Rep. Natalie A. Manley

Filed: 4/15/2021





10200HB0295ham002LRB102 04798 KTG 25082 a


2    AMENDMENT NO. ______. Amend House Bill 295, AS AMENDED, by
3replacing everything after the enacting clause with the
5    "Section 5. The Illinois Insurance Code is amended by
6adding Section 245.3 as follows:
7    (215 ILCS 5/245.3 new)
8    Sec. 245.3. Irrevocable assignment of life insurance to a
9funeral home. An insured or any other person who may be the
10owner of rights under a policy of life insurance may make an
11irrevocable assignment of all or a part of his or her rights
12under the policy to a funeral home in accordance with Section
132b of the Illinois Funeral or Burial Funds Act and have an
14individual policy issued in accordance with paragraphs (G),
15(H), and (K) of Section 231.1. Subject to the terms of the
16policy or a contract relating to the policy, including, but



10200HB0295ham002- 2 -LRB102 04798 KTG 25082 a

1not limited to, a prepaid funeral or burial contract, an
2irrevocable assignment by an insured or other owner of rights
3under a policy made before or after the effective date of this
4amendatory Act of the 102nd General Assembly is valid for the
5purpose of vesting in the assignee, in accordance with the
6policy or contract as to the time at which it is effective, all
7rights assigned. That irrevocable assignment is, however,
8without prejudice to the company on account of any payment it
9makes or individual policy it issues in accordance with
10paragraphs (G), (H), and (K) of Section 231.1 before receipt
11of notice of the assignment. The insurance company shall
12within 15 business days notify the funeral home and owner of
13the policy of its receipt of the form. A policy owner who
14executes a designation of beneficiary form pursuant to Section
152b of the Illinois Funeral or Burial Funds Act also
16irrevocably waives and cannot exercise the following rights:
17        (1) The right to collect from the insurance company
18    the net proceeds of the policy when it becomes a claim by
19    death.
20        (2) The right to surrender the policy and receive the
21    cash surrender value of the policy.
22        (3) The right to obtain a policy loan.
23        (4) The right to designate as primary beneficiary of
24    the policy anyone other than as provided in that Act.
25        (5) The right to collect or receive income,
26    distributions, or shares of surplus, dividend deposits,



10200HB0295ham002- 3 -LRB102 04798 KTG 25082 a

1    refunds of premium, or additions to the policy.
2    This amendatory Act of the 102nd General Assembly
3acknowledges, declares, and codifies the existing right of
4assignment of interests under life insurance policies.
5    Section 10. The Illinois Funeral or Burial Funds Act is
6amended by changing Sections 1a and 2a and by by adding Section
72b as follows:
8    (225 ILCS 45/1a)  (from Ch. 111 1/2, par. 73.101a)
9    Sec. 1a. For the purposes of this Act, the following terms
10shall have the meanings specified, unless the context clearly
11requires another meaning:
12    "Beneficiary" means the person specified in the pre-need
13contract upon whose death funeral services or merchandise
14shall be provided or delivered.
15    "Burial spaces" has the meaning ascribed to that term in
1620 CFR 416.1231.
17    "Licensee" means a seller of a pre-need contract who has
18been licensed by the Comptroller under this Act.
19    "Outer burial container" means any container made of
20concrete, steel, wood, fiberglass or similar material, used
21solely at the interment site, and designed and used
22exclusively to surround or enclose a separate casket and to
23support the earth above such casket, commonly known as a
24burial vault, grave box or grave liner, but not including a



10200HB0295ham002- 4 -LRB102 04798 KTG 25082 a

1lawn crypt as defined in the Illinois Pre-need Cemetery Sales
3    "Parent company" means a corporation owning more than 12
4cemeteries or funeral homes in more than one state.
5    "Person" means any person, partnership, association,
6corporation, or other entity.
7    "Pre-need contract" means any agreement or contract, or
8any series or combination of agreements or contracts, whether
9funded by trust deposits or life insurance policies or
10annuities, which has for a purpose the furnishing or
11performance of funeral services or the furnishing or delivery
12of any personal property, merchandise, or services of any
13nature in connection with the final disposition of a dead
14human body. Nothing in this Act is intended to regulate the
15content of a life insurance policy or a tax-deferred annuity.
16    "Provider" means a person who is obligated for furnishing
17or performing funeral services or the furnishing or delivery
18of any personal property, merchandise, or services of any
19nature in connection with the final disposition of a dead
20human body.
21    "Purchaser" means the person who originally paid the money
22under or in connection with a pre-need contract.
23    "Sales proceeds" means the entire amount paid to a seller,
24exclusive of sales taxes paid by the seller, finance charges
25paid by the purchaser, and credit life, accident or disability
26insurance premiums, upon any agreement or contract, or series



