96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB2325

 

Introduced 2/18/2009, by Rep. Karen May

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/367e   from Ch. 73, par. 979e
215 ILCS 125/4-9.2   from Ch. 111 1/2, par. 1409.2-2

    Amends the Illinois Insurance Code. Provides that an employee or member is eligible for continuing coverage under a group insurance policy for up to 18 months (instead of 9 months) after the date the employee's or member's insurance under the policy would have terminated because of termination of employment or membership or reduction in employment hours. Provides that the employer must give written notice of the employee's option to elect continuation coverage to the employee within 10 days after the employee's termination or reduction in hours and to the insurer. Provides that an employee or member who wishes continuation of coverage must make the request in writing within a 30 day (instead of ten-day) period. Provides that in the event the employer fails or refuses to provide notice of continuation rights to the employee or member, the insurer is required to mail notice of the continuation rights to the employee or member at the employee's last known address. Provides that any employer who fails to provide the notice required by the Act is guilty of a petty offense and shall be fined $500. Amends the Health Maintenance Organization Act to incorporate the written notice, penalty, and condition of termination provisions as they relate to continuation of group HMO coverage after termination of employment or membership. Effective immediately.


LRB096 09782 RPM 19945 b

 

 

A BILL FOR

 

HB2325 LRB096 09782 RPM 19945 b

1     AN ACT concerning insurance.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Insurance Code is amended by
5 changing Section 367e as follows:
 
6     (215 ILCS 5/367e)  (from Ch. 73, par. 979e)
7     Sec. 367e. Continuation of Group Hospital, Surgical and
8 Major Medical Coverage After Termination of Employment or
9 Membership. A group policy delivered, issued for delivery,
10 renewed or amended in this state which insures employees or
11 members for hospital, surgical or major medical insurance on an
12 expense incurred or service basis, other than for specific
13 diseases or for accidental injuries only, shall provide that
14 employees or members whose insurance under the group policy
15 would otherwise terminate because of termination of employment
16 or membership or because of a reduction in hours below the
17 minimum required by the group plan shall be entitled to
18 continue their hospital, surgical and major medical insurance
19 under that group policy, for themselves and their eligible
20 dependents, subject to all of the group policy's terms and
21 conditions applicable to those forms of insurance and to the
22 following conditions:
23         1. Continuation shall only be available to an employee

 

 

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1     or member who has been continuously insured under the group
2     policy (and for similar benefits under any group policy
3     which it replaced) during the entire 3 months period ending
4     with such termination or reduction in hours below the
5     minimum required by the group plan.
6         2. Continuation shall not be available for any person
7     who is covered by Medicare, except for those individuals
8     who have been covered under a group Medicare supplement
9     policy. Neither shall continuation be available for any
10     person who is covered by any other insured or uninsured
11     plan which provides hospital, surgical or medical coverage
12     for individuals in a group and under which the person was
13     not covered immediately prior to such termination or
14     reduction in hours below the minimum required by the group
15     plan or who exercises his conversion privilege under the
16     group policy.
17         3. Continuation need not include dental, vision care,
18     prescription drug benefits, disability income, specified
19     disease, or similar supplementary benefits which are
20     provided under the group policy in addition to its
21     hospital, surgical or major medical benefits.
22         4. Upon termination or reduction in hours below the
23     minimum required by the group plan written notice of
24     continuation shall be presented to the employee or member
25     and the insurer by the employer or mailed by the employer
26     to the last known address of the employee. This written

 

 

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1     notice must be given directly to the employee or sent via
2     certified mail within 10 days after the employee's
3     termination or reduction in hours below the minimum
4     required by the group plan. An employee or member who
5     wishes continuation of coverage must request such
6     continuation in writing within the 30 day ten-day period
7     following the later of: (i) the date of such termination or
8     reduction in hours below the minimum required by the group
9     plan, or (ii) the date the employee is given written notice
10     of the right of continuation by either the employer, or the
11     group policyholder, or insurer. The written notice
12     provided to an employee must include an explanation that
13     his or her option for continuation coverage will expire
14     within the 30 day period following the later of (i) the
15     date of such termination of employment or reduction in
16     hours below the minimum required by the group plan, or (ii)
17     the date the employee is given written notice of the right
18     of continuation by either the employer, group
19     policyholder, or insurer. In no event, however, may the
20     employee or member elect continuation more than 60 days
21     after the date of such termination or reduction in hours
22     below the minimum required by the group plan. Written
23     notice of continuation presented to the employee or member
24     by the policyholder, or mailed by the policyholder to the
25     last known address of the employee, shall constitute the
26     giving of notice for the purpose of this provision.

