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215 ILCS 125/2-4
(215 ILCS 125/2-4) (from Ch. 111 1/2, par. 1406)
Sec. 2-4.
Required minimum net worth; special contingent
reserve; deficiency; impairment.
(a) A health maintenance
organization issued a certificate of authority on or after the
effective date of this amendatory Act of 1987
shall have and at all times maintain net worth of not
less than $1,500,000. As an allocation of net worth, organizations
certified prior to the effective date of this amendatory Act of 1987
shall maintain a special contingent reserve. The special contingent
reserve for an organization certified between January 1, 1986 and the
effective date of this amendatory Act of 1987 shall be equal to 5% of its
net earned subscription revenue for health care services through December
31st of the year in which certified. In subsequent years such organization
shall accumulate additions to the
contingent reserve in an amount which is equal to 2% of
its net earned subscription revenue for each calendar year. For purposes
of this Section, net earned subscription
revenue means premium minus reinsurance expenses. Maintenance of the
contingent reserve requires that net worth equals or exceeds the contingent
reserve at any balance sheet date.
(b) Additional accumulations under subsection (a) will no longer be
required at such time that the total special contingent reserve required
by subsection (a) is equal to $1,500,000.
(c) A deficiency in meeting amounts required in
subsections (a), (b), and (d) will require (1)
filing with the Director a plan for
correction of the deficiency, acceptable to the Director and (2) correction
of the deficiency within a reasonable
time, not to exceed 60 days unless an extension
of time, not to exceed 60 additional days, is granted by the Director.
Such a deficiency will be deemed an impairment, and failure to correct the
deficiency in the prescribed time shall be grounds for suspension or
revocation pursuant to subsection (h) of Section 5-5.
(d) All health maintenance organizations issued a certificate of
authority on or prior to December 31, 1985 and regulated under this Act
must have and at all times maintain, prior to December 31, 1988, the net
worth and special contingent
reserve that was required for that particular organization at the time it
was certified. All such organizations must have by December 31, 1988 and
thereafter maintain at all times, net worth of not less than $300,000 and a
special contingent reserve calculated and accumulated in the same manner as
required of a health maintenance organization issued a certificate of
authority on or between January 1, 1986 and the effective date of this
amendatory Act of 1987. Such calculation shall commence with
the financial reporting period first following certification.
All organizations issued a certificate of authority between January 1,
1986 and the effective date of this amendatory Act of 1987 must have and at
all times maintain the net worth and special contingent reserve that was
required for that particular organization at the time it was certified.
(d-5) A health maintenance organization that offers a point-of-service
product
must
maintain minimum net worth of not less than:
(1) the greater of 300% of the "authorized control | | level" as defined by Article IIA of the Illinois Insurance Code; or
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(2) $3,500,000 if the health maintenance
| | organization's annual projected out-of-plan claims are less than $500,000; or
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(3) $4,500,000 if the health maintenance
| | organization's annual projected out-of-plan claims are equal to or greater than $500,000 but less than $1,000,000; or
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(4) $6,000,000 if the health maintenance
| | organization's annual projected out-of-plan claims are $1,000,000 or greater.
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(e) Unless allowed by the Director, no health maintenance
organization, officer, director, trustee, producer, or employee of such
organization may renew, issue, or deliver, or cause to be renewed, issued
or delivered, any certificate, agreement, or contract of coverage in this
State, for which a premium is charged or collected, when the organization
writing such coverage is insolvent or impaired, and the fact of such
insolvency or impairment is known to the organization, officer, director,
trustee, producer, or employee of such organization. An organization is
impaired when a deficiency exists in meeting the amounts required in
subsections (a), (b), and (d) of Section 2-4.
However, the existence of an impairment does not prevent the issuance or
renewal of a certificate, agreement or contract when the enrollee exercises
an option granted under the plan to obtain new, renewed or converted coverage.
Any organization, officer, director, trustee, producer, or employee of
such organization violating this subsection shall be guilty of a
Class A misdemeanor.
(Source: P.A. 92-135, eff. 1-1-02.)
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