SB0092 95TH GENERAL ASSEMBLY

LRB095 03900 KBJ 23933 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB0092

Introduced 1/31/2007, by Sen. William R. Haine

SYNOPSIS AS INTRODUCED:

New Act
35 ILCS 5/218 new
215 ILCS 5/352	from Ch. 73, par. 964

Creates the Health Insurance Choice Act. Requires certain small employer carriers to offer health insurance choice policies to employees of eligible employers, and requires eligible employers to facilitate insurers offering the coverage. Requires eligible employers to offer their employees a group health plan. For a health insurance choice policy, establishes the maximum aggregate benefits for each enrollee and the standard required benefits. Sets forth the policy requirements. Requires employers to perform means testing to determine eligibility requirements. Designates conditions for the guaranteed renewability and availability of a health insurance choice policy. Sets forth language to be included in enrollment applications and policies. Requires insurers to provide written disclosure statements. Applies the Small Employer Health Insurance Rating Act to health insurance choice policies under certain conditions. Amends the Illinois Income Tax Act. Creates an income tax credit for taxpayers that are eligible employers under the Health Insurance Choice Act in an amount equal to 33% of the amount of any contribution made by the taxpayer towards the premium of a health insurance choice policy. Amends the Illinois Insurance Code to exempt the Health Insurance Choice Act from the Accident and Health Insurance Article of the Code. Effective immediately.

FISCAL NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Health Insurance Choice Act.

Section 5. Purpose. The General Assembly recognizes the need for individuals and small employers in this State to have access to health insurance policies that are more affordable and flexible than those currently available in the small group market. The General Assembly, therefore, seeks to increase the availability of health insurance coverage by requiring small employer carriers in this State to issue policies that are more affordable for employees of eligible employers. To accomplish its objective, the General Assembly also requires eligible employers to facilitate the offering of these policies to their employees.

Section 10. Definitions. For purposes of this Act:

"Department" means the Department of Financial and Professional Regulation.

"Eligible employer" means a small employer (1) that has not offered group health plans to its employees for at least 12 months before the employee applies for such coverage under a health insurance choice policy; and (2) whose average annual compensation paid to employees is less than 250% of the Federal poverty level.

"Employee" means an employee who is scheduled to work not less than 20 hours per week on a regular basis.

"Enrollee" means an individual covered under a health insurance choice policy, including both an employee and his or her dependents.

"Facilitate" means, with respect to an eligible employer, permitting one or more insurers to, without endorsement, publicize their health insurance choice policy or policies and alternative accident and health insurance policy or policies with all mandated benefits to the eligible employer's employees and collecting premiums through payroll deduction and remitting such premiums to the insurer.

"Federal poverty level" means the federal poverty level guidelines published annually by the United States Department of Health and Human Services.

"Group health plan" has the meaning given to such term in the Illinois Health Insurance Portability and Accountability Act.

"Health insurance choice policy" or "policy" means a policy of accident and health insurance that provides standard required benefits as described in Section 20 of this Act and satisfies the additional requirements set forth in Section 25 of this Act.

"Insurer" means a small employer carrier as such term is defined in the Small Employer Health Insurer Rating Act.

"Secretary" means the Secretary of the Financial and Professional Regulation.

"Small employer" has the meaning given that term in the Illinois Health Insurance Portability and Accountability Act.

"State-mandated health benefits" means coverage required under the laws of this State to be provided in a group major medical policy for accident and health insurance or a contract for a health-related condition that: (1) includes coverage for specific health care services or benefits; (2) places limitations or restrictions on deductibles, coinsurance, co-payments, or any annual or lifetime maximum benefit amounts; or (3) includes coverage for a specific category of licensed health practitioner from whom an insured is entitled to receive care.

Section 15. Authorization of health insurance choice policies.

(a) All insurers, as defined in Section 10 of this Act, shall offer one or more health insurance choice policies to employees of eligible employers in this State.

(b) An insurer that offers one or more health insurance choice policies under this Act to the employees of an eligible employer must also offer to all employees of such eligible employer at least one accident and health insurance policy that has been filed with and approved by the Department and includes coverage for all state-mandated health benefits.

(c) All eligible employers in this State shall facilitate insurers offering coverage under one or more health insurance choice policies for employees of such eligible employers and their dependents. Each employee may elect whether he or she wants to apply for coverage.

(d) All eligible employers in the State shall also offer to their employees at least one insured group health plan under a policy that has been filed with and approved by the Department and includes coverage for all state-mandated health benefits.

(e) An eligible employer whose employees elect coverage under a health insurance choice policy or group health plan under subsections (c) or (d) of this Section for themselves or their dependents is not required to make contributions to the cost of any policy or group health plan on behalf of its employees or their dependents.