 

 

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1         In the event the employer fails or refuses to provide
2     notice of continuation rights to the employee or member,
3     the insurer is required to mail notice of the continuation
4     rights to the employee or member at the last known address
5     of the employee. In the event the employee or member
6     contacts the insurer regarding continuation rights and
7     advises that notice has not been provided by the employer
8     or group policyholder, the insurer shall mail out notice to
9     that individual. An employee or member shall have 30 days
10     from receipt of the notice to elect continuation.
11         Any employer who fails to provide the notice required
12     in this subsection 4. is guilty of a petty offense and
13     shall be fined $500.
14         5. An employee or member electing continuation must pay
15     to the group policyholder or his employer, on a monthly
16     basis in advance, the total amount of premium required by
17     the insurer, including that portion of the premium
18     contributed by the policyholder or employer, if any, but
19     not more than the group rate for the insurance being
20     continued with appropriate reduction in premium for any
21     supplementary benefits which have been discontinued under
22     paragraph (3) of this Section. The premium rate required by
23     the insurer shall be the applicable premium required on the
24     due date of each payment.
25         6. Continuation of insurance under the group policy for
26     any person shall terminate when he becomes eligible for

 

 

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1     Medicare or is covered by any other insured or uninsured
2     plan which provides hospital, surgical or medical coverage
3     for individuals in a group and under which the person was
4     not covered immediately prior to such termination or
5     reduction in hours below the minimum required by the group
6     plan as provided in condition 2 above or, if earlier, at
7     the first to occur of the following:
8             (a) The date 18 9 months after the date the
9         employee's or member's insurance under the policy
10         would otherwise have terminated because of termination
11         of employment or membership or reduction in hours below
12         the minimum required by the group plan.
13             (b) If the employee or member fails to make timely
14         payment of a required contribution, the end of the
15         period for which contributions were made.
16             (c) The date on which the group policy is
17         terminated or, in the case of an employee, the date his
18         employer terminates participation under the group
19         policy. However, if this (c) applies and the coverage
20         ceasing by reason of such termination is replaced by
21         similar coverage under another group policy, the
22         following shall apply:
23                 (i) The employee or member shall have the right
24             to become covered under that other group policy,
25             for the balance of the period that he would have
26             remained covered under the prior group policy in

 

 

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1             accordance with condition 6 had a termination
2             described in this (c) not occurred.
3                 (ii) The prior group policy shall continue to
4             provide benefits to the extent of its accrued
5             liabilities and extensions of benefits as if the
6             replacement had not occurred.
7         7. A notification of the continuation privilege shall
8     be included in each certificate of coverage.
9         8. Continuation shall not be available for any employee
10     who was discharged because of the commission of a felony in
11     connection with his work, or because of theft in connection
12     with his work, for which the employer was in no way
13     responsible; provided the employee admitted his commission
14     of the felony or theft or such act has resulted in a
15     conviction or order of supervision by a court of competent
16     jurisdiction.
17     The requirements of this amendatory Act of 1983 shall apply
18 to any group policy as defined in this Section, delivered or
19 issued for delivery on or after 180 days following the
20 effective date of this amendatory Act of 1983.
21     The requirements of this amendatory Act of 1985 shall apply
22 to any group policy as defined in this Section, delivered,
23 issued for delivery, renewed or amended on or after 180 days
24 following the effective date of this amendatory Act of 1985.
25 (Source: P.A. 93-477, eff. 1-1-04.)
 

 

 

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1     Section 10. The Health Maintenance Organization Act is
2 amended by changing Section 4-9.2 as follows:
 
3     (215 ILCS 125/4-9.2)  (from Ch. 111 1/2, par. 1409.2-2)
4     Sec. 4-9.2. Continuation of group HMO coverage after
5 termination of employee or membership. A group contract
6 delivered, issued for delivery, renewed, or amended in this
7 State that covers employees or members for health care services
8 shall provide that employees or members whose coverage under
9 the group contract would otherwise terminate because of
10 termination of employment or membership or because of a
11 reduction in hours below the minimum required by the group
12 contract shall be entitled to continue their coverage under
13 that group contract, for themselves and their eligible
14 dependents, subject to all of the group contract's terms and
15 conditions applicable to those forms of coverage and to the
16 following conditions:
17         (1) Continuation shall only be available to an employee
18     or member who has been continuously covered under the group
19     contract (and for similar benefits under any group contract
20     that it replaced) during the entire 3 month period ending
21     with the termination of employment or membership or
22     reduction in hours below the minimum required by the group
23     contract.
24         (2) Continuation shall not be available for any
25     enrollee who is covered by Medicare, except for those

 

 

