093_HB3661sam001
LRB093 09245 RLC 15282 a
1 AMENDMENT TO HOUSE BILL 3661
2 AMENDMENT NO. . Amend House Bill 3661 by replacing
3 everything after the enacting clause with the following:
4 "Section 3. The State Employees Group Insurance Act of
5 1971 is amended by changing Section 6.2 as follows:
6 (5 ILCS 375/6.2) (from Ch. 127, par. 526.2)
7 Sec. 6.2. When the Director, with the advice and consent
8 of the Commission, determines that it would be in the best
9 interests of the State and its employees, the program of
10 health benefits under this Act may be administered with the
11 State as a self-insurer in whole or in part. The State
12 assumes the risks of the program. The State may provide the
13 administrative services in connection with the self-insurance
14 health plan or purchase administrative services from an
15 administrative service organization. A plan of self-insurance
16 may combine forms of re-insurance or stop-loss insurance
17 which limits the amount of State liability.
18 The program of health benefits shall provide a
19 continuation and conversion privilege for persons whose State
20 employment is terminated and a continuation privilege for
21 members' spouses and dependent children who are covered under
22 the provisions of the program, consistent with the
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1 requirements of federal law and Sections 367.2, and 367e, and
2 367e.1 of the Illinois Insurance Code.
3 (Source: P.A. 85-848.)
4 Section 5. The Illinois Insurance Code is amended by
5 changing Sections 245.25, 367.2, and 367e, by resectioning
6 Section 367e as Sections 367e and 367e.1, and by adding
7 Section 367.2-5 as follows:
8 (215 ILCS 5/245.25) (from Ch. 73, par. 857.25)
9 Sec. 245.25. Except for subparagraphs (1) (a), (1) (f),
10 (1) (g) and (3) of Section 226 of the Illinois Insurance
11 Code, in the case of a variable annuity contract and
12 subparagraphs (1) (b), (1) (f), (1) (g), (1) (h), (1) (i),
13 and (1) (k) of Section 224, subparagraph (1) (c) of Section
14 225, and subparagraph (h) of Section 231 in the case of a
15 variable life insurance policy, except for Sections 357.4,
16 357.5, and 367e, and 367e.1 in the case of a variable health
17 insurance policy, and except as otherwise provided in this
18 Article, all pertinent provisions of the Illinois Insurance
19 Code which are appropriate to those contracts apply to
20 separate accounts and contracts relating thereto. Any
21 individual variable life insurance contract, delivered or
22 issued for delivery in this State, must contain grace,
23 reinstatement and non-forfeiture provisions appropriate to
24 such a contract. Any individual variable annuity contract,
25 delivered or issued for delivery in this State, must contain
26 grace and reinstatement provisions appropriate to such a
27 contract. Any group variable life insurance contract,
28 delivered or issued for delivery in this State, must contain
29 a grace provision appropriate to such a contract. A group
30 variable health insurance contract delivered or issued for
31 delivery in this State must contain a continuation of group
32 coverage provision appropriate to the contract. The reserve
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1 liability for variable contracts must be established in
2 accordance with actuarial procedures that recognize the
3 variable nature of the benefits provided and any mortality
4 guarantees.
5 (Source: P.A. 90-381, eff. 8-14-97.)
6 (215 ILCS 5/367.2) (from Ch. 73, par. 979.2)
7 Sec. 367.2. Spousal continuation privilege; group
8 contracts.
9 A. No policy of group accident or health insurance, nor
10 any certificate thereunder shall be delivered or issued for
11 delivery in this State after December 1, 1985, unless the
12 policy provides for a continuation of the existing insurance
13 benefits for an employee's spouse and dependent children who
14 are insured under the provisions of that group policy or
15 certificate thereunder, notwithstanding that the marriage is
16 dissolved by judgment or terminated by the death of the
17 employee spouse or, after the effective date of this
18 amendatory Act of the 93rd General Assembly 1991,
19 notwithstanding the retirement of the employee spouse
20 provided that the employee's spouse is at least 55 years of
21 age, in each case without any other eligibility requirements.
22 The provisions of this amendatory Act of the 93rd General
23 Assembly 1991 apply to every group policy of accident or
24 health insurance and every certificate issued thereunder
25 delivered or issued for delivery after the effective date of
26 this amendatory Act of the 93rd General Assembly 1991.
27 B. Within 30 days of the entry of judgment or the death
28 or retirement of the employee spouse, the spouse of an
29 employee insured under the policy who seeks a continuation of
30 coverage thereunder shall give the employer or and the
31 insurer written notice of the dissolution of the marriage or
32 the death or retirement of the employee spouse. The
33 employer, within 15 days of receipt of the notice shall give
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1 written notice of the dissolution of the employee's marriage
2 or the death or retirement of the employee and that former
3 spouse's or retired employee's spouse's residence, to the
4 insurance company issuing the policy., of the dissolution of
5 the employee's marriage or the death or retirement of the
6 employee spouse and the former or retired employee's spouse's
7 residence.
8 The employer shall immediately send a copy of the notice
9 to the former spouse of the employee or the spouse of the
10 retired employee at the retired employee's spouse's residence
11 or at the former spouse's residence. For purposes of this
12 Act, the term "former spouse" includes "widow" or "widower".
13 C. Within 30 days after the date of receipt of a notice
14 from the employer, retired employee's spouse or former spouse
15 or of the initiation of a new group policy, the insurance
16 company, by certified mail, return receipt requested, shall
17 notify the retired employee's spouse or former spouse at his
18 or her residence that the policy may be continued for as to
19 that retired employee's spouse or former spouse and covered
20 dependents, and the notice shall include:
21 (i) a form for election to continue the insurance
22 coverage;
23 (ii) the amount of periodic premiums to be charged
24 for continuation coverage and the method and place of
25 payment; and
26 (iii) instructions for returning the election form
27 by certified mail, return receipt requested, within 30
28 days after the date it is received from of the mailing
29 receipt of the instruction by the insurance company.
30 Failure of the retired employee's spouse or former spouse
31 to exercise the election to continue insurance coverage by
32 notifying the insurance company in writing by certified mail,
33 return receipt requested, within such 30 day period shall
34 terminate the continuation of benefits and the right to
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1 continuation.
2 If the insurance company fails to notify the retired
3 employee's spouse or former spouse as provided for in
4 subsection C hereof, all premiums shall be waived from the
5 date the notice was required until notice is sent, and the
6 benefits shall continue under the terms and provisions of the
7 policy, from the date the notice was required until the
8 notice is sent, notwithstanding any other provision hereof,
9 except where the benefits in existence at the time the
10 company's notice was to be sent pursuant to subsection C are
11 terminated as to all employees.
12 D. With respect to a former spouse who has not attained
13 the age of 55 at the time continuation coverage begins
14 hereunder, the monthly premium for continuation shall be
15 computed as follows:
16 (i) an amount, if any, that would be charged an
17 employee if the former spouse were a current employee of
18 the employer, plus;
19 (ii) an amount, if any, that the employer would
20 contribute toward the premium if the former spouse were a
21 current employee.
22 Failure to pay the initial monthly premium within 30 days
23 after the date of receipt of notice required in subsection C
24 of this Section terminates the continuation benefits and the
25 right to continuation benefits.
