Public Act 93-0477
HB3661 Enrolled LRB093 09245 JLS 09478 b
AN ACT in relation to insurance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 3. The State Employees Group Insurance Act of
1971 is amended by changing Section 6.2 as follows:
(5 ILCS 375/6.2) (from Ch. 127, par. 526.2)
Sec. 6.2. When the Director, with the advice and consent
of the Commission, determines that it would be in the best
interests of the State and its employees, the program of
health benefits under this Act may be administered with the
State as a self-insurer in whole or in part. The State
assumes the risks of the program. The State may provide the
administrative services in connection with the self-insurance
health plan or purchase administrative services from an
administrative service organization. A plan of self-insurance
may combine forms of re-insurance or stop-loss insurance
which limits the amount of State liability.
The program of health benefits shall provide a
continuation and conversion privilege for persons whose State
employment is terminated and a continuation privilege for
members' spouses and dependent children who are covered under
the provisions of the program, consistent with the
requirements of federal law and Sections 367.2, and 367e, and
367e.1 of the Illinois Insurance Code.
(Source: P.A. 85-848.)
Section 5. The Illinois Insurance Code is amended by
changing Sections 143.17a, 245.25, 367.2, 367e, and 404.1, by
resectioning Section 367e as Sections 367e and 367e.1, and by
adding Section 367.2-5 as follows:
(215 ILCS 5/143.17a) (from Ch. 73, par. 755.17a)
Sec. 143.17a. Notice of intention not to renew.
a. No company shall fail to renew any policy of
insurance, to which Section 143.11 applies, except for those
defined in subsections (a), (b), (c), and (h) of Section
143.13, unless it shall send by mail to the named insured at
least 60 days advance notice of its intention not to renew.
The company shall maintain proof of mailing of such notice on
one of the following forms: a recognized U.S. Post Office
form or a form acceptable to the U.S. Post Office or other
commercial mail delivery service. An exact and unaltered
copy of such notice shall also be sent to the insured's
broker, if known, or the agent of record and to the mortgagee
or lien holder at the last mailing address known by the
company. However, where cancellation is for nonpayment of
premium, the notice of cancellation must be mailed at least
10 days before the effective date of the cancellation.
b. This Section does not apply if the company has
manifested its willingness to renew directly to the named
insured. Provided, however, that no company may increase the
renewal premium on any policy of insurance to which Section
143.11 applies, except for those defined in subsections (a),
(b), (c), and (h) of Section 143.13, by 30% or more, nor
impose changes in deductibles or coverage that materially
alter the policy, unless the company shall have mailed or
delivered to the named insured written notice of such
increase or change in deductible or coverage at least 60 days
prior to the renewal or anniversary date. The increase in
premium shall be the renewal premium based on the known
exposure as of the date of the quotation compared to the
premium as of the last day of coverage for the current year's
policy, annualized. The premium on the renewal policy may be
subsequently amended to reflect any change in exposure or
reinsurance costs not considered in the quotation. An exact
and unaltered copy of such notice shall also be sent to the
insured's broker, if known, or the agent of record. If an
insurer fails to provide the notice required by this
subsection, then the company must extend the current policy
under the same terms, conditions, and premium to allow 60
days notice of renewal and provide the actual renewal premium
quotation and any change in coverage or deductible on the
policy. Proof of mailing or proof of receipt may be proven
by a sworn affidavit by the insurer as to the usual and
customary business practices of mailing notice pursuant to
this Section or may be proven consistent with Illinois
Supreme Court Rule 236. The company shall maintain proof of
mailing or proof of receipt whichever is required.
c. Should a company fail to comply with the non-renewal
notice requirements of subsection a., this Section, the
policy shall be extended for an additional year the policy
shall terminate only as provided in this subsection. In the
event notice is provided at least 31 days, but less than 60
days prior to expiration of the policy, the policy shall be
extended for a period of 60 days or until the effective date
of any similar insurance procured by the insured, whichever
is less, on the same terms and conditions as the policy
sought to be terminated. In the event notice is provided
less than 31 days prior to the expiration of the policy, the
policy shall be extended for a period of one year or until
the effective date of any similar insurance procured by the
insured, whichever is less, on the same terms and conditions
as the policy sought to be terminated, unless the insurer has
manifested its intention to renew at a different premium that
represents an increase not exceeding 30% unless the insurer
has manifested its willingness to renew at a premium which
represents an increase not exceeding 30%. The premium for
coverage shall be prorated in accordance with the amount of
the last year's premium, and the company shall be entitled to
this premium for the extension of coverage and such extension
may be contingent upon the payment of such premium.
d. Renewal of a policy does not constitute a waiver or
estoppel with respect to grounds for cancellation which
existed before the effective date of such renewal.
e. In all notices of intention not to renew any policy
of insurance, as defined in Section 143.11 the company shall
provide a specific explanation of the reasons for nonrenewal.
(Source: P.A. 89-669, eff. 1-1-97.)
(215 ILCS 5/245.25) (from Ch. 73, par. 857.25)
Sec. 245.25. Except for subparagraphs (1) (a), (1) (f),
(1) (g) and (3) of Section 226 of the Illinois Insurance
Code, in the case of a variable annuity contract and
subparagraphs (1) (b), (1) (f), (1) (g), (1) (h), (1) (i),
and (1) (k) of Section 224, subparagraph (1) (c) of Section
225, and subparagraph (h) of Section 231 in the case of a
variable life insurance policy, except for Sections 357.4,
357.5, and 367e, and 367e.1 in the case of a variable health
insurance policy, and except as otherwise provided in this
Article, all pertinent provisions of the Illinois Insurance
Code which are appropriate to those contracts apply to
separate accounts and contracts relating thereto. Any
individual variable life insurance contract, delivered or
issued for delivery in this State, must contain grace,
reinstatement and non-forfeiture provisions appropriate to
such a contract. Any individual variable annuity contract,
delivered or issued for delivery in this State, must contain
grace and reinstatement provisions appropriate to such a
contract. Any group variable life insurance contract,
delivered or issued for delivery in this State, must contain
a grace provision appropriate to such a contract. A group
variable health insurance contract delivered or issued for
delivery in this State must contain a continuation of group
coverage provision appropriate to the contract. The reserve
liability for variable contracts must be established in
accordance with actuarial procedures that recognize the
variable nature of the benefits provided and any mortality
guarantees.
(Source: P.A. 90-381, eff. 8-14-97.)
(215 ILCS 5/367.2) (from Ch. 73, par. 979.2)
Sec. 367.2. Spousal continuation privilege; group
contracts.
A. No policy of group accident or health insurance, nor
any certificate thereunder shall be delivered or issued for
delivery in this State after December 1, 1985, unless the
policy provides for a continuation of the existing insurance
benefits for an employee's spouse and dependent children who
are insured under the provisions of that group policy or
certificate thereunder, notwithstanding that the marriage is
dissolved by judgment or terminated by the death of the
employee spouse or, after the effective date of this
amendatory Act of the 93rd General Assembly 1991,
notwithstanding the retirement of the employee spouse
provided that the employee's spouse is at least 55 years of
age, in each case without any other eligibility requirements.
The provisions of this amendatory Act of the 93rd General
Assembly 1991 apply to every group policy of accident or
health insurance and every certificate issued thereunder
delivered or issued for delivery after the effective date of
this amendatory Act of the 93rd General Assembly 1991.
