1099-Rs are entered under Retirement Plans and Social Security. Once you enter the 1099-R, TurboTax will ask pertinent questions that will determine the state tax treatment of that income, whether in KY or elsewhere.
By Act of Congress only your resident state can tax retirement income, no matter where you originally earned it. Thus, the KY exemption amount or percentage is only relevant if you still live in KY; in that case TurboTax will ask you the proper questions and apply the proper exemption under KY law. (The IRS doesn't care about KY exemptions; except for any allocated return of basis, it's 100% taxable.) If you moved elsewhere, that state's retirement income law applies instead; TurboTax will ask the questions pertinent to your current resident state.
As far as the insurance, the IRS does NOT allow it to be deducted pre-tax from your retirement (unlike most paychecks). Except in certain special cases, you'll have to treat the insurance as an itemized deduction; it may or may not reduce your taxes.