26 The continuation coverage for right granted hereunder to
27 former spouses who have not attained the age of 55 at the
28 time coverage begins hereunder shall terminate upon the
29 earliest to happen of the following:
30 (i) The failure to pay premiums when due, including
31 any grace period allowed by the policy; or
32 (ii) When coverage would terminate under the terms
33 of the existing policy if the employee and former spouse
34 were still married to each other; however, the existing
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1 coverage shall not be modified or terminated during the
2 first 120 consecutive days subsequent to the employee
3 spouse's death or to the entry of the judgment dissolving
4 the marriage existing between the employee and the former
5 spouse unless the master policy in existence at the time
6 is modified or terminated as to all employees; or
7 (iii) the date on which the former spouse first
8 becomes, after the date of election, an insured employee
9 under any other group health plan; or
10 (iv) the date on which the former spouse remarries;
11 or
12 (v) the expiration of 2 years from the date
13 continuation coverage began hereunder.
14 Upon the termination of continuation coverage hereunder,
15 the former spouse shall be entitled to convert the coverage
16 to an individual policy.
17 The continuation rights granted to former spouses who
18 have not attained age 55 shall also include eligible
19 dependents insured prior to the dissolution of marriage or
20 the death of the employee.
21 E. With respect to a retired employee's spouse or former
22 spouse who has attained the age of 55 at the time
23 continuation coverage begins hereunder, the monthly premium
24 for the continuation shall be computed as follows:
25 (i) an amount, if any, that would be charged an
26 employee if the retired employee's spouse or former
27 spouse were a current employee of the employer, plus;
28 (ii) an amount, if any, that the employer would
29 contribute toward the premium if the retired employee's
30 spouse or former spouse were a current employee.
31 Beginning 2 years after coverage begins under this
32 paragraph, the monthly premium shall be computed as follows:
33 (i) an amount, if any, that would be charged an
34 employee if the retired employee's spouse or former
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1 spouse were a current employee of the employer, plus;
2 (ii) an amount, if any, that the employer would
3 contribute toward the premium if the retired employee's
4 spouse or former spouse were a current employee.
5 (iii) an additional amount, not to exceed 20% of
6 (i) and (ii) above, for costs of administration.
7 Failure to pay the initial monthly premium within 30 days
8 after the date of receipt of the notice required in
9 subsection C of this Section terminates the continuation
10 benefits and the right to continuation benefits.
11 The continuation coverage for right granted to retired
12 employees' spouses and former spouses who have attained the
13 age of 55 at the time coverage begins hereunder shall
14 terminate upon the earliest to happen of the following:
15 (i) The failure to pay premiums when due, including
16 any grace period allowed by the policy; or
17 (ii) When coverage would terminate, except due to
18 the retirement of an employee, under the terms of the
19 existing policy if the employee and former spouse were
20 still married to each other; however, the existing
21 coverage shall not be modified or terminated during the
22 first 120 consecutive days subsequent to the employee
23 spouse's death or retirement to the entry of the judgment
24 dissolving the marriage existing between the employee and
25 the former spouse unless the master policy in existence
26 at the time is modified or terminated as to all
27 employees; or
28 (iii) the date on which the retired employee's
29 spouse or former spouse first becomes, after the date of
30 election, an insured employee under any other group
31 health plan; or
32 (iv) the date on which the former spouse remarries;
33 or
34 (v) the date that person reaches the qualifying age
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1 or otherwise establishes eligibility under the Medicare
2 Program pursuant to Title XVIII of the federal Social
3 Security Act.
4 Upon the termination of continuation coverage hereunder,
5 the former spouse shall be entitled to convert the coverage
6 to an individual policy.
7 The continuation rights granted to former spouses who
8 have attained age 55 shall also include eligible dependents
9 insured prior to the dissolution of marriage, the death of
10 the employee, or the retirement of the employee.
11 F. The renewal, amendment, or extension of any group
12 policy affected by this Section shall be deemed to be
13 delivery or issuance for delivery of a new policy or contract
14 of insurance in this State.
15 G. If (i) the policy is canceled cancelled, and (ii)
16 another insurance company contracts to provide group health
17 and accident insurance to the employer, and (iii)
18 continuation coverage is in effect for the retired employee's
19 spouse or former spouse at the time of cancellation and (iv)
20 the employee is or would have been included under the new
21 group policy, then the new insurer must also offer
22 continuation coverage to the retired employee's spouse and to
23 an employee's former spouse under the same terms and
24 conditions as contained in this Section.
25 H. This Section shall not limit the right of the retired
26 employee's spouse or any former spouse to exercise the
27 privilege to convert to an individual policy as contained in
28 this Code.
29 I. No person who obtains coverage under this Section
30 shall be required to pay a rate greater than that applicable
31 to any employee or member covered under that group except as
32 provided in clause (iii) of the second paragraph of
33 subsection E.
34 (Source: P.A. 87-615.)
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1 (215 ILCS 5/367.2-5 new)
2 Sec. 367.2-5. Dependent child continuation privilege;
3 group contracts.
4 (a) No policy of group accident or health insurance, nor
5 any certificate thereunder shall be amended, renewed,
6 delivered, or issued for delivery in this State after July 1,
7 2004, unless the policy provides for a continuation of the
8 existing insurance benefits for an employee's dependent child
9 who is insured under the provisions of that group policy or
10 certificate in the event of the death of the employee and the
11 child is not eligible for coverage as a dependent under the
12 provisions of Section 367.2 or the dependent child has
13 attained the limiting age under the policy.
14 (b) In the event of the death of the employee, if
15 continuation coverage is desired, the dependent child or a
16 responsible adult acting on behalf of the dependent child
17 shall give the employer or the insurer written notice of the
18 death of employee within 30 days of the date the coverage
19 terminates. The employer, within 15 days of receipt of the
20 notice, shall give written notice to the insurance company
21 issuing the policy of the death of the employee and the
22 dependent child's residence. The employer shall immediately
23 send a copy of the notice to the dependent child or
24 responsible adult at the dependent child's residence.
25 (c) In the event of the dependent child attaining the
26 limiting age under the policy, if continuation coverage is
27 desired, the dependent child shall give the employer or the
28 insurer written notice of the attainment of the limiting age
29 within 30 days of the date the coverage terminates. The
30 employer, within 15 days of receipt of the notice, shall give
31 written notice to the insurance company issuing the policy of
32 the attainment of the limiting age by the dependent child and
33 of the dependent child's residence.
34 (d) Within 30 days after the date of receipt of a notice
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1 from the employer, dependent child, or responsible adult
2 acting on behalf of the dependent child, or of the initiation
3 of a new group policy, the insurance company, by certified
4 mail, return receipt requested, shall notify the dependent
5 child or responsible adult at the dependent child's residence
6 that the policy may be continued for the dependent child.
7 The notice shall include:
8 (1) a form for election to continue the insurance
9 coverage;
10 (2) the amount of periodic premiums to be charged
11 for continuation coverage and the method and place of
12 payment; and
13 (3) instructions for returning the election form
14 within 30 days after the date it is received from the
15 insurance company.
16 Failure of the dependent child or the responsible adult
17 acting on behalf of the dependent child to exercise the
18 election to continue insurance coverage by notifying the
19 insurance company in writing within such 30 day period shall
20 terminate the continuation of benefits and the right to
21 continuation.
22 If the insurance company fails to notify the dependent
23 child or responsible adult acting on behalf of the dependent
24 child as provided for in this subsection (d), all premiums
25 shall be waived from the date the notice was required until
26 notice was sent, and the benefits shall continue under the
27 terms and provisions of the policy, from the date the notice
28 was required until the notice was sent, notwithstanding any
29 other provision hereof, except where the benefits in
30 existence at the time the company's notice was to be sent
31 pursuant to this subsection (d) are terminated as to all
32 employees.