B. Within 30 days of the entry of judgment or the death
or retirement of the employee spouse, the spouse of an
employee insured under the policy who seeks a continuation of
coverage thereunder shall give the employer or and the
insurer written notice of the dissolution of the marriage or
the death or retirement of the employee spouse. The
employer, within 15 days of receipt of the notice shall give
written notice of the dissolution of the employee's marriage
or the death or retirement of the employee and that former
spouse's or retired employee's spouse's residence, to the
insurance company issuing the policy., of the dissolution of
the employee's marriage or the death or retirement of the
employee spouse and the former or retired employee's spouse's
residence.
The employer shall immediately send a copy of the notice
to the former spouse of the employee or the spouse of the
retired employee at the retired employee's spouse's residence
or at the former spouse's residence. For purposes of this
Act, the term "former spouse" includes "widow" or "widower".
C. Within 30 days after the date of receipt of a notice
from the employer, retired employee's spouse or former spouse
or of the initiation of a new group policy, the insurance
company, by certified mail, return receipt requested, shall
notify the retired employee's spouse or former spouse at his
or her residence that the policy may be continued for as to
that retired employee's spouse or former spouse and covered
dependents, and the notice shall include:
(i) a form for election to continue the insurance
coverage;
(ii) the amount of periodic premiums to be charged
for continuation coverage and the method and place of
payment; and
(iii) instructions for returning the election form
by certified mail, return receipt requested, within 30
days after the date it is received from of the mailing
receipt of the instruction by the insurance company.
Failure of the retired employee's spouse or former spouse
to exercise the election to continue insurance coverage by
notifying the insurance company in writing by certified mail,
return receipt requested, within such 30 day period shall
terminate the continuation of benefits and the right to
continuation.
If the insurance company fails to notify the retired
employee's spouse or former spouse as provided for in
subsection C hereof, all premiums shall be waived from the
date the notice was required until notice is sent, and the
benefits shall continue under the terms and provisions of the
policy, from the date the notice was required until the
notice is sent, notwithstanding any other provision hereof,
except where the benefits in existence at the time the
company's notice was to be sent pursuant to subsection C are
terminated as to all employees.
D. With respect to a former spouse who has not attained
the age of 55 at the time continuation coverage begins
hereunder, the monthly premium for continuation shall be
computed as follows:
(i) an amount, if any, that would be charged an
employee if the former spouse were a current employee of
the employer, plus;
(ii) an amount, if any, that the employer would
contribute toward the premium if the former spouse were a
current employee.
Failure to pay the initial monthly premium within 30 days
after the date of receipt of notice required in subsection C
of this Section terminates the continuation benefits and the
right to continuation benefits.
The continuation coverage for right granted hereunder to
former spouses who have not attained the age of 55 at the
time coverage begins hereunder shall terminate upon the
earliest to happen of the following:
(i) The failure to pay premiums when due, including
any grace period allowed by the policy; or
(ii) When coverage would terminate under the terms
of the existing policy if the employee and former spouse
were still married to each other; however, the existing
coverage shall not be modified or terminated during the
first 120 consecutive days subsequent to the employee
spouse's death or to the entry of the judgment dissolving
the marriage existing between the employee and the former
spouse unless the master policy in existence at the time
is modified or terminated as to all employees; or
(iii) the date on which the former spouse first
becomes, after the date of election, an insured employee
under any other group health plan; or
(iv) the date on which the former spouse remarries;
or
(v) the expiration of 2 years from the date
continuation coverage began hereunder.
Upon the termination of continuation coverage hereunder,
the former spouse shall be entitled to convert the coverage
to an individual policy.
The continuation rights granted to former spouses who
have not attained age 55 shall also include eligible
dependents insured prior to the dissolution of marriage or
the death of the employee.
E. With respect to a retired employee's spouse or former
spouse who has attained the age of 55 at the time
continuation coverage begins hereunder, the monthly premium
for the continuation shall be computed as follows:
(i) an amount, if any, that would be charged an
employee if the retired employee's spouse or former
spouse were a current employee of the employer, plus;
(ii) an amount, if any, that the employer would
contribute toward the premium if the retired employee's
spouse or former spouse were a current employee.
Beginning 2 years after coverage begins under this
paragraph, the monthly premium shall be computed as follows:
(i) an amount, if any, that would be charged an
employee if the retired employee's spouse or former
spouse were a current employee of the employer, plus;
(ii) an amount, if any, that the employer would
contribute toward the premium if the retired employee's
spouse or former spouse were a current employee.
(iii) an additional amount, not to exceed 20% of
(i) and (ii) above, for costs of administration.
Failure to pay the initial monthly premium within 30 days
after the date of receipt of the notice required in
subsection C of this Section terminates the continuation
benefits and the right to continuation benefits.
The continuation coverage for right granted to retired
employees' spouses and former spouses who have attained the
age of 55 at the time coverage begins hereunder shall
terminate upon the earliest to happen of the following:
(i) The failure to pay premiums when due, including
any grace period allowed by the policy; or
(ii) When coverage would terminate, except due to
the retirement of an employee, under the terms of the
existing policy if the employee and former spouse were
still married to each other; however, the existing
coverage shall not be modified or terminated during the
first 120 consecutive days subsequent to the employee
spouse's death or retirement to the entry of the judgment
dissolving the marriage existing between the employee and
the former spouse unless the master policy in existence
at the time is modified or terminated as to all
employees; or
(iii) the date on which the retired employee's
spouse or former spouse first becomes, after the date of
election, an insured employee under any other group
health plan; or
(iv) the date on which the former spouse remarries;
or
(v) the date that person reaches the qualifying age
or otherwise establishes eligibility under the Medicare
Program pursuant to Title XVIII of the federal Social
Security Act.
Upon the termination of continuation coverage hereunder,
the former spouse shall be entitled to convert the coverage
to an individual policy.
The continuation rights granted to former spouses who
have attained age 55 shall also include eligible dependents
insured prior to the dissolution of marriage, the death of
the employee, or the retirement of the employee.
F. The renewal, amendment, or extension of any group
policy affected by this Section shall be deemed to be
delivery or issuance for delivery of a new policy or contract
of insurance in this State.
G. If (i) the policy is canceled cancelled, and (ii)
another insurance company contracts to provide group health
and accident insurance to the employer, and (iii)
continuation coverage is in effect for the retired employee's
spouse or former spouse at the time of cancellation and (iv)
the employee is or would have been included under the new
group policy, then the new insurer must also offer
continuation coverage to the retired employee's spouse and to
an employee's former spouse under the same terms and
conditions as contained in this Section.
H. This Section shall not limit the right of the retired
employee's spouse or any former spouse to exercise the
privilege to convert to an individual policy as contained in
this Code.
I. No person who obtains coverage under this Section
shall be required to pay a rate greater than that applicable
to any employee or member covered under that group except as
provided in clause (iii) of the second paragraph of
subsection E.
(Source: P.A. 87-615.)
(215 ILCS 5/367.2-5 new)
Sec. 367.2-5. Dependent child continuation privilege;
group contracts.
(a) No policy of group accident or health insurance, nor
any certificate thereunder shall be amended, renewed,
delivered, or issued for delivery in this State after July 1,
2004, unless the policy provides for a continuation of the
existing insurance benefits for an employee's dependent child
who is insured under the provisions of that group policy or
certificate in the event of the death of the employee and the
child is not eligible for coverage as a dependent under the
provisions of Section 367.2 or the dependent child has
attained the limiting age under the policy.