10200HB0295ham002- 5 -LRB102 04798 KTG 25082 a

1or combination of agreements or contracts, for the purpose of
2performing funeral services or furnishing personal property,
3merchandise, or services of any nature in connection with the
4final disposition of a dead human body, including, but not
5limited to, the retail price paid for such services and
6personal property and merchandise.
7    "Purchase price" means sales proceeds less finance charges
8on retail installment contracts.
9    "Seller" means the person who sells or offers to sell the
10pre-need contract to a purchaser, whether funded by a trust
11agreement, life insurance policy, or tax-deferred annuity.
12    "Trustee" means a person authorized to hold funds under
13this Act.
14(Source: P.A. 92-419, eff. 1-1-02.)
15    (225 ILCS 45/2a)
16    Sec. 2a. Purchase of insurance or annuity.
17    (a) If a purchaser selects the purchase of a life
18insurance policy or tax-deferred annuity contract to fund the
19pre-need contract, the application and collected premium shall
20be mailed within 30 days of signing the pre-need contract.
21    (b) If life insurance or an annuity is used to fund a
22pre-need contract, the seller or provider shall not be named
23as the owner or beneficiary of the policy or annuity. No person
24whose only insurable interest in the insured is the receipt of
25proceeds from the policy or in naming who shall receive the



10200HB0295ham002- 6 -LRB102 04798 KTG 25082 a

1proceeds nor any trust acting on behalf of such person or
2seller or provider shall be named as owner or beneficiary of
3the policy or annuity.
4    (c) Nothing shall prohibit the purchaser from irrevocably
5assigning ownership of the policy or annuity used to fund a
6guaranteed price pre-need contract to a person or trust or
7from irrevocably assigning the benefits of the policy or
8annuity to a funeral home for the purpose of obtaining
9favorable consideration for Medicaid, Supplemental Security
10Income, or another public assistance program, as permitted
11under federal law. The seller or contract provider may be
12named a nominal owner of the life insurance policy only for
13such time as it takes to immediately transfer the policy into a
14trust. Except for this purpose, neither the seller nor the
15contract provider shall be named the owner or the beneficiary
16of the policy or annuity.
17    (d) If a life insurance policy or annuity contract is used
18to fund a pre-need contract, except for guaranteed price
19contracts permitted in Section 4(a) of this Act, the pre-need
20contract must be revocable, and any assignment provision in
21the pre-need contract must contain the following disclosure in
2212 point bold type:



10200HB0295ham002- 7 -LRB102 04798 KTG 25082 a

5    (e) Sales proceeds shall not be used to purchase life
6insurance policies or tax-deferred annuities unless the
7company issuing the life insurance policies or tax-deferred
8annuities is licensed with the Illinois Department of
9Insurance, and the insurance producer or annuity seller is
10licensed to do business in the State of Illinois.
11(Source: P.A. 92-419, eff. 1-1-02.)
12    (225 ILCS 45/2b new)
13    Sec. 2b. Irrevocable designation of beneficiary of
14existing whole life insurance.
15    (a) In accordance with Section 245.3 of the Illinois
16Insurance Code, an insured or any other person who may be the
17owner of rights under an existing policy of whole life
18insurance may make an irrevocable assignment of all or a part
19of his or her rights under the policy to a provider in
20consideration for signing a guaranteed pre-need contract for
21the purpose of obtaining favorable consideration for Medicaid,
22Supplemental Security Income, or another public assistance
23program. The form prepared by the Department of Healthcare and
24Family Services under paragraph (4) of subsection (c) of
25Section 3-1.2 of the Illinois Public Aid Code or by the