33 (e) The monthly premium for continuation shall be
34 computed as follows:
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1 (1) an amount, if any, that would be charged an
2 employee if the dependent child were a current employee
3 of the employer, plus;
4 (2) an amount, if any, that the employer would
5 contribute toward the premium if the dependent child were
6 a current employee.
7 Failure to pay the initial monthly premium within 30 days
8 after the date of receipt of notice required in subsection
9 (d) of this Section terminates the continuation benefits and
10 the right to continuation benefits.
11 Continuation coverage provided under this Act shall
12 terminate upon the earliest to happen of the following:
13 (1) the failure to pay premiums when due, including
14 any grace period allowed by the policy;
15 (2) when coverage would terminate under the terms
16 of the existing policy if the dependent child was still
17 an eligible dependent of the employee;
18 (3) the date on which the dependent child first
19 becomes, after the date of election, an insured employee
20 under any other group health plan; or
21 (4) the expiration of 2 years from the date
22 continuation coverage began.
23 Upon the termination of continuation coverage, the
24 dependent child shall be entitled to convert the coverage to
25 an individual policy.
26 (f) The renewal, amendment, or extension of any group
27 policy affected by this Section shall be deemed to be
28 delivery or issuance for delivery of a new policy or contract
29 of insurance in this State.
30 (g) If (1) the policy is cancelled, and (2) another
31 insurance company contracts to provide group health and
32 accident insurance to the employer, and (3) continuation
33 coverage is in effect for the dependent child at the time of
34 cancellation, and (4) the employee is or would have been
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1 included under the new group policy, then the new insurer
2 must also offer continuation coverage to the dependent child
3 under the same terms and conditions as contained in this
4 Section.
5 (h) This Section shall not limit the right of any
6 dependent child to exercise the privilege to convert to an
7 individual policy as contained in this Code.
8 (i) No person who obtains coverage under this Section
9 shall be required to pay a rate greater than that applicable
10 to any employee or member covered under that group.
11 (215 ILCS 5/367e) (from Ch. 73, par. 979e)
12 Sec. 367e. Continuation of Group Hospital, Surgical and
13 Major Medical Coverage After Termination of Employment or
14 Membership.
15 A group policy delivered, issued for delivery, renewed or
16 amended in this state which insures employees or members for
17 hospital, surgical or major medical insurance on an expense
18 incurred or service basis, other than for specific diseases
19 or for accidental injuries only, shall provide that employees
20 or members whose insurance under the group policy would
21 otherwise terminate because of termination of employment or
22 membership or because of a reduction in hours below the
23 minimum required by the group plan shall be entitled to
24 continue their hospital, surgical and major medical insurance
25 under that group policy, for themselves and their eligible
26 dependents, subject to all of the group policy's terms and
27 conditions applicable to those forms of insurance and to the
28 following conditions:
29 1. Continuation shall only be available to an employee
30 or member who has been continuously insured under the group
31 policy (and for similar benefits under any group policy which
32 it replaced) during the entire 3 months period ending with
33 such termination or reduction in hours below the minimum
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1 required by the group plan.
2 2. Continuation shall not be available for any person
3 who is covered by Medicare, except for those individuals who
4 have been covered under a group Medicare supplement policy.
5 Neither shall continuation be available for any person who is
6 covered by any other insured or uninsured plan which provides
7 hospital, surgical or medical coverage for individuals in a
8 group and under which the person was not covered immediately
9 prior to such termination or reduction in hours below the
10 minimum required by the group plan or who exercises his
11 conversion privilege under the group policy.
12 3. Continuation need not include dental, vision care,
13 prescription drug benefits, disability income, specified
14 disease, or similar supplementary benefits which are provided
15 under the group policy in addition to its hospital, surgical
16 or major medical benefits.
17 4. Upon termination or reduction in hours below the
18 minimum required by the group plan written notice of
19 continuation shall be presented to the employee or member by
20 the employer or mailed by the employer to the last known
21 address of the employee. An employee or member who wishes
22 continuation of coverage must request such continuation in
23 writing within the ten-day period following the later of: (i)
24 the date of such termination or reduction in hours below the
25 minimum required by the group plan, or (ii) the date the
26 employee is given written notice of the right of continuation
27 by either the employer or the group policyholder. In no
28 event, however, may the employee or member elect continuation
29 more than 60 days after the date of such termination or
30 reduction in hours below the minimum required by the group
31 plan. Written notice of continuation presented to the
32 employee or member by the policyholder, or mailed by the
33 policyholder to the last known address of the employee, shall
34 constitute the giving of notice for the purpose of this
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1 provision.
2 5. An employee or member electing continuation must pay
3 to the group policyholder or his employer, on a monthly basis
4 in advance, the total amount of premium required by the
5 insurer, including that portion of the premium contributed by
6 the policyholder or employer, if any, but not more than the
7 group rate for the insurance being continued with appropriate
8 reduction in premium for any supplementary benefits which
9 have been discontinued under paragraph (3) of this Section.
10 The premium rate required by the insurer shall be the
11 applicable premium required on the due date of each payment.
12 6. Continuation of insurance under the group policy for
13 any person shall terminate when he becomes eligible for
14 Medicare or is covered by any other insured or uninsured plan
15 which provides hospital, surgical or medical coverage for
16 individuals in a group and under which the person was not
17 covered immediately prior to such termination or reduction in
18 hours below the minimum required by the group plan as
19 provided in condition 2 above or, if earlier, at the first to
20 occur of the following:
21 (a) The date 9 months after the date the employee's
22 or member's insurance under the policy would otherwise
23 have terminated because of termination of employment or
24 membership or reduction in hours below the minimum
25 required by the group plan.
26 (b) If the employee or member fails to make timely
27 payment of a required contribution, the end of the period
28 for which contributions were made.
29 (c) The date on which the group policy is
30 terminated or, in the case of an employee, the date his
31 employer terminates participation under the group policy.
32 However, if this (c) applies and the coverage ceasing by
33 reason of such termination is replaced by similar
34 coverage under another group policy, the following shall
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1 apply:
2 (i) The employee or member shall have the
3 right to become covered under that other group
4 policy, for the balance of the period that he would
5 have remained covered under the prior group policy
6 in accordance with condition 6 had a termination
7 described in this (c) not occurred.
8 (ii) The prior group policy shall continue to
9 provide benefits to the extent of its accrued
10 liabilities and extensions of benefits as if the
11 replacement had not occurred.
12 7. A notification of the continuation privilege shall be
13 included in each certificate of coverage.
14 8. Continuation shall not be available for any employee
15 who was discharged because of the commission of a felony in
16 connection with his work, or because of theft in connection
17 with his work, for which the employer was in no way
18 responsible; provided the employee admitted his commission of
19 the felony or theft or such act has resulted in a conviction
20 or order of supervision by a court of competent jurisdiction.
21 The requirements of this amendatory Act of 1983 shall
22 apply to any group policy as defined in this Section,
23 delivered or issued for delivery on or after 180 days
24 following the effective date of this amendatory Act of 1983.
25 The requirements of this amendatory Act of 1985 shall
26 apply to any group policy as defined in this Section,
27 delivered, issued for delivery, renewed or amended on or
28 after 180 days following the effective date of this
29 amendatory Act of 1985.
30 (Source: P.A. 85-210; 86-1475.)