(b) In the event of the death of the employee, if
continuation coverage is desired, the dependent child or a
responsible adult acting on behalf of the dependent child
shall give the employer or the insurer written notice of the
death of employee within 30 days of the date the coverage
terminates. The employer, within 15 days of receipt of the
notice, shall give written notice to the insurance company
issuing the policy of the death of the employee and the
dependent child's residence. The employer shall immediately
send a copy of the notice to the dependent child or
responsible adult at the dependent child's residence.
(c) In the event of the dependent child attaining the
limiting age under the policy, if continuation coverage is
desired, the dependent child shall give the employer or the
insurer written notice of the attainment of the limiting age
within 30 days of the date the coverage terminates. The
employer, within 15 days of receipt of the notice, shall give
written notice to the insurance company issuing the policy of
the attainment of the limiting age by the dependent child and
of the dependent child's residence.
(d) Within 30 days after the date of receipt of a notice
from the employer, dependent child, or responsible adult
acting on behalf of the dependent child, or of the initiation
of a new group policy, the insurance company, by certified
mail, return receipt requested, shall notify the dependent
child or responsible adult at the dependent child's residence
that the policy may be continued for the dependent child.
The notice shall include:
(1) a form for election to continue the insurance
coverage;
(2) the amount of periodic premiums to be charged
for continuation coverage and the method and place of
payment; and
(3) instructions for returning the election form
within 30 days after the date it is received from the
insurance company.
Failure of the dependent child or the responsible adult
acting on behalf of the dependent child to exercise the
election to continue insurance coverage by notifying the
insurance company in writing within such 30 day period shall
terminate the continuation of benefits and the right to
continuation.
If the insurance company fails to notify the dependent
child or responsible adult acting on behalf of the dependent
child as provided for in this subsection (d), all premiums
shall be waived from the date the notice was required until
notice was sent, and the benefits shall continue under the
terms and provisions of the policy, from the date the notice
was required until the notice was sent, notwithstanding any
other provision hereof, except where the benefits in
existence at the time the company's notice was to be sent
pursuant to this subsection (d) are terminated as to all
employees.
(e) The monthly premium for continuation shall be
computed as follows:
(1) an amount, if any, that would be charged an
employee if the dependent child were a current employee
of the employer, plus;
(2) an amount, if any, that the employer would
contribute toward the premium if the dependent child were
a current employee.
Failure to pay the initial monthly premium within 30 days
after the date of receipt of notice required in subsection
(d) of this Section terminates the continuation benefits and
the right to continuation benefits.
Continuation coverage provided under this Act shall
terminate upon the earliest to happen of the following:
(1) the failure to pay premiums when due, including
any grace period allowed by the policy;
(2) when coverage would terminate under the terms
of the existing policy if the dependent child was still
an eligible dependent of the employee;
(3) the date on which the dependent child first
becomes, after the date of election, an insured employee
under any other group health plan; or
(4) the expiration of 2 years from the date
continuation coverage began.
Upon the termination of continuation coverage, the
dependent child shall be entitled to convert the coverage to
an individual policy.
(f) The renewal, amendment, or extension of any group
policy affected by this Section shall be deemed to be
delivery or issuance for delivery of a new policy or contract
of insurance in this State.
(g) If (1) the policy is cancelled, and (2) another
insurance company contracts to provide group health and
accident insurance to the employer, and (3) continuation
coverage is in effect for the dependent child at the time of
cancellation, and (4) the employee is or would have been
included under the new group policy, then the new insurer
must also offer continuation coverage to the dependent child
under the same terms and conditions as contained in this
Section.
(h) This Section shall not limit the right of any
dependent child to exercise the privilege to convert to an
individual policy as contained in this Code.
(i) No person who obtains coverage under this Section
shall be required to pay a rate greater than that applicable
to any employee or member covered under that group.
(215 ILCS 5/367e) (from Ch. 73, par. 979e)
Sec. 367e. Continuation of Group Hospital, Surgical and
Major Medical Coverage After Termination of Employment or
Membership.
A group policy delivered, issued for delivery, renewed or
amended in this state which insures employees or members for
hospital, surgical or major medical insurance on an expense
incurred or service basis, other than for specific diseases
or for accidental injuries only, shall provide that employees
or members whose insurance under the group policy would
otherwise terminate because of termination of employment or
membership or because of a reduction in hours below the
minimum required by the group plan shall be entitled to
continue their hospital, surgical and major medical insurance
under that group policy, for themselves and their eligible
dependents, subject to all of the group policy's terms and
conditions applicable to those forms of insurance and to the
following conditions:
1. Continuation shall only be available to an employee
or member who has been continuously insured under the group
policy (and for similar benefits under any group policy which
it replaced) during the entire 3 months period ending with
such termination or reduction in hours below the minimum
required by the group plan.
2. Continuation shall not be available for any person
who is covered by Medicare, except for those individuals who
have been covered under a group Medicare supplement policy.
Neither shall continuation be available for any person who is
covered by any other insured or uninsured plan which provides
hospital, surgical or medical coverage for individuals in a
group and under which the person was not covered immediately
prior to such termination or reduction in hours below the
minimum required by the group plan or who exercises his
conversion privilege under the group policy.
3. Continuation need not include dental, vision care,
prescription drug benefits, disability income, specified
disease, or similar supplementary benefits which are provided
under the group policy in addition to its hospital, surgical
or major medical benefits.
4. Upon termination or reduction in hours below the
minimum required by the group plan written notice of
continuation shall be presented to the employee or member by
the employer or mailed by the employer to the last known
address of the employee. An employee or member who wishes
continuation of coverage must request such continuation in
writing within the ten-day period following the later of: (i)
the date of such termination or reduction in hours below the
minimum required by the group plan, or (ii) the date the
employee is given written notice of the right of continuation
by either the employer or the group policyholder. In no
event, however, may the employee or member elect continuation
more than 60 days after the date of such termination or
reduction in hours below the minimum required by the group
plan. Written notice of continuation presented to the
employee or member by the policyholder, or mailed by the
policyholder to the last known address of the employee, shall
constitute the giving of notice for the purpose of this
provision.
5. An employee or member electing continuation must pay
to the group policyholder or his employer, on a monthly basis
in advance, the total amount of premium required by the
insurer, including that portion of the premium contributed by
the policyholder or employer, if any, but not more than the
group rate for the insurance being continued with appropriate
reduction in premium for any supplementary benefits which
have been discontinued under paragraph (3) of this Section.
The premium rate required by the insurer shall be the
applicable premium required on the due date of each payment.
6. Continuation of insurance under the group policy for
any person shall terminate when he becomes eligible for
Medicare or is covered by any other insured or uninsured plan
which provides hospital, surgical or medical coverage for
individuals in a group and under which the person was not
covered immediately prior to such termination or reduction in
hours below the minimum required by the group plan as
provided in condition 2 above or, if earlier, at the first to
occur of the following:
(a) The date 9 months after the date the employee's
or member's insurance under the policy would otherwise
have terminated because of termination of employment or
membership or reduction in hours below the minimum
required by the group plan.
(b) If the employee or member fails to make timely
payment of a required contribution, the end of the period
for which contributions were made.
(c) The date on which the group policy is
terminated or, in the case of an employee, the date his
employer terminates participation under the group policy.
However, if this (c) applies and the coverage ceasing by
reason of such termination is replaced by similar
coverage under another group policy, the following shall
apply:
(i) The employee or member shall have the
right to become covered under that other group
policy, for the balance of the period that he would
have remained covered under the prior group policy
in accordance with condition 6 had a termination
described in this (c) not occurred.
(ii) The prior group policy shall continue to
provide benefits to the extent of its accrued
liabilities and extensions of benefits as if the
replacement had not occurred.