(f) An insurer is not required to issue or renew coverage to the employees of an eligible employer under a health insurance choice policy or group health plan unless (i) 75% of the eligible employer's employees, excluding employees covered by a group health plan of another employer, elect coverage under a health insurance choice policy or a group health plan of the small employer offered by the insurer and (ii) 50% of the eligible employer's total employees elect coverage under a health insurance choice policy or group health plan of the eligible employer offered by the insurer.

(g) This Act must not be interpreted to restrict the ability of any insurer or small employer to offer any health insurance coverage permitted by law.

Section 20. Standard required benefits. A health insurance choice policy must include a maximum aggregate benefit of not less than $50,000 per year for each enrollee and the policy must contain the following standard required benefits:

(1) physician services, including, primary care, consultation, referral, surgical, anesthesia, or other, as needed by the enrollee in any level of service delivery. Such services need not include organ transplants unless specifically authorized by a physician;

(2) outpatient diagnostic, imaging, and pathology services and radiation therapy;

(3) 120 days of non-mental-health inpatient services per year, including all professional services, medications, surgically implanted devices, and supplies used by the enrollee while an inpatient;

(4) 45 days of inpatient serious mental illness treatment services per year and 60 office visits per year for outpatient serious mental illness treatment services, with the copayment to apply to the cost of treatment if the treatment occurs during the office visit;

(5) 30 days of other inpatient mental health and chemical dependency treatment services per year and 30 days of other outpatient mental health and chemical dependency treatment services per year, with a lifetime maximum of 100 visits;

(6) emergency services for accidental injury or emergency illness 24 hours per day and 7 days per week. Such emergency treatment shall include outpatient visits and referrals for emergency mental health problems;

(7) maternity care, including prenatal and post-natal care, care for complications of pregnancy of the mother, and care with respect to a newborn child from the moment of birth, which shall include the necessary care and treatment of an illness, an injury, congenital defects, birth abnormalities, and a premature birth;

(8) blood transfusion services, processing, and the administration of whole blood and blood components and derivatives;

(9) preventive health services as appropriate for the patient population, including a health evaluation program and immunizations to prevent or arrest the further manifestation of human illness or injury, including, but not limited to, allergy infections and allergy serum. Such health evaluation program shall include at least periodic physical examinations and medical history, hearing and vision testing or screening, routine laboratory testing or screening, blood pressure testing, uterine cervical-cytological testing, and low-dose mammography testing as required by Section 356g of the Illinois Insurance Code; and

(10) outpatient rehabilitative therapy (including, but not limited to, speech therapy, physical therapy, and occupational therapy directed at improving physical functioning of the member), up to 60 treatments per year for conditions that are expected to result in significant improvement within 2 months, as determined by the primary care physician.

The benefits under a health insurance choice policy may contain reasonable deductibles and co-payments subject to such limitations as the Department may prescribe pursuant to rule.

Section 25. Health insurance choice policy requirements.

(a) Any insurer, as defined in Section 10 of this Act, shall have the power to issue health insurance choice policies. No such policy may be issued or delivered in this State unless a copy of the form thereof has been filed with the Department and approved by it in accordance with Section 355 of the Illinois Insurance Code, unless it contains in substance those provisions contained in Sections 357.1 through 357.30 of the Illinois Insurance Code as may be applicable to this Act and the provisions set forth in this Section.

(b) The policy must provide that the policy and the individual applications of the employees of the eligible employer shall constitute the entire contract between the parties, that all statements made by the employer or by the individual employees shall (in the absence of fraud) be deemed representations and not warranties, and that none of those statements may be used in defense to a claim under the policy unless it is contained in a written application.

(c) The policy must provide that the insurer will issue to the eligible employer, for delivery to the employee who is insured under the policy, an individual certificate setting forth a statement as to the insurance protection to which the employee is entitled and to whom payable.

(d) The policy must provide that all new employees of the eligible employer shall be eligible to apply for coverage under any health insurance choice policies facilitated by such employer or the group health plan of the employer.

(e) Any health insurance choice policy may provide that all or any portion of any indemnities provided by the policy on account of hospital, nursing, medical, or surgical services may, at the insurer's option, be paid directly to the health care professional, health care provider, or the insured; but the policy may not require that the service be rendered by a particular hospital or person. Payment so made shall discharge the insurer's obligation with respect to the amount of insurance so paid. Nothing in this subsection (e) shall prohibit an insurer from providing incentives for insureds to utilize the services of a particular hospital or person.

(f) Whenever the Department of Public Health finds that it has paid all or part of any hospital or medical expenses that an insurer is obligated to pay under a policy issued under this Act, the Department of Public Health shall be entitled to receive reimbursement for its payments from the insurer, provided that the Department of Public Health has notified the insurer of its claim before the carrier has paid the benefits to its insureds or the insureds' assignees.