31 (215 ILCS 5/367e.1 new)
32 Sec. 367e.1. Group Accident and Health Insurance
33 Conversion Privilege.
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1 (A) A group policy which provides hospital, medical, or
2 major medical expense insurance, or any combination of these
3 coverages, on an expense-incurred basis, but not including a
4 policy which provides benefits for specific diseases or for
5 accidental injuries only, shall provide that an employee or
6 member (i) whose insurance under the group policy has been
7 terminated for any reason other than discontinuance of the
8 group policy in its entirety where there is a succeeding
9 carrier, or failure of the employee or member to pay any
10 required contribution; and (ii) who has been continuously
11 insured under the group policy (and under any group policy
12 providing similar benefits which it replaces) for at least
13 three months immediately prior to termination, shall be
14 entitled to have issued to him by the insurer a policy of
15 health insurance (hereafter referred to as the converted
16 policy), subject to the following conditions:
17 (1) Written application for the converted policy
18 shall be made and the first premium paid to the insurer
19 not later than the latter of (i) thirty-one days after
20 such termination or (ii) 15 days after the employee or
21 member has been given written notice of the existence of
22 the conversion privilege, but in no event later than 60
23 days after such termination.
24 Written notice presented to the employee or member by
25 the policyholder, or mailed by the policyholder to the
26 last known address of the employee or member, shall
27 constitute the giving of notice for the purpose of this
28 provision.
29 (2) The converted policy shall be issued without
30 evidence of insurability.
31 (3) The initial premium for the converted policy
32 shall be determined in accordance with the insurer's
33 table of premium rates applicable to the age and class of
34 risk of each person to be covered under the converted
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1 policy and to the type and amount of the insurance
2 provided. Conditions pertaining to health shall not be an
3 acceptable basis of classification for the purposes of
4 this subsection. The frequency of premium payment shall
5 be the frequency customarily required by the insurer for
6 the policy form and plan selected, provided that the
7 insurer shall not require premium payments less
8 frequently than quarterly without the consent of the
9 insured.
10 (4) The effective date of the converted policy
11 shall be the day following the termination of insurance
12 under the group policy.
13 (5) The converted policy shall cover the employee
14 or member and his dependents who were covered by the
15 group policy on the date of termination of insurance. At
16 the option of the insurer, a separate converted policy
17 may be issued to cover any dependent.
18 (6) The insurer shall not be required to issue a
19 converted policy covering any person if such person is or
20 could be covered by Medicare (Title XVIII of the United
21 States Social Security Act as added by the Social
22 Security Amendments of 1965 or as later amended or
23 superseded). Furthermore, the insurer shall not be
24 required to issue a converted policy covering any person
25 if (i) such person is covered for similar benefits by
26 another hospital, surgical, medical, or major medical
27 expense insurance policy or hospital or medical service
28 subscriber contract or medical practice or other
29 prepayment plan or by any other plan or program; or (ii)
30 such person is eligible for similar benefits (whether or
31 not covered therefor) under any arrangement of coverage
32 for individuals in a group, whether on an insured or
33 uninsured basis; or (iii) similar benefits are provided
34 for or available to such person, pursuant to or in
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1 accordance with the requirements of any statute, and the
2 benefits provided or available under the sources referred
3 to in (i), (ii), (iii) above for such person together
4 with the converted policy would result in overinsurance
5 according to the insurer's standards.
6 (7) In the event that coverage would be continued
7 under the group policy on an employee following his
8 retirement prior to the time he is or could be covered by
9 Medicare, he may elect, in lieu of such continuation of
10 such group insurance, to have the same conversion rights
11 as would apply had his insurance terminated at retirement
12 by reason of termination of employment or membership.
13 (8) Subject to the conditions set forth above, the
14 conversion privilege shall also be available (i) to the
15 surviving spouse, if any, at the death of the employee or
16 member, with respect to the spouse and such children
17 whose coverage under the group policy terminates by
18 reason of such death, otherwise to each surviving child
19 whose coverage under the group policy terminates by
20 reason of such death, or, if the group policy provides
21 for continuation of dependents' coverage following the
22 employee's or member's death, at the end of such
23 continuation; (ii) to the spouse of the employee or
24 member upon termination of coverage of the spouse, while
25 the employee or member remains insured under the group
26 policy, by reason of ceasing to be a qualified family
27 member under the group policy, with respect to the spouse
28 and such children whose coverage under the group policy
29 terminates at the same time; or (iii) to a child solely
30 with respect to himself upon termination of his coverage
31 by reason of ceasing to be a qualified family member
32 under the group policy, if a conversion privilege is not
33 otherwise provided above with respect to such
34 termination.
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1 (9) A notification of the conversion privilege
2 shall be included in each certificate.
3 (10) The insurer may elect to provide group
4 insurance coverage in lieu of the issuance of a converted
5 policy.
6 (B) A converted policy issued upon the exercise of the
7 conversion privilege required by subsection (A) of this
8 Section shall conform to the following minimum standards:
9 (1) If the group policy provided hospital,
10 surgical, or medical expense insurance, or a combination
11 thereof, the converted policy shall provide benefits on
12 an expense-incurred basis equal to the lesser of (i) the
13 hospital room and board, miscellaneous hospital, surgical
14 and medical benefits provided under the group policy; and
15 (ii) the corresponding benefits described below:
16 (a) Hospital room and board benefits in an
17 amount per day elected by the group policyholder,
18 but in no event less than 60% of the then average
19 semi-private hospital room and board charge in the
20 State, such benefits to be payable for a maximum of
21 not less than 70 days for any period of hospital
22 confinement, as defined in the converted policy.
23 (b) Miscellaneous hospital benefits for any
24 one period of hospital confinement in an amount up
25 to twenty times the hospital room and board daily
26 benefit provided under the converted policy.
27 (c) Surgical benefits according to a surgical
28 schedule providing a benefit amount elected by the
29 group policy holder, but in no event less than 60%
30 of the then average surgical charge in the State and
31 with a maximum amount appropriate thereto. The
32 maximum surgical benefit shall be applicable to all
33 surgical operations of an individual resulting from
34 or contributed to by the same and all related causes
-20- LRB093 09245 RLC 15282 a
1 occurring in one period of disability. Two or more
2 surgical procedures performed in the course of a
3 single operation through the same incision, or in
4 the same natural body orifice, may be treated as one
5 surgical procedure with the payment determined by
6 the scheduled benefit for the most expensive
7 procedure performed. The surgical schedule shall be
8 consistent with the schedule of operations
9 customarily offered by the insurer under group or
10 individual health insurance policies.
11 (d) Non-surgical medical attendance benefits
12 for in-hospital services in an amount elected by the
13 group policyholder, but in no event less than 60% of
14 the then average in-hospital physician's visit
15 charge in the State, such benefits may be limited to
16 one visit per day of hospitalization and a maximum
17 number of visits numbering not less than seventy for
18 any period of hospital confinement as defined in the
19 converted policy.
20 (2) If the group policy provided major medical
21 insurance, the insurer may offer the insurance described
22 in (1) above only, major medical insurance only, or a
23 combination of the insurance described in (1) above and
24 major medical insurance. If the insurer elects to
25 provide major medical insurance, the converted policy
26 shall provide:
27 (a) A maximum benefit at least equal to (i) or
28 (ii) below:
29 (i) A maximum payment of twenty-five
30 thousand dollars for all covered medical
31 expenses incurred during the covered person's
32 lifetime with an annual restoration of the
33 lesser of, while coverage is in force, one
34 thousand dollars and the amount counted against
-21- LRB093 09245 RLC 15282 a
1 the maximum benefit which was not previously
2 restored; or
3 (ii) A maximum payment of twenty-five
4 thousand dollars for each unrelated injury or
5 illness.