7. A notification of the continuation privilege shall be
included in each certificate of coverage.
8. Continuation shall not be available for any employee
who was discharged because of the commission of a felony in
connection with his work, or because of theft in connection
with his work, for which the employer was in no way
responsible; provided the employee admitted his commission of
the felony or theft or such act has resulted in a conviction
or order of supervision by a court of competent jurisdiction.
The requirements of this amendatory Act of 1983 shall
apply to any group policy as defined in this Section,
delivered or issued for delivery on or after 180 days
following the effective date of this amendatory Act of 1983.
The requirements of this amendatory Act of 1985 shall
apply to any group policy as defined in this Section,
delivered, issued for delivery, renewed or amended on or
after 180 days following the effective date of this
amendatory Act of 1985.
(Source: P.A. 85-210; 86-1475.)
(215 ILCS 5/367e.1 new)
Sec. 367e.1. Group Accident and Health Insurance
Conversion Privilege.
(A) A group policy which provides hospital, medical, or
major medical expense insurance, or any combination of these
coverages, on an expense-incurred basis, but not including a
policy which provides benefits for specific diseases or for
accidental injuries only, shall provide that an employee or
member (i) whose insurance under the group policy has been
terminated for any reason other than discontinuance of the
group policy in its entirety where there is a succeeding
carrier, or failure of the employee or member to pay any
required contribution; and (ii) who has been continuously
insured under the group policy (and under any group policy
providing similar benefits which it replaces) for at least
three months immediately prior to termination, shall be
entitled to have issued to him by the insurer a policy of
health insurance (hereafter referred to as the converted
policy), subject to the following conditions:
(1) Written application for the converted policy
shall be made and the first premium paid to the insurer
not later than the latter of (i) thirty-one days after
such termination or (ii) 15 days after the employee or
member has been given written notice of the existence of
the conversion privilege, but in no event later than 60
days after such termination.
Written notice presented to the employee or member by
the policyholder, or mailed by the policyholder to the
last known address of the employee or member, shall
constitute the giving of notice for the purpose of this
provision.
(2) The converted policy shall be issued without
evidence of insurability.
(3) The initial premium for the converted policy
shall be determined in accordance with the insurer's
table of premium rates applicable to the age and class of
risk of each person to be covered under the converted
policy and to the type and amount of the insurance
provided. Conditions pertaining to health shall not be an
acceptable basis of classification for the purposes of
this subsection. The frequency of premium payment shall
be the frequency customarily required by the insurer for
the policy form and plan selected, provided that the
insurer shall not require premium payments less
frequently than quarterly without the consent of the
insured.
(4) The effective date of the converted policy
shall be the day following the termination of insurance
under the group policy.
(5) The converted policy shall cover the employee
or member and his dependents who were covered by the
group policy on the date of termination of insurance. At
the option of the insurer, a separate converted policy
may be issued to cover any dependent.
(6) The insurer shall not be required to issue a
converted policy covering any person if such person is or
could be covered by Medicare (Title XVIII of the United
States Social Security Act as added by the Social
Security Amendments of 1965 or as later amended or
superseded). Furthermore, the insurer shall not be
required to issue a converted policy covering any person
if (i) such person is covered for similar benefits by
another hospital, surgical, medical, or major medical
expense insurance policy or hospital or medical service
subscriber contract or medical practice or other
prepayment plan or by any other plan or program; or (ii)
such person is eligible for similar benefits (whether or
not covered therefor) under any arrangement of coverage
for individuals in a group, whether on an insured or
uninsured basis; or (iii) similar benefits are provided
for or available to such person, pursuant to or in
accordance with the requirements of any statute, and the
benefits provided or available under the sources referred
to in (i), (ii), (iii) above for such person together
with the converted policy would result in overinsurance
according to the insurer's standards.
(7) In the event that coverage would be continued
under the group policy on an employee following his
retirement prior to the time he is or could be covered by
Medicare, he may elect, in lieu of such continuation of
such group insurance, to have the same conversion rights
as would apply had his insurance terminated at retirement
by reason of termination of employment or membership.
(8) Subject to the conditions set forth above, the
conversion privilege shall also be available (i) to the
surviving spouse, if any, at the death of the employee or
member, with respect to the spouse and such children
whose coverage under the group policy terminates by
reason of such death, otherwise to each surviving child
whose coverage under the group policy terminates by
reason of such death, or, if the group policy provides
for continuation of dependents' coverage following the
employee's or member's death, at the end of such
continuation; (ii) to the spouse of the employee or
member upon termination of coverage of the spouse, while
the employee or member remains insured under the group
policy, by reason of ceasing to be a qualified family
member under the group policy, with respect to the spouse
and such children whose coverage under the group policy
terminates at the same time; or (iii) to a child solely
with respect to himself upon termination of his coverage
by reason of ceasing to be a qualified family member
under the group policy, if a conversion privilege is not
otherwise provided above with respect to such
termination.
(9) A notification of the conversion privilege
shall be included in each certificate.
(10) The insurer may elect to provide group
insurance coverage in lieu of the issuance of a converted
policy.
(B) A converted policy issued upon the exercise of the
conversion privilege required by subsection (A) of this
Section shall conform to the following minimum standards:
(1) If the group policy provided hospital,
surgical, or medical expense insurance, or a combination
thereof, the converted policy shall provide benefits on
an expense-incurred basis equal to the lesser of (i) the
hospital room and board, miscellaneous hospital, surgical
and medical benefits provided under the group policy; and
(ii) the corresponding benefits described below:
(a) Hospital room and board benefits in an
amount per day elected by the group policyholder,
but in no event less than 60% of the then average
semi-private hospital room and board charge in the
State, such benefits to be payable for a maximum of
not less than 70 days for any period of hospital
confinement, as defined in the converted policy.
(b) Miscellaneous hospital benefits for any
one period of hospital confinement in an amount up
to twenty times the hospital room and board daily
benefit provided under the converted policy.
(c) Surgical benefits according to a surgical
schedule providing a benefit amount elected by the
group policy holder, but in no event less than 60%
of the then average surgical charge in the State and
with a maximum amount appropriate thereto. The
maximum surgical benefit shall be applicable to all
surgical operations of an individual resulting from
or contributed to by the same and all related causes
occurring in one period of disability. Two or more
surgical procedures performed in the course of a
single operation through the same incision, or in
the same natural body orifice, may be treated as one
surgical procedure with the payment determined by
the scheduled benefit for the most expensive
procedure performed. The surgical schedule shall be
consistent with the schedule of operations
customarily offered by the insurer under group or
individual health insurance policies.
(d) Non-surgical medical attendance benefits
for in-hospital services in an amount elected by the
group policyholder, but in no event less than 60% of
the then average in-hospital physician's visit
charge in the State, such benefits may be limited to
one visit per day of hospitalization and a maximum
number of visits numbering not less than seventy for
any period of hospital confinement as defined in the
converted policy.
(2) If the group policy provided major medical
insurance, the insurer may offer the insurance described
in (1) above only, major medical insurance only, or a
combination of the insurance described in (1) above and
major medical insurance. If the insurer elects to
provide major medical insurance, the converted policy
shall provide:
(a) A maximum benefit at least equal to (i) or
(ii) below:
(i) A maximum payment of twenty-five
thousand dollars for all covered medical
expenses incurred during the covered person's
lifetime with an annual restoration of the
lesser of, while coverage is in force, one
thousand dollars and the amount counted against
the maximum benefit which was not previously
restored; or
(ii) A maximum payment of twenty-five
thousand dollars for each unrelated injury or
illness.