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1     individuals who have been covered under a group Medicare
2     supplement policy. Continuation shall not be available for
3     any enrollee who is covered by any other insured or
4     uninsured plan that provides hospital, surgical, or
5     medical coverage for individuals in a group and under which
6     the enrollee was not covered immediately before
7     termination or reduction in hours below the minimum
8     required by the group contract or who exercises his or her
9     conversion privilege under the group policy.
10         (3) Continuation need not include dental, vision care,
11     prescription drug, or similar supplementary benefits that
12     are provided under the group contract in addition to its
13     basic health care services.
14         (4) Upon termination or reduction in hours below the
15     minimum required by the group contract, written notice of
16     continuation shall be presented to the employee or member
17     and the HMO by the employer or mailed by the employer to
18     the last known address of the employee. This written notice
19     must be given directly to the employee or sent via
20     certified mail within 10 days after the employee's
21     termination or reduction in hours below the minimum
22     required by the group plan. An employee or member who
23     wishes continuation of coverage must request continuation
24     in writing within the 30 10 day period following the later
25     of (i) the date of termination or reduction in hours below
26     the minimum required by the group contract or (ii) the date

 

 

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1     the employee is given written notice of the right of
2     continuation by either the employer, or the group
3     policyholder, or HMO. In no event, however, shall the
4     employee or member elect continuation more than 60 days
5     after the date of termination or reduction in hours below
6     the minimum required by the group contract. Written notice
7     of continuation presented to the employee or member by the
8     policyholder or HMO, or mailed by the policyholder or HMO
9     to the last known address of the employee, shall constitute
10     the giving of notice for the purpose of this paragraph.
11         The written notice provided to an employee must include
12     an explanation that his or her option for continuation
13     coverage will expire within the 30 day period following the
14     later of (i) the date of such termination of employment or
15     reduction in hours below the minimum required by the group
16     plan, or (ii) the date the employee is given written notice
17     of the right of continuation by either the employer, group
18     policyholder, or HMO.
19         In the event the employer fails or refuses to provide
20     notice of continuation rights to the employee or member,
21     the HMO is required to mail notice of the continuation
22     rights to the employee or member at the last known address
23     of the employee. In the event the employee or member
24     contacts the HMO regarding continuation rights and advises
25     that notice has not been provided by the employer or group
26     policyholder, the HMO shall mail out notice to that

 

 

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1     individual. An employee or member shall have 30 days from
2     receipt of the notice to elect continuation.
3         Any employer who fails to provide the notice required
4     in this subsection (4) is guilty of a petty offense and
5     shall be fined $500.
6         (5) An employee or member electing continuation must
7     pay to the group policyholder or his employer, on a monthly
8     basis in advance, the total amount of premium required by
9     the HMO, including that portion of the premium contributed
10     by the policyholder or employer, if any, but not more than
11     the group rate for the coverage being continued with
12     appropriate reduction in premium for any supplementary
13     benefits that have been discontinued under paragraph (3) of
14     this Section. The premium rate required by the HMO shall be
15     the applicable premium required on the due date of each
16     payment.
17         (6) Continuation of coverage under the group contract
18     for any person shall terminate when the person becomes
19     eligible for Medicare or is covered by any other insured or
20     uninsured plan that provides hospital, surgical, or
21     medical coverage for individuals in a group and under which
22     the person was not covered immediately before termination
23     or reduction in hours below the minimum required by the
24     group contract as provided in paragraph (2) of this Section
25     or, if earlier, at the first to occur of the following:
26             (a) The expiration of 18 9 months after the

 

 

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1         employee's or member's coverage because of termination
2         of employment or membership or reduction in hours below
3         the minimum required by the group contract.
4             (b) If the employee or member fails to make timely
5         payment of a required contribution, the end of the
6         period for which contributions were made.
7             (c) The date on which the group contract is
8         terminated or, in the case of an employee, the date his
9         or her employer terminates participation under the
10         group contract. If, however, this paragraph applies
11         and the coverage ceasing by reason of termination is
12         replaced by similar coverage under another group
13         contract, then (i) the employee or member shall have
14         the right to become covered under the replacement group
15         contract for the balance of the period that he or she
16         would have remained covered under the prior group
17         contract in accordance with paragraph (6) had a
18         termination described in this item (c) not occurred and
19         (ii) the prior group contract shall continue to provide
20         benefits to the extent of its accrued liabilities and
21         extensions of benefits as if the replacement had not
22         occurred.
23         (7) A notification of the continuation privilege shall
24     be included in each evidence of coverage.
25         (8) Continuation shall not be available for any
26     employee who was discharged because of the commission of a

 

 

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1     felony in connection with his or her work, or because of
2     theft in connection with his or her work, for which the
3     employer was in no way responsible if the employee (i)
4     admitted to committing the felony or theft or (ii) was
5     convicted or placed under supervision by a court of
6     competent jurisdiction.
7     The requirements of this amendatory Act of 1992 shall apply
8 to any group contract, as defined in this Section, delivered or
9 issued for delivery on or after 180 days following the
10 effective date of this amendatory Act of 1992.
11 (Source: P.A. 93-477, eff. 1-1-04.)
 
12     Section 99. Effective date. This Act takes effect upon
13 becoming law.