10200HB0295ham002- 8 -LRB102 04798 KTG 25082 a

1insurance company shall provide for an irrevocable designation
2of beneficiary of one or more life insurance policies. The
3insured or any other person who may be the owner of rights
4under an existing policy of whole life insurance shall sign a
5guaranteed pre-need contract with the provider that describes
6the cost of the funeral goods and services to be provided upon
7the person's death, up to $6,774, in addition to the purchase
8of burial spaces. This amount shall be adjusted annually by
9the Department of Human Services for any increase in the
10Consumer Price Index. The guaranteed pre-need contract must
11provide a complete description and cost of the funeral goods
12and services including burial spaces. More than one policy may
13be subject to this Section if the total face value of the
14policies is necessary to pay the amount described in the
15guaranteed pre-need contract with the provider. All policies
16shall be listed on the form. The insured or any other person
17who may be the owner of rights under an existing policy of
18whole life insurance shall be given a copy of the executed
19form. The licensee shall retain copies for inspection by the
20Comptroller and shall report annually to the Comptroller the
21following: the name of the insured, the insurance policy
22number, the amount of the guaranteed pre-need contract, the
23current value of the policy or benefits designated, and the
24name of the insurance company issuing the policy.
25    (b) The insured or any other person who may be the owner of
26rights under an existing policy of whole life insurance shall



10200HB0295ham002- 9 -LRB102 04798 KTG 25082 a

1acknowledge that by making this assignment irrevocable, the
2policy cannot be cancelled, although it does not affect the
3right of the policy owner to cancel the insurance policy
4within the examination period provided under the policy.
5    (c) Upon the death of the insured, the proceeds of the life
6insurance policies subject to this Section shall be paid to
7the provider, who shall apply such proceeds in the following
8order or priority:
9        (1) first, to the provider in an amount equal to the
10    lesser of:
11            (A) the amount of the guaranteed pre-need
12        contract; or
13            (B) the actual value of the funeral and burial or
14        cemetery services and merchandise provided;
15        (2) second, to the State of Illinois, up to an amount
16    equal to the total medical assistance paid on behalf of
17    the insured; and
18        (3) third, payment of proceeds to a secondary
19    beneficiary (if any) listed on the policy, or to the
20    estate of the decedent if no secondary beneficiary is
21    named on the policy in the event the proceeds exceed the
22    lesser of the prearranged costs or actual value of the
23    funeral and burial or cemetery merchandise and services
24    provided and the total medical assistance paid on behalf
25    of the insured.
26    (d) The provider shall receive and disburse these proceeds



10200HB0295ham002- 10 -LRB102 04798 KTG 25082 a

1notwithstanding any other prohibition in law against serving
2as a trustee.
3    (e) Further assignment. The rights and obligations of the
4provider subject to the irrevocable designation of beneficiary
5may be assigned to another provider upon the choice of the
6insured or the approved representative or the power of
7attorney for property of the insured, or upon the insolvency
8or bankruptcy of the provider. The assignee provider shall:
9(i) be bound to the terms of the irrevocable designation of
10beneficiary; (ii) notify the insurance company or companies of
11the assignment; (iii) notify the Department of Healthcare and
12Family Services of the change in provider; and (iv) retain a
13copy of the assignment for inspection by the Comptroller.
14    Section 15. The Illinois Public Aid Code is amended by
15changing Section 3-1.2 as follows:
16    (305 ILCS 5/3-1.2)  (from Ch. 23, par. 3-1.2)
17    Sec. 3-1.2. Need.
18    (a) Income available to the person, when added to
19contributions in money, substance, or services from other
20sources, including contributions from legally responsible
21relatives, must be insufficient to equal the grant amount
22established by Department regulation for such person. In
23determining earned income to be taken into account,
24consideration shall be given to any expenses reasonably



10200HB0295ham002- 11 -LRB102 04798 KTG 25082 a

1attributable to the earning of such income. If federal law or
2regulations permit or require exemption of earned or other
3income and resources, the Illinois Department shall provide by
4rule and regulation that the amount of income to be
5disregarded be increased (1) to the maximum extent so required
6and (2) to the maximum extent permitted by federal law or
7regulation in effect as of the date this amendatory Act
8becomes law. The Illinois Department may also provide by rule
9and regulation that the amount of resources to be disregarded
10be increased to the maximum extent so permitted or required.
11    (b) Subject to federal approval, resources (for example,
12land, buildings, equipment, supplies, or tools), including
13farmland property and personal property used in the
14income-producing operations related to the farmland (for
15example, equipment and supplies, motor vehicles, or tools),
16necessary for self-support, up to $6,000 of the person's
17equity in the income-producing property, provided that the
18property produces a net annual income of at least 6% of the
19excluded equity value of the property, are exempt. Equity
20value in excess of $6,000 shall not be excluded. If the
21activity produces income that is less than 6% of the exempt
22equity due to reasons beyond the person's control (for
23example, the person's illness or crop failure) and there is a
24reasonable expectation that the property will again produce
25income equal to or greater than 6% of the equity value (for
26example, a medical prognosis that the person is expected to