(b) Payment of benefits for covered medical
expenses, in excess of the deductible, at a rate not
less than 80% except as otherwise permitted below.
(c) A deductible for each benefit period
which, at the option of the insurer, shall be (i)
the greater of $500 and the benefits deductible;
(ii) the sum of the benefits deductible and $100; or
(iii) the corresponding deductible in the group
policy. The term "benefit period," as used herein,
means, when the maximum payment is determined by (a)
(i) above, either a calendar year or a period of
twelve consecutive months; and, when the maximum
payment is determined by (a) (ii) above, a period of
twenty-four consecutive months. The term "benefits
deductible," as used herein, means the value of any
benefits provided on an expense-incurred basis which
are provided with respect to covered medical
expenses by any other hospital, surgical, or medical
insurance policy or hospital or medical service
subscriber contract of medical practice or other
prepayment plan, or any other plans or program
whether on an insured or uninsured basis, or of any
similar benefits which are provided or made
available pursuant to or in accordance with the
requirements of any statute and, if, pursuant to the
provisions of this subsection, the converted policy
provides both the coverage described in (1) above
and major medical insurance, the value of the
coverage described in (1) above. The insurer may
require that the deductible be satisfied during a
period of not less than three months. If the maximum
payment is determined by (a) (i) above, and if no
benefits become payable during the preceding benefit
period due to the cash deductible not being
satisfied; credit shall be given, in the succeeding
benefit period, to any expense applied toward the
cash deductible of the preceding benefit period and
incurred during the last three months of such
preceding benefit period, subject to any requirement
that the deductible be satisfied during a specified
period of time.
(d) The term "covered medical expenses," as
used above, may be limited (i) in the case of
hospital room and board benefits, maximum surgical
schedule, and non-surgical medical attendance
benefits to amounts not less than the amounts
provided in (1) (a), (1) (c) and (1) (d) above; and
(ii) in the case of mental and nervous condition
treatments while the patient is not a hospital
in-patient, to co-insurance of 50%, a maximum
benefit of $500 per calendar year or twelve
consecutive month periods subject to the inclusion
by the insurer of reasonable limits on the number of
visits and the maximum permissible expense per
visit.
(3) The converted policy may contain any exclusion,
reduction, or limitation contained in the group policy
and any exclusion, reduction, or limitation customarily
used in individual accident and health policies delivered
or issued for delivery in this state. It is not required
that the converted policy contain all of the covered
medical expenses or the same level of benefits as
provided in the group policy.
(4) The insurer may, at its option, also offer
alternative plans for group accident and health
conversion.
(5) The converted policy may only exclude a
pre-existing condition excluded by the group policy.
Any hospital, surgical, medical or major medical benefits
payable under the converted policy may be reduced by the
amount of any such benefits payable under the group
policy after the termination of the individual's
insurance thereunder and, during the first policy year of
such converted policy, the benefits payable under the
converted policy may be so reduced so that they are not
in excess of the benefits that would have been payable
had the individual's insurance under the group policy
remained in force and effect.
(6) The converted policy may provide for the
termination of coverage thereunder of any person when he
is or could be covered by Medicare (Title XVIII of the
United States Social Security Act as added by the Social
Security Amendments of 1965 or as later amended or
superseded).
(7) The converted policy may provide that the
insurer may request information from the converted
policyholder, in advance of any premium due date of the
converted policy, to determine whether any person covered
thereunder (i) is covered for similar benefits by another
hospital, surgical, medical, or major medical expense
insurance policy or hospital or medical service
subscriber contract or medical practice or other
prepayment plan or by any other plan or program; or (ii)
is eligible for similar benefits (whether or not covered
therefor) under any arrangement of coverage for
individuals in a group, whether on an insured or
uninsured basis; or (iii) has similar benefits provided
for or available to such person, pursuant to or in
accordance with the requirements of any statute. The
converted policy may also provide that the insurer need
not renew the converted policy or the coverage of any
person insured thereunder if either the benefits provided
or available under the sources referred to in (i), (ii),
(iii) above for such person, together with the converted
policy, would result in overinsurance according to the
insurer's standards, or if the converted policyholder
refuses to provide the requested information.
(8) The converted policy shall not contain any
provision allowing the insurer to non-renew due to a
change in the health of an insured.
(9) The converted policy may contain any provisions
permitted herein and may also include any other
provisions not expressly prohibited by law. Any
provisions required or permitted herein may be made a
part of the converted policy by means of an endorsement
or rider.
(10) In the conversion of group health insurance in
accordance with the provisions of subsection (A) above,
the insurer may, at its option, accomplish the conversion
by issuing one or more converted policies.
(11) With respect to any person who was covered by
the group policy, the period specified in the Time Limit
on Certain Defenses provisions of the converted policy
shall commence with the date the person's insurance
became effective under the group policy.
(12) If the insurer elects to provide group
insurance coverage in lieu of a converted policy, the
benefit levels required for a converted policy must be
applicable to such group insurance coverage.
(C) The requirements of this Section shall apply to any
group policy of accident and health insurance delivered,
issued for delivery, renewed or amended on or after 180 days
following the effective date of this Section.
(Source: P.A. 85-210; 86-1475.)
(215 ILCS 5/404.1) (from Ch. 73, par. 1016.1)
Sec. 404.1. Safekeeping of deposits. The Director may
maintain with a corporation qualified to administer trusts in
this State under the Corporate Fiduciary Act "An Act to
provide for and regulate the administration of trusts by
trust companies", approved June 15, 1887, as amended, for the
securities deposited with the Director, a limited agency,
custodial, or depository account, or other type of account
for the safekeeping of those securities, and for collecting
the income from those securities and providing supportive
accounting services relating to such safekeeping and
collection. Such a corporation, in safekeeping such
securities, shall have all the powers, rights, duties and
responsibilities that it has for holding securities in its
fiduciary accounts under the Securities in Fiduciary Accounts
Act "An Act concerning the powers of corporations authorized
to accept and execute trusts, to register and hold securities
of fiduciary accounts in bulk and to deposit same with a
clearing corporation", approved September 1, 1972, as
amended. The Director shall arrange with any depository
institution that has been authorized to accept and execute
trusts to provide for collateralization of any cash accounts
resulting from the failure of any depositing company to give
instruction regarding the investment of any such cash amounts
as provided for by Section 6 of the Public Funds Investment
Act.
(Source: P.A. 83-746.)
Section 7. The Comprehensive Health Insurance Plan Act
is amended by changing Section 2 as follows:
(215 ILCS 105/2) (from Ch. 73, par. 1302)
Sec. 2. Definitions. As used in this Act, unless the
context otherwise requires:
"Plan administrator" means the insurer or third party
administrator designated under Section 5 of this Act.
"Benefits plan" means the coverage to be offered by the
Plan to eligible persons and federally eligible individuals
pursuant to this Act.
"Board" means the Illinois Comprehensive Health Insurance
Board.
"Church plan" has the same meaning given that term in the
federal Health Insurance Portability and Accountability Act
of 1996.
"Continuation coverage" means continuation of coverage
under a group health plan or other health insurance coverage
for former employees or dependents of former employees that
would otherwise have terminated under the terms of that
coverage pursuant to any continuation provisions under
federal or State law, including the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA), as amended,
Sections 367.2, and 367e, and 367e.1 of the Illinois
Insurance Code, or any other similar requirement in another
State.
"Covered person" means a person who is and continues to
remain eligible for Plan coverage and is covered under one of
the benefit plans offered by the Plan.
"Creditable coverage" means, with respect to a federally
eligible individual, coverage of the individual under any of
the following:
(A) A group health plan.