6 (b) Payment of benefits for covered medical
7 expenses, in excess of the deductible, at a rate not
8 less than 80% except as otherwise permitted below.
9 (c) A deductible for each benefit period
10 which, at the option of the insurer, shall be (i)
11 the greater of $500 and the benefits deductible;
12 (ii) the sum of the benefits deductible and $100; or
13 (iii) the corresponding deductible in the group
14 policy. The term "benefit period," as used herein,
15 means, when the maximum payment is determined by (a)
16 (i) above, either a calendar year or a period of
17 twelve consecutive months; and, when the maximum
18 payment is determined by (a) (ii) above, a period of
19 twenty-four consecutive months. The term "benefits
20 deductible," as used herein, means the value of any
21 benefits provided on an expense-incurred basis which
22 are provided with respect to covered medical
23 expenses by any other hospital, surgical, or medical
24 insurance policy or hospital or medical service
25 subscriber contract of medical practice or other
26 prepayment plan, or any other plans or program
27 whether on an insured or uninsured basis, or of any
28 similar benefits which are provided or made
29 available pursuant to or in accordance with the
30 requirements of any statute and, if, pursuant to the
31 provisions of this subsection, the converted policy
32 provides both the coverage described in (1) above
33 and major medical insurance, the value of the
34 coverage described in (1) above. The insurer may
-22- LRB093 09245 RLC 15282 a
1 require that the deductible be satisfied during a
2 period of not less than three months. If the maximum
3 payment is determined by (a) (i) above, and if no
4 benefits become payable during the preceding benefit
5 period due to the cash deductible not being
6 satisfied; credit shall be given, in the succeeding
7 benefit period, to any expense applied toward the
8 cash deductible of the preceding benefit period and
9 incurred during the last three months of such
10 preceding benefit period, subject to any requirement
11 that the deductible be satisfied during a specified
12 period of time.
13 (d) The term "covered medical expenses," as
14 used above, may be limited (i) in the case of
15 hospital room and board benefits, maximum surgical
16 schedule, and non-surgical medical attendance
17 benefits to amounts not less than the amounts
18 provided in (1) (a), (1) (c) and (1) (d) above; and
19 (ii) in the case of mental and nervous condition
20 treatments while the patient is not a hospital
21 in-patient, to co-insurance of 50%, a maximum
22 benefit of $500 per calendar year or twelve
23 consecutive month periods subject to the inclusion
24 by the insurer of reasonable limits on the number of
25 visits and the maximum permissible expense per
26 visit.
27 (3) The converted policy may contain any exclusion,
28 reduction, or limitation contained in the group policy
29 and any exclusion, reduction, or limitation customarily
30 used in individual accident and health policies delivered
31 or issued for delivery in this state. It is not required
32 that the converted policy contain all of the covered
33 medical expenses or the same level of benefits as
34 provided in the group policy.
-23- LRB093 09245 RLC 15282 a
1 (4) The insurer may, at its option, also offer
2 alternative plans for group accident and health
3 conversion.
4 (5) The converted policy may only exclude a
5 pre-existing condition excluded by the group policy.
6 Any hospital, surgical, medical or major medical benefits
7 payable under the converted policy may be reduced by the
8 amount of any such benefits payable under the group
9 policy after the termination of the individual's
10 insurance thereunder and, during the first policy year of
11 such converted policy, the benefits payable under the
12 converted policy may be so reduced so that they are not
13 in excess of the benefits that would have been payable
14 had the individual's insurance under the group policy
15 remained in force and effect.
16 (6) The converted policy may provide for the
17 termination of coverage thereunder of any person when he
18 is or could be covered by Medicare (Title XVIII of the
19 United States Social Security Act as added by the Social
20 Security Amendments of 1965 or as later amended or
21 superseded).
22 (7) The converted policy may provide that the
23 insurer may request information from the converted
24 policyholder, in advance of any premium due date of the
25 converted policy, to determine whether any person covered
26 thereunder (i) is covered for similar benefits by another
27 hospital, surgical, medical, or major medical expense
28 insurance policy or hospital or medical service
29 subscriber contract or medical practice or other
30 prepayment plan or by any other plan or program; or (ii)
31 is eligible for similar benefits (whether or not covered
32 therefor) under any arrangement of coverage for
33 individuals in a group, whether on an insured or
34 uninsured basis; or (iii) has similar benefits provided
-24- LRB093 09245 RLC 15282 a
1 for or available to such person, pursuant to or in
2 accordance with the requirements of any statute. The
3 converted policy may also provide that the insurer need
4 not renew the converted policy or the coverage of any
5 person insured thereunder if either the benefits provided
6 or available under the sources referred to in (i), (ii),
7 (iii) above for such person, together with the converted
8 policy, would result in overinsurance according to the
9 insurer's standards, or if the converted policyholder
10 refuses to provide the requested information.
11 (8) The converted policy shall not contain any
12 provision allowing the insurer to non-renew due to a
13 change in the health of an insured.
14 (9) The converted policy may contain any provisions
15 permitted herein and may also include any other
16 provisions not expressly prohibited by law. Any
17 provisions required or permitted herein may be made a
18 part of the converted policy by means of an endorsement
19 or rider.
20 (10) In the conversion of group health insurance in
21 accordance with the provisions of subsection (A) above,
22 the insurer may, at its option, accomplish the conversion
23 by issuing one or more converted policies.
24 (11) With respect to any person who was covered by
25 the group policy, the period specified in the Time Limit
26 on Certain Defenses provisions of the converted policy
27 shall commence with the date the person's insurance
28 became effective under the group policy.
29 (12) If the insurer elects to provide group
30 insurance coverage in lieu of a converted policy, the
31 benefit levels required for a converted policy must be
32 applicable to such group insurance coverage.
33 (C) The requirements of this Section shall apply to any
34 group policy of accident and health insurance delivered,
-25- LRB093 09245 RLC 15282 a
1 issued for delivery, renewed or amended on or after 180 days
2 following the effective date of this Section.
3 (Source: P.A. 85-210; 86-1475.)
4 Section 7. The Comprehensive Health Insurance Plan Act
5 is amended by changing Section 2 as follows:
6 (215 ILCS 105/2) (from Ch. 73, par. 1302)
7 Sec. 2. Definitions. As used in this Act, unless the
8 context otherwise requires:
9 "Plan administrator" means the insurer or third party
10 administrator designated under Section 5 of this Act.
11 "Benefits plan" means the coverage to be offered by the
12 Plan to eligible persons and federally eligible individuals
13 pursuant to this Act.
14 "Board" means the Illinois Comprehensive Health Insurance
15 Board.
16 "Church plan" has the same meaning given that term in the
17 federal Health Insurance Portability and Accountability Act
18 of 1996.
19 "Continuation coverage" means continuation of coverage
20 under a group health plan or other health insurance coverage
21 for former employees or dependents of former employees that
22 would otherwise have terminated under the terms of that
23 coverage pursuant to any continuation provisions under
24 federal or State law, including the Consolidated Omnibus
25 Budget Reconciliation Act of 1985 (COBRA), as amended,
26 Sections 367.2, and 367e, and 367e.1 of the Illinois
27 Insurance Code, or any other similar requirement in another
28 State.
29 "Covered person" means a person who is and continues to
30 remain eligible for Plan coverage and is covered under one of
31 the benefit plans offered by the Plan.
