Are You Still Unsure about the Health Care Stabilization Fund?

Big Changes to Liability Insurance Next Year

As many of you know, Kansas licensed senior care providers will see big changes to their liability insurance policies effective January 1, 2015.

Due to changes in the Healthcare Stabilization Fund nearly all liability insurance policies for licensed senior living facilities must be canceled and rewritten effective January 1, 2015 with specific terms and conditions. Providers must pick a liability carrier from a short list of approved insurance carriers.[1]

What is the Healthcare Stabilization Fund?

Kansas House Bill No. 2516 effective 7/1/2014 renewed the Healthcare Stabilization Fund (HCSF) authorization along with a few changes and clarifications effective 1/1/2015. 

The most important change to KHCA members is that a health care provider is now defined as “…a medical care facility licensed by the state of Kansas”.[2]

Passage of the bill cements the applicability of a $250,000 cap on non-economic damages to senior care liability claims.  The Kansas Supreme Court decision Miller vs. Johnson upheld the $250,000 cap as constitutional and the decision referenced the unique quid pro quo relationship with statutorily defined healthcare providers.  The implication is that if you were not a defined healthcare provider under the HCSF, you would not have the benefit of the pain and suffering cap. Now, licensed senior living facilities are protected by the cap.

Participation in the HCSF is now mandatory for licensed senior living facilities: skilled nursing, assisted living and residential health. 

As of 1/1/2015, the facility must purchase general and professional liability insurance with the professional liability limits at $200,000 per occurrence and $600,000 per aggregate.  This primary professional liability insurance policy must be purchased from either a carrier admitted in Kansas or a risk retention group licensed to do business in Kansas.  Surplus lines carriers do not qualify.  (HealthCap RRG, endorsed by the KHCA, is approved.) The primary policy must now be a “claims-made” policy to comply with the fund’s requirements. 

The facility must also purchase one of three HCSF options for fund coverage: 1) additional limits of $100,000/$300,000 for 22% of the underlying premium; 2) additional limits of $200,000/$600,000 for 33% of the underlying premium or 3) additional limits of $800,000/$2,400,000 for 38% of the underlying premium. 

In the event of a facility sale, extended reporting periods (ERPs) or “tails” will need to be purchased from both the primary insurance carrier and the HCSF.  Note that after five years of participation in the HCSF, the fund’s ERP coverage is free. 

For those facilities who choose HealthCap as the underlying carrier, HealthCap will bill you for your chosen surcharge amount and will remit both the HCSF surcharge premium and appropriate forms to the Kansas Healthcare Stabilization Fund.

How do we get a quote from HealthCap?

HealthCap is the only endorsed provider of liability insurance of the American Health Care Association (AHCA) and the National Center for Assisted Living (NCAL). HealthCap is also endorsed by KHCA and over 30 other provider associations.

In order to ease the transition to HCSF-compliant insurance, HealthCap is now accepting applications for liability insurance for Kansas facilities from any licensed insurance agent.

Please contact Cindy Luxem (cluxem@khca.org) or Jeff Mason (jeff.mason@healthcapusa.com) for more information.

 


[2]  http://www.kslegislature.org/li/b2013_14/measures/hb2516/