(B) Health insurance coverage (including group
health insurance coverage).
(C) Medicare.
(D) Medical assistance.
(E) Chapter 55 of title 10, United States Code.
(F) A medical care program of the Indian Health
Service or of a tribal organization.
(G) A state health benefits risk pool.
(H) A health plan offered under Chapter 89 of title
5, United States Code.
(I) A public health plan (as defined in regulations
consistent with Section 104 of the Health Care
Portability and Accountability Act of 1996 that may be
promulgated by the Secretary of the U.S. Department of
Health and Human Services).
(J) A health benefit plan under Section 5(e) of the
Peace Corps Act (22 U.S.C. 2504(e)).
(K) Any other qualifying coverage required by the
federal Health Insurance Portability and Accountability
Act of 1996, as it may be amended, or regulations under
that Act.
"Creditable coverage" does not include coverage
consisting solely of coverage of excepted benefits, as
defined in Section 2791(c) of title XXVII of the Public
Health Service Act (42 U.S.C. 300 gg-91), nor does it include
any period of coverage under any of items (A) through (K)
that occurred before a break of more than 90 days during all
of which the individual was not covered under any of items
(A) through (K) above. Any period that an individual is in a
waiting period for any coverage under a group health plan (or
for group health insurance coverage) or is in an affiliation
period under the terms of health insurance coverage offered
by a health maintenance organization shall not be taken into
account in determining if there has been a break of more than
90 days in any creditable coverage.
"Department" means the Illinois Department of Insurance.
"Dependent" means an Illinois resident: who is a spouse;
or who is claimed as a dependent by the principal insured for
purposes of filing a federal income tax return and resides in
the principal insured's household, and is a resident
unmarried child under the age of 19 years; or who is an
unmarried child who also is a full-time student under the age
of 23 years and who is financially dependent upon the
principal insured; or who is a child of any age and who is
disabled and financially dependent upon the principal
insured.
"Direct Illinois premiums" means, for Illinois business,
an insurer's direct premium income for the kinds of business
described in clause (b) of Class 1 or clause (a) of Class 2
of Section 4 of the Illinois Insurance Code, and direct
premium income of a health maintenance organization or a
voluntary health services plan, except it shall not include
credit health insurance as defined in Article IX 1/2 of the
Illinois Insurance Code.
"Director" means the Director of the Illinois Department
of Insurance.
"Eligible person" means a resident of this State who
qualifies for Plan coverage under Section 7 of this Act.
"Employee" means a resident of this State who is employed
by an employer or has entered into the employment of or works
under contract or service of an employer including the
officers, managers and employees of subsidiary or affiliated
corporations and the individual proprietors, partners and
employees of affiliated individuals and firms when the
business of the subsidiary or affiliated corporations, firms
or individuals is controlled by a common employer through
stock ownership, contract, or otherwise.
"Employer" means any individual, partnership,
association, corporation, business trust, or any person or
group of persons acting directly or indirectly in the
interest of an employer in relation to an employee, for which
one or more persons is gainfully employed.
"Family" coverage means the coverage provided by the Plan
for the covered person and his or her eligible dependents who
also are covered persons.
"Federally eligible individual" means an individual
resident of this State:
(1)(A) for whom, as of the date on which the
individual seeks Plan coverage under Section 15 of this
Act, the aggregate of the periods of creditable coverage
is 18 or more months, and (B) whose most recent prior
creditable coverage was under group health insurance
coverage offered by a health insurance issuer, a group
health plan, a governmental plan, or a church plan (or
health insurance coverage offered in connection with any
such plans) or any other type of creditable coverage that
may be required by the federal Health Insurance
Portability and Accountability Act of 1996, as it may be
amended, or the regulations under that Act;
(2) who is not eligible for coverage under (A) a
group health plan, (B) part A or part B of Medicare due
to age, or (C) medical assistance, and does not have
other health insurance coverage;
(3) with respect to whom the most recent coverage
within the coverage period described in paragraph (1)(A)
of this definition was not terminated based upon a factor
relating to nonpayment of premiums or fraud;
(4) if the individual had been offered the option
of continuation coverage under a COBRA continuation
provision or under a similar State program, who elected
such coverage; and
(5) who, if the individual elected such
continuation coverage, has exhausted such continuation
coverage under such provision or program.
"Group health insurance coverage" means, in connection
with a group health plan, health insurance coverage offered
in connection with that plan.
"Group health plan" has the same meaning given that term
in the federal Health Insurance Portability and
Accountability Act of 1996.
"Governmental plan" has the same meaning given that term
in the federal Health Insurance Portability and
Accountability Act of 1996.
"Health insurance coverage" means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise and including items and services
paid for as medical care) under any hospital and medical
expense-incurred policy, certificate, or contract provided by
an insurer, non-profit health care service plan contract,
health maintenance organization or other subscriber contract,
or any other health care plan or arrangement that pays for or
furnishes medical or health care services whether by
insurance or otherwise. Health insurance coverage shall not
include short term, accident only, disability income,
hospital confinement or fixed indemnity, dental only, vision
only, limited benefit, or credit insurance, coverage issued
as a supplement to liability insurance, insurance arising out
of a workers' compensation or similar law, automobile
medical-payment insurance, or insurance under which benefits
are payable with or without regard to fault and which is
statutorily required to be contained in any liability
insurance policy or equivalent self-insurance.
"Health insurance issuer" means an insurance company,
insurance service, or insurance organization (including a
health maintenance organization and a voluntary health
services plan) that is authorized to transact health
insurance business in this State. Such term does not include
a group health plan.
"Health Maintenance Organization" means an organization
as defined in the Health Maintenance Organization Act.
"Hospice" means a program as defined in and licensed
under the Hospice Program Licensing Act.
"Hospital" means a duly licensed institution as defined
in the Hospital Licensing Act, an institution that meets all
comparable conditions and requirements in effect in the state
in which it is located, or the University of Illinois
Hospital as defined in the University of Illinois Hospital
Act.
"Individual health insurance coverage" means health
insurance coverage offered to individuals in the individual
market, but does not include short-term, limited-duration
insurance.
"Insured" means any individual resident of this State who
is eligible to receive benefits from any insurer (including
health insurance coverage offered in connection with a group
health plan) or health insurance issuer as defined in this
Section.
"Insurer" means any insurance company authorized to
transact health insurance business in this State and any
corporation that provides medical services and is organized
under the Voluntary Health Services Plans Act or the Health
Maintenance Organization Act.
"Medical assistance" means the State medical assistance
or medical assistance no grant (MANG) programs provided under
Title XIX of the Social Security Act and Articles V (Medical
Assistance) and VI (General Assistance) of the Illinois
Public Aid Code (or any successor program) or under any
similar program of health care benefits in a state other than
Illinois.
"Medically necessary" means that a service, drug, or
supply is necessary and appropriate for the diagnosis or
treatment of an illness or injury in accord with generally
accepted standards of medical practice at the time the
service, drug, or supply is provided. When specifically
applied to a confinement it further means that the diagnosis
or treatment of the covered person's medical symptoms or
condition cannot be safely provided to that person as an
outpatient. A service, drug, or supply shall not be medically
necessary if it: (i) is investigational, experimental, or for
research purposes; or (ii) is provided solely for the
convenience of the patient, the patient's family, physician,
hospital, or any other provider; or (iii) exceeds in scope,
duration, or intensity that level of care that is needed to
provide safe, adequate, and appropriate diagnosis or
treatment; or (iv) could have been omitted without adversely
affecting the covered person's condition or the quality of
medical care; or (v) involves the use of a medical device,
drug, or substance not formally approved by the United States
Food and Drug Administration.