10200HB0295ham002- 12 -LRB102 04798 KTG 25082 a

1respond to treatment or that drought-resistant corn will be
2planted), the equity value in the property up to $6,000 is
3exempt. If the person owns more than one piece of property and
4each produces income, each piece of property shall be looked
5at to determine whether the 6% rule is met, and then the
6amounts of the person's equity in all of those properties
7shall be totaled to determine whether the total equity is
8$6,000 or less. The total equity value of all properties that
9is exempt shall be limited to $6,000.
10    (c) In determining the resources of an individual or any
11dependents, the Department shall exclude from consideration
12the value of funeral and burial spaces, funeral and burial
13insurance the proceeds of which can only be used to pay the
14funeral and burial expenses of the insured and funds
15specifically set aside for the funeral and burial arrangements
16of the individual or his or her dependents, including prepaid
17funeral and burial plans, to the same extent that such items
18are excluded from consideration under the federal Supplemental
19Security Income program (SSI). At any time after submitting an
20application for medical assistance and before a final
21determination of eligibility has been made by the Department,
22an applicant may use available resources to purchase one of
23the prepaid funeral or burial contracts exempted under this
25    Prepaid funeral or burial contracts are exempt to the
26following extent:



10200HB0295ham002- 13 -LRB102 04798 KTG 25082 a

1        (1) Funds in a revocable prepaid funeral or burial
2    contract are exempt up to $1,500, except that any portion
3    of a contract that clearly represents the purchase of
4    burial space, as that term is defined for purposes of the
5    Supplemental Security Income program, is exempt regardless
6    of value.
7        (2) Funds in an irrevocable prepaid funeral or burial
8    contract are exempt up to $6,774 $5,874, except that any
9    portion of a contract that clearly represents the purchase
10    of burial space, as that term is defined for purposes of
11    the Supplemental Security Income program, is exempt
12    regardless of value. This amount shall be adjusted
13    annually for any increase in the Consumer Price Index. The
14    amount exempted shall be limited to the price of the
15    funeral goods and services to be provided upon death. The
16    contract must provide a complete description of the
17    funeral goods and services to be provided and the price
18    thereof. Any amount in the contract not so specified shall
19    be treated as a transfer of assets for less than fair
20    market value.
21        (3) A prepaid, guaranteed-price funeral or burial
22    contract, funded by an irrevocable assignment of a
23    person's life insurance policy to a trust or a funeral
24    home, is exempt. The amount exempted shall be limited to
25    the amount of the insurance benefit designated for the
26    cost of the funeral goods and services to be provided upon



10200HB0295ham002- 14 -LRB102 04798 KTG 25082 a

1    the person's death. The contract must provide a complete
2    description of the funeral goods and services to be
3    provided and the price thereof. Any amount in the contract
4    not so specified shall be treated as a transfer of assets
5    for less than fair market value. The trust must include a
6    statement that, upon the death of the person, the State
7    will receive all amounts remaining in the trust, including
8    any remaining payable proceeds under the insurance policy
9    up to an amount equal to the total medical assistance paid
10    on behalf of the person. The trust is responsible for
11    ensuring that the provider of funeral services under the
12    contract receives the proceeds of the policy when it
13    provides the funeral goods and services specified under
14    the contract. The irrevocable assignment of ownership of
15    the insurance policy must be acknowledged by the insurance
16    company.
17        (4) Existing life insurance policies are exempt if
18    there has been an irrevocable declaration of proceeds at
19    the death of the insured in compliance with this
20    subsection. A person shall sign a contract with a funeral
21    home that describes the cost of the funeral goods and
22    services to be provided upon the person's death, up to
23    $6,774, in addition to the purchase of burial spaces. This
24    amount shall be adjusted annually for any increase in the
25    Consumer Price Index. The contract must provide a complete
26    description of the funeral goods and services and burial