32 "Creditable coverage" means, with respect to a federally
-26- LRB093 09245 RLC 15282 a
1 eligible individual, coverage of the individual under any of
2 the following:
3 (A) A group health plan.
4 (B) Health insurance coverage (including group
5 health insurance coverage).
6 (C) Medicare.
7 (D) Medical assistance.
8 (E) Chapter 55 of title 10, United States Code.
9 (F) A medical care program of the Indian Health
10 Service or of a tribal organization.
11 (G) A state health benefits risk pool.
12 (H) A health plan offered under Chapter 89 of title
13 5, United States Code.
14 (I) A public health plan (as defined in regulations
15 consistent with Section 104 of the Health Care
16 Portability and Accountability Act of 1996 that may be
17 promulgated by the Secretary of the U.S. Department of
18 Health and Human Services).
19 (J) A health benefit plan under Section 5(e) of the
20 Peace Corps Act (22 U.S.C. 2504(e)).
21 (K) Any other qualifying coverage required by the
22 federal Health Insurance Portability and Accountability
23 Act of 1996, as it may be amended, or regulations under
24 that Act.
25 "Creditable coverage" does not include coverage
26 consisting solely of coverage of excepted benefits, as
27 defined in Section 2791(c) of title XXVII of the Public
28 Health Service Act (42 U.S.C. 300 gg-91), nor does it include
29 any period of coverage under any of items (A) through (K)
30 that occurred before a break of more than 90 days during all
31 of which the individual was not covered under any of items
32 (A) through (K) above. Any period that an individual is in a
33 waiting period for any coverage under a group health plan (or
34 for group health insurance coverage) or is in an affiliation
-27- LRB093 09245 RLC 15282 a
1 period under the terms of health insurance coverage offered
2 by a health maintenance organization shall not be taken into
3 account in determining if there has been a break of more than
4 90 days in any creditable coverage.
5 "Department" means the Illinois Department of Insurance.
6 "Dependent" means an Illinois resident: who is a spouse;
7 or who is claimed as a dependent by the principal insured for
8 purposes of filing a federal income tax return and resides in
9 the principal insured's household, and is a resident
10 unmarried child under the age of 19 years; or who is an
11 unmarried child who also is a full-time student under the age
12 of 23 years and who is financially dependent upon the
13 principal insured; or who is a child of any age and who is
14 disabled and financially dependent upon the principal
15 insured.
16 "Direct Illinois premiums" means, for Illinois business,
17 an insurer's direct premium income for the kinds of business
18 described in clause (b) of Class 1 or clause (a) of Class 2
19 of Section 4 of the Illinois Insurance Code, and direct
20 premium income of a health maintenance organization or a
21 voluntary health services plan, except it shall not include
22 credit health insurance as defined in Article IX 1/2 of the
23 Illinois Insurance Code.
24 "Director" means the Director of the Illinois Department
25 of Insurance.
26 "Eligible person" means a resident of this State who
27 qualifies for Plan coverage under Section 7 of this Act.
28 "Employee" means a resident of this State who is employed
29 by an employer or has entered into the employment of or works
30 under contract or service of an employer including the
31 officers, managers and employees of subsidiary or affiliated
32 corporations and the individual proprietors, partners and
33 employees of affiliated individuals and firms when the
34 business of the subsidiary or affiliated corporations, firms
-28- LRB093 09245 RLC 15282 a
1 or individuals is controlled by a common employer through
2 stock ownership, contract, or otherwise.
3 "Employer" means any individual, partnership,
4 association, corporation, business trust, or any person or
5 group of persons acting directly or indirectly in the
6 interest of an employer in relation to an employee, for which
7 one or more persons is gainfully employed.
8 "Family" coverage means the coverage provided by the Plan
9 for the covered person and his or her eligible dependents who
10 also are covered persons.
11 "Federally eligible individual" means an individual
12 resident of this State:
13 (1)(A) for whom, as of the date on which the
14 individual seeks Plan coverage under Section 15 of this
15 Act, the aggregate of the periods of creditable coverage
16 is 18 or more months, and (B) whose most recent prior
17 creditable coverage was under group health insurance
18 coverage offered by a health insurance issuer, a group
19 health plan, a governmental plan, or a church plan (or
20 health insurance coverage offered in connection with any
21 such plans) or any other type of creditable coverage that
22 may be required by the federal Health Insurance
23 Portability and Accountability Act of 1996, as it may be
24 amended, or the regulations under that Act;
25 (2) who is not eligible for coverage under (A) a
26 group health plan, (B) part A or part B of Medicare due
27 to age, or (C) medical assistance, and does not have
28 other health insurance coverage;
29 (3) with respect to whom the most recent coverage
30 within the coverage period described in paragraph (1)(A)
31 of this definition was not terminated based upon a factor
32 relating to nonpayment of premiums or fraud;
33 (4) if the individual had been offered the option
34 of continuation coverage under a COBRA continuation
-29- LRB093 09245 RLC 15282 a
1 provision or under a similar State program, who elected
2 such coverage; and
3 (5) who, if the individual elected such
4 continuation coverage, has exhausted such continuation
5 coverage under such provision or program.
6 "Group health insurance coverage" means, in connection
7 with a group health plan, health insurance coverage offered
8 in connection with that plan.
9 "Group health plan" has the same meaning given that term
10 in the federal Health Insurance Portability and
11 Accountability Act of 1996.
12 "Governmental plan" has the same meaning given that term
13 in the federal Health Insurance Portability and
14 Accountability Act of 1996.
15 "Health insurance coverage" means benefits consisting of
16 medical care (provided directly, through insurance or
17 reimbursement, or otherwise and including items and services
18 paid for as medical care) under any hospital and medical
19 expense-incurred policy, certificate, or contract provided by
20 an insurer, non-profit health care service plan contract,
21 health maintenance organization or other subscriber contract,
22 or any other health care plan or arrangement that pays for or
23 furnishes medical or health care services whether by
24 insurance or otherwise. Health insurance coverage shall not
25 include short term, accident only, disability income,
26 hospital confinement or fixed indemnity, dental only, vision
27 only, limited benefit, or credit insurance, coverage issued
28 as a supplement to liability insurance, insurance arising out
29 of a workers' compensation or similar law, automobile
30 medical-payment insurance, or insurance under which benefits
31 are payable with or without regard to fault and which is
32 statutorily required to be contained in any liability
33 insurance policy or equivalent self-insurance.
34 "Health insurance issuer" means an insurance company,
-30- LRB093 09245 RLC 15282 a
1 insurance service, or insurance organization (including a
2 health maintenance organization and a voluntary health
3 services plan) that is authorized to transact health
4 insurance business in this State. Such term does not include
5 a group health plan.
6 "Health Maintenance Organization" means an organization
7 as defined in the Health Maintenance Organization Act.
8 "Hospice" means a program as defined in and licensed
9 under the Hospice Program Licensing Act.
10 "Hospital" means a duly licensed institution as defined
11 in the Hospital Licensing Act, an institution that meets all
12 comparable conditions and requirements in effect in the state
13 in which it is located, or the University of Illinois
14 Hospital as defined in the University of Illinois Hospital
15 Act.
16 "Individual health insurance coverage" means health
17 insurance coverage offered to individuals in the individual
18 market, but does not include short-term, limited-duration
19 insurance.