"Medical care" means the ordinary and usual professional
services rendered by a physician or other specified provider
during a professional visit for treatment of an illness or
injury.
"Medicare" means coverage under both Part A and Part B of
Title XVIII of the Social Security Act, 42 U.S.C. Sec. 1395,
et seq.
"Minimum premium plan" means an arrangement whereby a
specified amount of health care claims is self-funded, but
the insurance company assumes the risk that claims will
exceed that amount.
"Participating transplant center" means a hospital
designated by the Board as a preferred or exclusive provider
of services for one or more specified human organ or tissue
transplants for which the hospital has signed an agreement
with the Board to accept a transplant payment allowance for
all expenses related to the transplant during a transplant
benefit period.
"Physician" means a person licensed to practice medicine
pursuant to the Medical Practice Act of 1987.
"Plan" means the Comprehensive Health Insurance Plan
established by this Act.
"Plan of operation" means the plan of operation of the
Plan, including articles, bylaws and operating rules, adopted
by the board pursuant to this Act.
"Provider" means any hospital, skilled nursing facility,
hospice, home health agency, physician, registered pharmacist
acting within the scope of that registration, or any other
person or entity licensed in Illinois to furnish medical
care.
"Qualified high risk pool" has the same meaning given
that term in the federal Health Insurance Portability and
Accountability Act of 1996.
"Resident" means a person who is and continues to be
legally domiciled and physically residing on a permanent and
full-time basis in a place of permanent habitation in this
State that remains that person's principal residence and from
which that person is absent only for temporary or transitory
purpose.
"Skilled nursing facility" means a facility or that
portion of a facility that is licensed by the Illinois
Department of Public Health under the Nursing Home Care Act
or a comparable licensing authority in another state to
provide skilled nursing care.
"Stop-loss coverage" means an arrangement whereby an
insurer insures against the risk that any one claim will
exceed a specific dollar amount or that the entire loss of a
self-insurance plan will exceed a specific amount.
"Third party administrator" means an administrator as
defined in Section 511.101 of the Illinois Insurance Code who
is licensed under Article XXXI 1/4 of that Code.
(Source: P.A. 91-357, eff. 7-29-99; 91-735, eff. 6-2-00;
92-153, eff. 7-25-01.)
Section 10. The Health Maintenance Organization Act is
amended by changing Sections 4-9.2 and 5-3 as follows:
(215 ILCS 125/4-9.2) (from Ch. 111 1/2, par. 1409.2-2)
Sec. 4-9.2. Continuation of group HMO coverage after
termination of employee or membership. A group contract
delivered, issued for delivery, renewed, or amended in this
State that covers employees or members for health care
services shall provide that employees or members whose
coverage under the group contract would otherwise terminate
because of termination of employment or membership or because
of a reduction in hours below the minimum required by the
group contract shall be entitled to continue their coverage
under that group contract, for themselves and their eligible
dependents, subject to all of the group contract's terms and
conditions applicable to those forms of coverage and to the
following conditions:
(1) Continuation shall only be available to an
employee or member who has been continuously covered
under the group contract (and for similar benefits under
any group contract that it replaced) during the entire 3
month period ending with the termination of employment or
membership or reduction in hours below the minimum
required by the group contract.
(2) Continuation shall not be available for any
enrollee who is covered by Medicare, except for those
individuals who have been covered under a group Medicare
supplement policy. Continuation shall not be available
for any enrollee who is covered by any other insured or
uninsured plan that provides hospital, surgical, or
medical coverage for individuals in a group and under
which the enrollee was not covered immediately before
termination or reduction in hours below the minimum
required by the group contract or who exercises his or
her conversion privilege under the group policy.
(3) Continuation need not include dental, vision
care, prescription drug, or similar supplementary
benefits that are provided under the group contract in
addition to its basic health care services.
(4) Upon termination or reduction in hours below
the minimum required by the group contract, written
notice of continuation shall be presented to the employee
or member by the employer or mailed by the employer to
the last known address of the employee. An employee or
member who wishes continuation of coverage must request
continuation in writing within the 10 day period
following the later of (i) the date of termination or
reduction in hours below the minimum required by the
group contract or (ii) the date the employee is given
written notice of the right of continuation by either the
employer or the group policyholder. In no event, however,
shall the employee or member elect continuation more than
60 days after the date of termination or reduction in
hours below the minimum required by the group contract.
Written notice of continuation presented to the employee
or member by the policyholder, or mailed by the
policyholder to the last known address of the employee,
shall constitute the giving of notice for the purpose of
this paragraph.
(5) An employee or member electing continuation
must pay to the group policyholder or his employer, on a
monthly basis in advance, the total amount of premium
required by the HMO, including that portion of the
premium contributed by the policyholder or employer, if
any, but not more than the group rate for the coverage
being continued with appropriate reduction in premium for
any supplementary benefits that have been discontinued
under paragraph (3) of this Section. The premium rate
required by the HMO shall be the applicable premium
required on the due date of each payment.
(6) Continuation of coverage under the group
contract for any person shall terminate when the person
becomes eligible for Medicare or is covered by any other
insured or uninsured plan that provides hospital,
surgical, or medical coverage for individuals in a group
and under which the person was not covered immediately
before termination or reduction in hours below the
minimum required by the group contract as provided in
paragraph (2) of this Section or, if earlier, at the
first to occur of the following:
(a) The expiration of 9 months after the
employee's or member's coverage because of
termination of employment or membership or reduction
in hours below the minimum required by the group
contract.
(b) If the employee or member fails to make
timely payment of a required contribution, the end
of the period for which contributions were made.
(c) The date on which the group contract is
terminated or, in the case of an employee, the date
his or her employer terminates participation under
the group contract. If, however, this paragraph
applies and the coverage ceasing by reason of
termination is replaced by similar coverage under
another group contract, then (i) the employee or
member shall have the right to become covered under
the replacement group contract for the balance of
the period that he or she would have remained
covered under the prior group contract in accordance
with paragraph (6) had a termination described in
this item (c) not occurred and (ii) the prior group
contract shall continue to provide benefits to the
extent of its accrued liabilities and extensions of
benefits as if the replacement had not occurred.
(7) A notification of the continuation privilege
shall be included in each evidence of coverage.
(8) Continuation shall not be available for any
employee who was discharged because of the commission of
a felony in connection with his or her work, or because
of theft in connection with his or her work, for which
the employer was in no way responsible if the employee
(i) admitted to committing the felony or theft or (ii)
was convicted or placed under supervision by a court of
competent jurisdiction.
The requirements of this amendatory Act of 1992
shall apply to any group contract, as defined in this
Section, delivered or issued for delivery on or after 180
days following the effective date of this amendatory Act
of 1992.
(Source: P.A. 87-1090.)
(215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x,
356y, 356z.2, 367.2, 367.2-5, 367i, 368a, 401, 401.1, 402,
403, 403A, 408, 408.2, 409, 412, 444, and 444.1, paragraph
(c) of subsection (2) of Section 367, and Articles IIA, VIII
1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of the
Illinois Insurance Code.