10200HB0295ham002- 15 -LRB102 04798 KTG 25082 a

1    spaces to be provided and the price thereof. The person
2    shall sign an irrevocable designation of beneficiary form
3    declaring that any amounts payable from the policies not
4    used for funeral goods and services or burial spaces as
5    set forth in the contract shall be received by the State,
6    up to an amount equal to the total medical assistance paid
7    on behalf of the person; any funds remaining after payment
8    to the State shall be paid to a secondary beneficiary (if
9    any) listed on the policy, or to the estate of the
10    purchaser if no secondary beneficiary is named on the
11    policy in the event the proceeds exceed the prearranged
12    costs of the funeral home or cemetery merchandise and
13    services and the total medical assistance paid on behalf
14    of the insured. More than one policy may be subject to this
15    subsection if the total face value of the policies is
16    necessary to pay the amount described in the contract with
17    the funeral home; policies that are not necessary to pay
18    the amount described in the contract are not exempt. The
19    Department of Healthcare and Family Services shall adopt
20    rules and forms to implement this Section.
21    (d) Notwithstanding any other provision of this Code to
22the contrary, an irrevocable trust containing the resources of
23a person who is determined to have a disability shall be
24considered exempt from consideration. A pooled trust must be
25established and managed by a non-profit association that pools
26funds but maintains a separate account for each beneficiary.



10200HB0295ham002- 16 -LRB102 04798 KTG 25082 a

1The trust may be established by the person, a parent,
2grandparent, legal guardian, or court. It must be established
3for the sole benefit of the person and language contained in
4the trust shall stipulate that any amount remaining in the
5trust (up to the amount expended by the Department on medical
6assistance) that is not retained by the trust for reasonable
7administrative costs related to wrapping up the affairs of the
8subaccount shall be paid to the Department upon the death of
9the person. After a person reaches age 65, any funding by or on
10behalf of the person to the trust shall be treated as a
11transfer of assets for less than fair market value unless the
12person is a ward of a county public guardian or the State
13Guardian pursuant to Section 13-5 of the Probate Act of 1975 or
14Section 30 of the Guardianship and Advocacy Act and lives in
15the community, or the person is a ward of a county public
16guardian or the State Guardian pursuant to Section 13-5 of the
17Probate Act of 1975 or Section 30 of the Guardianship and
18Advocacy Act and a court has found that any expenditures from
19the trust will maintain or enhance the person's quality of
20life. If the trust contains proceeds from a personal injury
21settlement, any Department charge must be satisfied in order
22for the transfer to the trust to be treated as a transfer for
23fair market value.
24    (e) The homestead shall be exempt from consideration
25except to the extent that it meets the income and shelter needs
26of the person. "Homestead" means the dwelling house and



10200HB0295ham002- 17 -LRB102 04798 KTG 25082 a

1contiguous real estate owned and occupied by the person,
2regardless of its value. Subject to federal approval, a person
3shall not be eligible for long-term care services, however, if
4the person's equity interest in his or her homestead exceeds
5the minimum home equity as allowed and increased annually
6under federal law. Subject to federal approval, on and after
7the effective date of this amendatory Act of the 97th General
8Assembly, homestead property transferred to a trust shall no
9longer be considered homestead property.
10    (f) Occasional or irregular gifts in cash, goods or
11services from persons who are not legally responsible
12relatives which are of nominal value or which do not have
13significant effect in meeting essential requirements shall be
15    (g) The eligibility of any applicant for or recipient of
16public aid under this Article is not affected by the payment of
17any grant under the "Senior Citizens and Disabled Persons
18Property Tax Relief Act" or any distributions or items of
19income described under subparagraph (X) of paragraph (2) of
20subsection (a) of Section 203 of the Illinois Income Tax Act.
21    (h) The Illinois Department may, after appropriate
22investigation, establish and implement a consolidated standard
23to determine need and eligibility for and amount of benefits
24under this Article or a uniform cash supplement to the federal
25Supplemental Security Income program for all or any part of
26the then current recipients under this Article; provided,



10200HB0295ham002- 18 -LRB102 04798 KTG 25082 a

1however, that the establishment or implementation of such a
2standard or supplement shall not result in reductions in
3benefits under this Article for the then current recipients of
4such benefits.
5(Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)".