20 "Insured" means any individual resident of this State who
21 is eligible to receive benefits from any insurer (including
22 health insurance coverage offered in connection with a group
23 health plan) or health insurance issuer as defined in this
24 Section.
25 "Insurer" means any insurance company authorized to
26 transact health insurance business in this State and any
27 corporation that provides medical services and is organized
28 under the Voluntary Health Services Plans Act or the Health
29 Maintenance Organization Act.
30 "Medical assistance" means the State medical assistance
31 or medical assistance no grant (MANG) programs provided under
32 Title XIX of the Social Security Act and Articles V (Medical
33 Assistance) and VI (General Assistance) of the Illinois
34 Public Aid Code (or any successor program) or under any
-31- LRB093 09245 RLC 15282 a
1 similar program of health care benefits in a state other than
2 Illinois.
3 "Medically necessary" means that a service, drug, or
4 supply is necessary and appropriate for the diagnosis or
5 treatment of an illness or injury in accord with generally
6 accepted standards of medical practice at the time the
7 service, drug, or supply is provided. When specifically
8 applied to a confinement it further means that the diagnosis
9 or treatment of the covered person's medical symptoms or
10 condition cannot be safely provided to that person as an
11 outpatient. A service, drug, or supply shall not be medically
12 necessary if it: (i) is investigational, experimental, or for
13 research purposes; or (ii) is provided solely for the
14 convenience of the patient, the patient's family, physician,
15 hospital, or any other provider; or (iii) exceeds in scope,
16 duration, or intensity that level of care that is needed to
17 provide safe, adequate, and appropriate diagnosis or
18 treatment; or (iv) could have been omitted without adversely
19 affecting the covered person's condition or the quality of
20 medical care; or (v) involves the use of a medical device,
21 drug, or substance not formally approved by the United States
22 Food and Drug Administration.
23 "Medical care" means the ordinary and usual professional
24 services rendered by a physician or other specified provider
25 during a professional visit for treatment of an illness or
26 injury.
27 "Medicare" means coverage under both Part A and Part B of
28 Title XVIII of the Social Security Act, 42 U.S.C. Sec. 1395,
29 et seq.
30 "Minimum premium plan" means an arrangement whereby a
31 specified amount of health care claims is self-funded, but
32 the insurance company assumes the risk that claims will
33 exceed that amount.
34 "Participating transplant center" means a hospital
-32- LRB093 09245 RLC 15282 a
1 designated by the Board as a preferred or exclusive provider
2 of services for one or more specified human organ or tissue
3 transplants for which the hospital has signed an agreement
4 with the Board to accept a transplant payment allowance for
5 all expenses related to the transplant during a transplant
6 benefit period.
7 "Physician" means a person licensed to practice medicine
8 pursuant to the Medical Practice Act of 1987.
9 "Plan" means the Comprehensive Health Insurance Plan
10 established by this Act.
11 "Plan of operation" means the plan of operation of the
12 Plan, including articles, bylaws and operating rules, adopted
13 by the board pursuant to this Act.
14 "Provider" means any hospital, skilled nursing facility,
15 hospice, home health agency, physician, registered pharmacist
16 acting within the scope of that registration, or any other
17 person or entity licensed in Illinois to furnish medical
18 care.
19 "Qualified high risk pool" has the same meaning given
20 that term in the federal Health Insurance Portability and
21 Accountability Act of 1996.
22 "Resident" means a person who is and continues to be
23 legally domiciled and physically residing on a permanent and
24 full-time basis in a place of permanent habitation in this
25 State that remains that person's principal residence and from
26 which that person is absent only for temporary or transitory
27 purpose.
28 "Skilled nursing facility" means a facility or that
29 portion of a facility that is licensed by the Illinois
30 Department of Public Health under the Nursing Home Care Act
31 or a comparable licensing authority in another state to
32 provide skilled nursing care.
33 "Stop-loss coverage" means an arrangement whereby an
34 insurer insures against the risk that any one claim will
-33- LRB093 09245 RLC 15282 a
1 exceed a specific dollar amount or that the entire loss of a
2 self-insurance plan will exceed a specific amount.
3 "Third party administrator" means an administrator as
4 defined in Section 511.101 of the Illinois Insurance Code who
5 is licensed under Article XXXI 1/4 of that Code.
6 (Source: P.A. 91-357, eff. 7-29-99; 91-735, eff. 6-2-00;
7 92-153, eff. 7-25-01.)
8 Section 10. The Health Maintenance Organization Act is
9 amended by changing Sections 4-9.2 and 5-3 as follows:
10 (215 ILCS 125/4-9.2) (from Ch. 111 1/2, par. 1409.2-2)
11 Sec. 4-9.2. Continuation of group HMO coverage after
12 termination of employee or membership. A group contract
13 delivered, issued for delivery, renewed, or amended in this
14 State that covers employees or members for health care
15 services shall provide that employees or members whose
16 coverage under the group contract would otherwise terminate
17 because of termination of employment or membership or because
18 of a reduction in hours below the minimum required by the
19 group contract shall be entitled to continue their coverage
20 under that group contract, for themselves and their eligible
21 dependents, subject to all of the group contract's terms and
22 conditions applicable to those forms of coverage and to the
23 following conditions:
24 (1) Continuation shall only be available to an
25 employee or member who has been continuously covered
26 under the group contract (and for similar benefits under
27 any group contract that it replaced) during the entire 3
28 month period ending with the termination of employment or
29 membership or reduction in hours below the minimum
30 required by the group contract.
31 (2) Continuation shall not be available for any
32 enrollee who is covered by Medicare, except for those
-34- LRB093 09245 RLC 15282 a
1 individuals who have been covered under a group Medicare
2 supplement policy. Continuation shall not be available
3 for any enrollee who is covered by any other insured or
4 uninsured plan that provides hospital, surgical, or
5 medical coverage for individuals in a group and under
6 which the enrollee was not covered immediately before
7 termination or reduction in hours below the minimum
8 required by the group contract or who exercises his or
9 her conversion privilege under the group policy.
10 (3) Continuation need not include dental, vision
11 care, prescription drug, or similar supplementary
12 benefits that are provided under the group contract in
13 addition to its basic health care services.
14 (4) Upon termination or reduction in hours below
15 the minimum required by the group contract, written
16 notice of continuation shall be presented to the employee
17 or member by the employer or mailed by the employer to
18 the last known address of the employee. An employee or
19 member who wishes continuation of coverage must request
20 continuation in writing within the 10 day period
21 following the later of (i) the date of termination or
22 reduction in hours below the minimum required by the
23 group contract or (ii) the date the employee is given
24 written notice of the right of continuation by either the
25 employer or the group policyholder. In no event, however,
26 shall the employee or member elect continuation more than
27 60 days after the date of termination or reduction in
28 hours below the minimum required by the group contract.
29 Written notice of continuation presented to the employee
30 or member by the policyholder, or mailed by the
31 policyholder to the last known address of the employee,
32 shall constitute the giving of notice for the purpose of
33 this paragraph.
34 (5) An employee or member electing continuation
-35- LRB093 09245 RLC 15282 a
1 must pay to the group policyholder or his employer, on a
2 monthly basis in advance, the total amount of premium
3 required by the HMO, including that portion of the
4 premium contributed by the policyholder or employer, if
5 any, but not more than the group rate for the coverage
6 being continued with appropriate reduction in premium for
7 any supplementary benefits that have been discontinued
8 under paragraph (3) of this Section. The premium rate
9 required by the HMO shall be the applicable premium
10 required on the due date of each payment.