(g) No group hospital, medical, or surgical expense policy under this Act may contain any provision whereby benefits otherwise payable thereunder are subject to reduction solely on account of the existence of similar benefits provided under other group or group-type accident and sickness insurance policies if the reduction would operate to reduce total benefits payable under the policies below an amount equal to 100% of total allowable expenses provided under the policies.

(h) If dependents of insureds are covered under 2 policies, both of which contain coordination of benefit provisions, benefits of the policy of the insured whose birthday falls earlier in the year are determined before those of the policy of the insured whose birthday falls later in the year. "Birthday", as used in this subsection (h), refers only to the month and day in a calendar year, not the year in which the person was born. The Department shall promulgate rules defining the order of benefit determination under this subsection (h).

(i) Discrimination between individuals of the same class of risk in the issuance of policies, in the amount of premiums or rates charged for any insurance covered by this Act, in benefits payable thereon, in any of the terms or conditions of the policy, or in any other manner whatsoever is prohibited. Nothing in this subsection (i) prohibits an insurer from providing incentives for insureds to utilize the services of a particular hospital or person.

(j) No insurer may make or permit any distinction or discrimination against individuals solely because of handicaps or disabilities in (i) the amount of payment of premiums or rates charged for policies of insurance, (ii) the amount of any dividends or other benefits payable thereon, or (iii) any other terms and conditions of the contract it makes, except if the distinction or discrimination is based on sound actuarial principles or is related to actual or reasonably anticipated experience.

(k) No insurer may refuse to insure or refuse to continue to insure, limit the amount, extent, or kind of coverage available to an individual, or charge an individual a different rate for the same coverage solely because of blindness or partial blindness. With respect to all other conditions, including the underlying cause of the blindness or partial blindness, persons who are blind or partially blind shall be subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are sighted persons. Refusal to insure includes denial by an insurer of disability insurance coverage on the grounds that the policy defines "disability" as being presumed in the event that the insured loses his or her eyesight. However, an insurer may exclude from coverage disability consisting solely of blindness or partial blindness when the condition existed at the time the policy was issued.

Section 30. Applicability of other Insurance Code provisions. All health insurance choice policies issued under this Act shall be subject to the provisions of Sections 356c, 356d, 356g, 356h, 356n, 367.2, 367.2-5, 367c, 367d, 367e, 367e.1, 367i, 368a, 370, 370a, and 370e of the Illinois Insurance Code even though such policies do not constitute group health plans.

Section 35. Means testing; authorized. For purposes of this Act, an employer shall perform means testing to determine eligibility requirements for the health insurance choice policy and shall provide a certification to the insurer respecting the results of the means testing. A health insurance choice policy based on those eligibility requirements shall not be in violation of Section 364 of the Illinois Insurance Code or subsection (i) or (j) of Section 25 of this Act.

Section 40. Guaranteed renewability and availability.

(a) Subject to subsection (f) of Section 15 of this Act and subsections (b) and (c) of this Section, an insurer (i) must accept the application of every employee of an eligible employer that applies for coverage under subsections (c) or (d) of Section 15 of this Act and (ii) must renew or continue in force such coverage at the option of the covered employee as long as the employee continues as an employee of the eligible employer.

(b) An insurer is not obligated to renew or continue in force coverage under subsection (a) of this Section (i) if the coverage requirements of subsection (f) of Section 15 of this Act are not satisfied, (ii) if the insurer would not be obligated to renew or continue in force such coverage had subdivision (2), (4), or (5) of subsection (B) Section 30 of the Illinois Health Insurance Portability and Accountability Act applied to such policies, or (iii) with respect to an employee who has failed to pay premiums in accordance with the applicable policy or the insurer has not received timely premium payments from the employee.

(c) An insurer may modify the coverage offered under this Act only at the time of coverage renewal and only if the modification is consistent with State law and effective on a uniform basis with respect to all employees of eligible employers.

(d) Subsection (a) of Section 15 of this Act and this Section shall apply with respect to an insurer as long as the insurer offers any health benefit plan to small employers in this State that is subject to the Small Employer Health Insurance Rating Act.

Section 45. Notice to policyholders and enrollees.

(a) Each written application for enrollment under a health insurance choice policy must contain the following language at the beginning of the application in bold type:

"You have the option to choose this health insurance choice policy that, either in whole or in part, does not provide state-mandated health insurance benefits normally required in accident and health insurance policies in Illinois. This health insurance choice policy may provide a more affordable health insurance policy for you, although, at the same time, it may provide you with fewer health insurance benefits than those normally included as state-mandated health insurance benefits in policies in Illinois."

(b) Each health insurance choice policy must contain the following language at or near the beginning of the policy in bold type:

"This health insurance choice policy, either in whole or in part, does not provide state-mandated health benefits normally required in accident and health insurance policies in Illinois. This health insurance choice policy may provide a more affordable health insurance policy for you, although, at the same time, it may provide you with fewer health insurance benefits than those normally included as state-mandated health insurance benefits in policies in Illinois."

