]”; cf. City of Louisville Municipal Housing Comm’n v. Public Housing Adminis- tration, 261 S.W.2d 286, 288 (Ky. 1953). KHESLC, which participates in the state employee health insurance program, has requested an opin- ion regarding the application of KRS 18A.225(13) to a former state em- ployee who receives a retirement allowance and health insurance cov- erage through the Kentucky Employees Retirement System (“KERS”) but is currently employed by KHESLC.

The question is whether a state retiree, presently employed by a participating entity such as KHESLC, can receive both the state health insurance coverage through KERS and the employer contribution for the benefit plan offered by KHESLC, provided he waives the state health coverage under his current employment and instead requests that the employer contribution be directed to other benefits in KHESLC’s cafeteria plan, such as dental insurance, vision coverage, and dependent care. A “cafeteria plan” is a benefit plan authorized by 26 U.S.C. § 125 under which an employee may elect between qualify- ing benefits and their cash equivalent, where the payroll deduction for

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benefits is excluded from gross income but the cash option is taxable as income. OAG 87-48; OAG 83-151.

It is our opinion that an employee in the situation described would not be eligible for the employer contribution from KHESLC. “TA]ny statutory analysis must begin with the plain language of the statute. In so doing, [the] ultimate goal is to implement the intent of the legislature.” AK Steel Corp. v. Com., 87 S.W.3d 15, 17 (Ky.App. 2002). The evident intent of KRS 18A.225(13) is to prevent a retiree from receiving both health benefits under a state retirement plan while also receiving the state health insurance contribution as a result of subsequent public employment.

The statutory language does not state merely that such an em- ployee may not “use the state health insurance contribution for health care coverage,” but rather that he may not “receive the state health insurance contribution toward health care coverage.” (Emphasis added.) The fact that the “contribution toward health care coverage” can be applied to other items in KHESLC’s cafeteria plan does not change the fact that it is the same employer contribution the General Assembly intended to prevent such employees from “receiv[ing].”

This is not to imply that an employee receiving health coverage through KERS would, by virtue of KRS 18A.225(13), be ineligible to par- ticipate in the other benefits available through KHESLC’s cafeteria plan. The statute merely provides that such an employee may not re- ceive additional public funds for that purpose.

Gregory D. Stumbo
Attorney General

James M. Herrick
Assistant Attorney General

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