AGO 1989-087.

• Case Date: July 10, 1989
• Court: Kansas

Kansas Attorney General Opinions 1989. AGO 1989-087. July 10, 1989ATTORNEY GENERAL OPINION NO. 89-87The Honorable Don MontgomeryState Senator Twenty-First District 1218 Main Sabetha, Kansas 66534-1835 Re: Schools--Purchase of Insurance--Group Insurance; Distribution of Health Insurance Reserve Refunds Synopsis: A group health insurance divisible surplus fund results when yearly premiums exceed total claims, expenses, and reserves for the plan year. When the reserve is reduced to zero because it has been discontinued, the moneys refunded are to be distributed according to the divisible surplus rider. * * * Dear Senator Montgomery: As State Senator for the Twenty-first District, you have requested our opinion regarding the distribution of reserve refund moneys received by the school board for United School District No. 389 under the school's group health policy. Specifically, you ask whether the moneys must be returned to the employees who were insured through the group policy. In Attorney General Opinion No. 81-97 the issue was raised whether group surplus health insurance refund monies refunded by the insurer were the property of the school board (contracting party) or the teachers (subscribers). We opined that the individual subscribers were entitled to these divisible surplus refunds. However, had the policy contained a divisible surplus rider, the language of the rider would control the disposition of the refund. Our opinion was cited with approval in U.S.D. No. 259 v. Kansas-National Education Ass'n, 239 Kan. 76 (1986). The court held that a contractual provision which specifies the method of distributing a divisible surplus controls the distribution of the refund. 239 Kan. at 79-80. A divisible...