Section 50. Disclosure statement.

(a) When a health insurance choice policy is issued, the insurer providing such policy must provide an applicant with a written disclosure statement that does the following:

(1) acknowledges that the health insurance choice policy being purchased does not provide some or all state-mandated health benefits;

(2) lists those state-mandated health benefits not included under the health insurance choice policy; and

(3) includes a section that allows for a signature by the applicant attesting to the fact that the applicant has read and understands the disclosure statement and attesting to the fact that the applicant has in fact been given a choice between the health insurance choice policy that he or she has chosen and a health insurance policy that includes all state-mandated health benefits.

(b) Each applicant for initial coverage must sign the disclosure statement provided by the insurer under subsection (a) of this Section and return the statement to the insurer.

(c) An insurer must:

(1) retain the signed disclosure statement in the insurer's records; and

(2) provide the signed disclosure statement to the Department upon request from the Secretary.

Section 55. Rates.

(a) Except as expressly provided in paragraphs (b) and (c) of this Section, the Small Employer Health Insurance Rating Act shall apply to each health insurance choice policy that is delivered, issued for delivery, renewed, or continued in this State.

(b) An insurer may establish one or more separate classes of business for purposes of the Small Employer Health Insurance Rating Act for health insurance choice policies delivered, issued for delivery, renewed, or continued in this State, and any such separate classes of business so established and including only health insurance choice policies shall not reduce the number of classes of business that an insurer may otherwise establish under the Small Employer Health Insurance Rating Act.

(c) Premium rates for health insurance choice policies included in a separate class of business shall not be subject to subdivision (1) of subsection (a) of Section 25 of the Small Employer Health Insurance Rating Act.

Section 60. Rules. The Secretary shall adopt rules as necessary to implement this Act.

Section 900. The Illinois Income Tax Act is amended by adding Section 218 as follows:

(35 ILCS 5/218 new)

Sec. 218. Health insurance choice contribution credit.

(a) For those taxable years ending on or after December 31, 2007 and ending on or before December 30, 2012, each taxpayer that is an eligible employer under the Health Insurance Choice Act is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 in an amount equal to 33% of the amount of any contribution made by the taxpayer during the taxable year towards the premium of a health insurance choice policy under the Health Insurance Choice Act.

(b) For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code.

(c) The credit under this Section may not be carried forward or back and may not reduce the taxpayer's liability to less than zero.

Section 905. The Illinois Insurance Code is amended by changing Section 352 as follows:

(215 ILCS 5/352) (from Ch. 73, par. 964)

Sec. 352. Scope of Article.

(a) Except as provided in subsections (b), (c), (d), and (e), this Article shall apply to all companies transacting in this State the kinds of business enumerated in clause (b) of Class 1 and clause (a) of Class 2 of section 4. Nothing in this Article shall apply to, or in any way affect policies or contracts described in clause (a) of Class 1 of Section 4; however, this Article shall apply to policies and contracts which contain benefits providing reimbursement for the expenses of long term health care which are certified or ordered by a physician including but not limited to professional nursing care, custodial nursing care, and non-nursing custodial care provided in a nursing home or at a residence of the insured.

(b) This Article does not apply to policies of accident and health insurance issued in compliance with Article XIXB of this Code or the Health Insurance Choice Act.

(c) A policy issued and delivered in this State that provides coverage under that policy for certificate holders who are neither residents of nor employed in this State does not need to provide to those nonresident certificate holders who are not employed in this State the coverages or services mandated by this Article.

(d) Stop-loss insurance is exempt from all Sections of this Article, except this Section and Sections 353a, 354, 357.30, and 370. For purposes of this exemption, stop-loss insurance is further defined as follows:

(1) The policy must be issued to and insure an employer, trustee, or other sponsor of the plan, or the plan itself, but not employees, members, or participants.

(2) Payments by the insurer must be made to the employer, trustee, or other sponsors of the plan, or the plan itself, but not to the employees, members, participants, or health care providers.

(e) A policy issued or delivered in this State to the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) and providing coverage, under clause (b) of Class 1 or clause (a) of Class 2 as described in Section 4, to persons who are enrolled under Article V of the Illinois Public Aid Code or under the Children's Health Insurance Program Act is exempt from all restrictions, limitations, standards, rules, or regulations respecting benefits imposed by or under authority of this Code, except those specified by subsection (1) of Section 143. Nothing in this subsection, however, affects the total medical services available to persons eligible for medical assistance under the Illinois Public Aid Code.

(Source: P.A. 92-370, eff. 8-15-01; revised 12-15-05.)

Section 999. Effective date. This Act takes effect upon becoming law.