(b) For purposes of the Illinois Insurance Code, except
for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
Health Maintenance Organizations in the following categories
are deemed to be "domestic companies":
(1) a corporation authorized under the Dental
Service Plan Act or the Voluntary Health Services Plans
Act;
(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of
another state, 30% or more of the enrollees of which are
residents of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article
VIII 1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration
to the continuation of benefits to enrollees and the
financial conditions of the acquired Health Maintenance
Organization after the merger, consolidation, or other
acquisition of control takes effect;
(2)(i) the criteria specified in subsection (1)(b)
of Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination
with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or
other acquisition of control;
(3) the Director shall have the power to require
the following information:
(A) certification by an independent actuary of
the adequacy of the reserves of the Health
Maintenance Organization sought to be acquired;
(B) pro forma financial statements reflecting
the combined balance sheets of the acquiring company
and the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as
of a date 90 days prior to the acquisition, as well
as pro forma financial statements reflecting
projected combined operation for a period of 2
years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the
operation of the Health Maintenance Organization
sought to be acquired for a period of not less than
3 years; and
(D) such other information as the Director
shall require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale
by any health maintenance organization of greater than 10% of
its enrollee population (including without limitation the
health maintenance organization's right, title, and interest
in and to its health care certificates).
(e) In considering any management contract or service
agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code,
take into account the effect of the management contract or
service agreement on the continuation of benefits to
enrollees and the financial condition of the health
maintenance organization to be managed or serviced, and (ii)
need not take into account the effect of the management
contract or service agreement on competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a
Health Maintenance Organization may by contract agree with a
group or other enrollment unit to effect refunds or charge
additional premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions
with respect to, the refund or additional premium are set
forth in the group or enrollment unit contract agreed in
advance of the period for which a refund is to be paid or
additional premium is to be charged (which period shall
not be less than one year); and
(ii) the amount of the refund or additional premium
shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the
period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and
marketing expenses, but shall not include any refund to
be made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the
profitable or unprofitable experience may be calculated
taking into account the refund period and the immediately
preceding 2 plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and
the resulting additional premium to be paid by the group or
enrollment unit.
In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay
any refund authorized under this Section.
(Source: P.A. 91-357, eff. 7-29-99; 91-406, eff. 1-1-00;
91-549, eff. 8-14-99; 91-605, eff. 12-14-99; 91-788, eff.
6-9-00; 92-764, eff. 1-1-03.)
Section 15. The Voluntary Health Services Plans Act is
amended by changing Section 15.5 as follows:
(215 ILCS 165/15.5) (from Ch. 32, par. 609.5)
Sec. 15.5. Conversion Privilege-Group Type Contracts.
(1) Every service plan contract of a health service plan
corporation which provides that the continued coverage of a
beneficiary is contingent upon the continued employment or
membership of the subscriber with a particular employer,
union, or association shall further provide for the right of
said person to make application for an individual service
plan contract under the circumstances and in accordance with
the requirements set forth in Sections Section 367e and
367e.1 of the "Illinois Insurance Code". The application of
Sections Section 367e and 367e.1 of the Code shall not be
construed in such a manner as to require a health service
plan corporation to furnish a service or kind of benefit not
customarily provided by such corporation and which is
inconsistent with the provision of this Act.
(2) The requirements of this Section shall apply to all
such contracts delivered, issued for delivery, renewed or
amended on or after 180 days following the effective date of
this Section.
(Source: P.A. 82-498.)
Section 95. If and only if House Bill 1640 of the 93rd
General Assembly becomes law in the form it passed the House,
the Use of Credit Information in Personal Insurance Act is
amended by changing Section 20 as follows:
(093 HB 1640 eng, Sec. 20)
Sec. 20. Use of credit information. An insurer
authorized to do business in this State that uses credit
information to underwrite or rate risks shall not:
(1) Use an insurance score that is calculated using
income, gender, address, ethnic group, religion, marital
status, or nationality of the consumer as a factor.
(2) Deny, cancel, or nonrenew a policy of personal
insurance solely on the basis of credit information,
without consideration of any other applicable
underwriting factor independent of credit information and
not expressly prohibited by item (1). An insurer shall
not be considered to have denied, cancelled, or
nonrenewed a policy if coverage is available through an
affiliate.
(3) Base an insured's renewal rates for personal
insurance solely upon credit information, without
consideration of any other applicable factor independent
of credit information. An insurer shall not be
considered to have based rates solely on credit
information if coverage is available in a different tier
of the same insurer.
(4) Take an adverse action against a consumer
solely because he or she does not have a credit card
account, without consideration of any other applicable
factor independent of credit information.
(5) Consider an absence of credit information or an
inability to calculate an insurance score in underwriting
or rating personal insurance, unless the insurer does one
of the following:
(A) Treats the consumer as otherwise filed
with approved by the Department, if the insurer
presents information that such an absence or
inability relates to the risk for the insurer and
submits a filing certification form signed by an
officer for the insurer certifying that such
treatment is actuarially justified.
(B) Treats the consumer as if the applicant or
insured had neutral credit information, as defined
by the insurer.
(C) Excludes the use of credit information as
a factor and uses only other underwriting criteria.
(6) Take an adverse action against a consumer based
on credit information, unless an insurer obtains and uses
a credit report issued or an insurance score calculated
within 90 days from the date the policy is first written
or renewal is issued.
(7) Use credit information unless not later than
every 36 months following the last time that the insurer
obtained current credit information for the insured, the
insurer recalculates the insurance score or obtains an
updated credit report. Regardless of the other
requirements of this Section:
(A) At annual renewal, upon the request of a
consumer or the consumer's agent, the insurer shall
re-underwrite and re-rate the policy based upon a
current credit report or insurance score. An insurer
need not recalculate the insurance score or obtain
the updated credit report of a consumer more
frequently than once in a 12-month period.
(B) The insurer shall have the discretion to
obtain current credit information upon any renewal
before the expiration of 36 months, if consistent
with its underwriting guidelines.
(C) An insurer is not required to obtain
current credit information for an insured, despite
the requirements of subitem (A) of item (7) of this
Section if one of the following applies:
(a) The insurer is treating the consumer
as otherwise filed with approved by the
Department.
(b) The insured is in the most
favorably-priced tier of the insurer, within a
group of affiliated insurers. However, the
insurer shall have the discretion to order
credit information, if consistent with its
underwriting guidelines.
(c) Credit was not used for underwriting
or rating the insured when the policy was
initially written. However, the insurer shall
have the discretion to use credit for
underwriting or rating the insured upon
renewal, if consistent with its underwriting
guidelines.
(d) The insurer re-evaluates the insured
beginning no later than 36 months after
inception and thereafter based upon other
underwriting or rating factors, excluding
credit information.
(8) Use the following as a negative factor in any
insurance scoring methodology or in reviewing credit
information for the purpose of underwriting or rating a
policy of personal insurance:
(A) Credit inquiries not initiated by the
consumer or inquiries requested by the consumer for
his or her own credit information.
(B) Inquiries relating to insurance coverage,
if so identified on a consumer's credit report.
(C) Collection accounts with a medical
industry code, if so identified on the consumer's
credit report.
(D) Multiple lender inquiries, if coded by the
consumer reporting agency on the consumer's credit
report as being from the home mortgage industry and
made within 30 days of one another, unless only one
inquiry is considered.
(E) Multiple lender inquiries, if coded by the
consumer reporting agency on the consumer's credit
report as being from the automobile lending industry
and made within 30 days of one another, unless only
one inquiry is considered.
(Source: 093 HB 1640 eng, Sec. 20)
Section 99. Effective date. This Section and the
changes made to Sec. 143.17a of the Illinois Insurance Code
in Section 5 of this Act take effect upon becoming law.
Section 95 of this Act takes effect on October 1, 2003. The
rest of this Act takes effect on the uniform effective date
provided by law.