11 (6) Continuation of coverage under the group
12 contract for any person shall terminate when the person
13 becomes eligible for Medicare or is covered by any other
14 insured or uninsured plan that provides hospital,
15 surgical, or medical coverage for individuals in a group
16 and under which the person was not covered immediately
17 before termination or reduction in hours below the
18 minimum required by the group contract as provided in
19 paragraph (2) of this Section or, if earlier, at the
20 first to occur of the following:
21 (a) The expiration of 9 months after the
22 employee's or member's coverage because of
23 termination of employment or membership or reduction
24 in hours below the minimum required by the group
25 contract.
26 (b) If the employee or member fails to make
27 timely payment of a required contribution, the end
28 of the period for which contributions were made.
29 (c) The date on which the group contract is
30 terminated or, in the case of an employee, the date
31 his or her employer terminates participation under
32 the group contract. If, however, this paragraph
33 applies and the coverage ceasing by reason of
34 termination is replaced by similar coverage under
-36- LRB093 09245 RLC 15282 a
1 another group contract, then (i) the employee or
2 member shall have the right to become covered under
3 the replacement group contract for the balance of
4 the period that he or she would have remained
5 covered under the prior group contract in accordance
6 with paragraph (6) had a termination described in
7 this item (c) not occurred and (ii) the prior group
8 contract shall continue to provide benefits to the
9 extent of its accrued liabilities and extensions of
10 benefits as if the replacement had not occurred.
11 (7) A notification of the continuation privilege
12 shall be included in each evidence of coverage.
13 (8) Continuation shall not be available for any
14 employee who was discharged because of the commission of
15 a felony in connection with his or her work, or because
16 of theft in connection with his or her work, for which
17 the employer was in no way responsible if the employee
18 (i) admitted to committing the felony or theft or (ii)
19 was convicted or placed under supervision by a court of
20 competent jurisdiction.
21 The requirements of this amendatory Act of 1992
22 shall apply to any group contract, as defined in this
23 Section, delivered or issued for delivery on or after 180
24 days following the effective date of this amendatory Act
25 of 1992.
26 (Source: P.A. 87-1090.)
27 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
28 Sec. 5-3. Insurance Code provisions.
29 (a) Health Maintenance Organizations shall be subject to
30 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
31 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
32 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x,
33 356y, 356z.2, 367.2, 367.2-5, 367i, 368a, 401, 401.1, 402,
-37- LRB093 09245 RLC 15282 a
1 403, 403A, 408, 408.2, 409, 412, 444, and 444.1, paragraph
2 (c) of subsection (2) of Section 367, and Articles IIA, VIII
3 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of the
4 Illinois Insurance Code.
5 (b) For purposes of the Illinois Insurance Code, except
6 for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
7 Health Maintenance Organizations in the following categories
8 are deemed to be "domestic companies":
9 (1) a corporation authorized under the Dental
10 Service Plan Act or the Voluntary Health Services Plans
11 Act;
12 (2) a corporation organized under the laws of this
13 State; or
14 (3) a corporation organized under the laws of
15 another state, 30% or more of the enrollees of which are
16 residents of this State, except a corporation subject to
17 substantially the same requirements in its state of
18 organization as is a "domestic company" under Article
19 VIII 1/2 of the Illinois Insurance Code.
20 (c) In considering the merger, consolidation, or other
21 acquisition of control of a Health Maintenance Organization
22 pursuant to Article VIII 1/2 of the Illinois Insurance Code,
23 (1) the Director shall give primary consideration
24 to the continuation of benefits to enrollees and the
25 financial conditions of the acquired Health Maintenance
26 Organization after the merger, consolidation, or other
27 acquisition of control takes effect;
28 (2)(i) the criteria specified in subsection (1)(b)
29 of Section 131.8 of the Illinois Insurance Code shall not
30 apply and (ii) the Director, in making his determination
31 with respect to the merger, consolidation, or other
32 acquisition of control, need not take into account the
33 effect on competition of the merger, consolidation, or
34 other acquisition of control;
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1 (3) the Director shall have the power to require
2 the following information:
3 (A) certification by an independent actuary of
4 the adequacy of the reserves of the Health
5 Maintenance Organization sought to be acquired;
6 (B) pro forma financial statements reflecting
7 the combined balance sheets of the acquiring company
8 and the Health Maintenance Organization sought to be
9 acquired as of the end of the preceding year and as
10 of a date 90 days prior to the acquisition, as well
11 as pro forma financial statements reflecting
12 projected combined operation for a period of 2
13 years;
14 (C) a pro forma business plan detailing an
15 acquiring party's plans with respect to the
16 operation of the Health Maintenance Organization
17 sought to be acquired for a period of not less than
18 3 years; and
19 (D) such other information as the Director
20 shall require.
21 (d) The provisions of Article VIII 1/2 of the Illinois
22 Insurance Code and this Section 5-3 shall apply to the sale
23 by any health maintenance organization of greater than 10% of
24 its enrollee population (including without limitation the
25 health maintenance organization's right, title, and interest
26 in and to its health care certificates).
27 (e) In considering any management contract or service
28 agreement subject to Section 141.1 of the Illinois Insurance
29 Code, the Director (i) shall, in addition to the criteria
30 specified in Section 141.2 of the Illinois Insurance Code,
31 take into account the effect of the management contract or
32 service agreement on the continuation of benefits to
33 enrollees and the financial condition of the health
34 maintenance organization to be managed or serviced, and (ii)
-39- LRB093 09245 RLC 15282 a
1 need not take into account the effect of the management
2 contract or service agreement on competition.
3 (f) Except for small employer groups as defined in the
4 Small Employer Rating, Renewability and Portability Health
5 Insurance Act and except for medicare supplement policies as
6 defined in Section 363 of the Illinois Insurance Code, a
7 Health Maintenance Organization may by contract agree with a
8 group or other enrollment unit to effect refunds or charge
9 additional premiums under the following terms and conditions:
10 (i) the amount of, and other terms and conditions
11 with respect to, the refund or additional premium are set
12 forth in the group or enrollment unit contract agreed in
13 advance of the period for which a refund is to be paid or
14 additional premium is to be charged (which period shall
15 not be less than one year); and
16 (ii) the amount of the refund or additional premium
17 shall not exceed 20% of the Health Maintenance
18 Organization's profitable or unprofitable experience with
19 respect to the group or other enrollment unit for the
20 period (and, for purposes of a refund or additional
21 premium, the profitable or unprofitable experience shall
22 be calculated taking into account a pro rata share of the
23 Health Maintenance Organization's administrative and
24 marketing expenses, but shall not include any refund to
25 be made or additional premium to be paid pursuant to this
26 subsection (f)). The Health Maintenance Organization and
27 the group or enrollment unit may agree that the
28 profitable or unprofitable experience may be calculated
29 taking into account the refund period and the immediately
30 preceding 2 plan years.
31 The Health Maintenance Organization shall include a
32 statement in the evidence of coverage issued to each enrollee
33 describing the possibility of a refund or additional premium,
34 and upon request of any group or enrollment unit, provide to
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1 the group or enrollment unit a description of the method used
2 to calculate (1) the Health Maintenance Organization's
3 profitable experience with respect to the group or enrollment
4 unit and the resulting refund to the group or enrollment unit
5 or (2) the Health Maintenance Organization's unprofitable
6 experience with respect to the group or enrollment unit and
7 the resulting additional premium to be paid by the group or
8 enrollment unit.
9 In no event shall the Illinois Health Maintenance
10 Organization Guaranty Association be liable to pay any
11 contractual obligation of an insolvent organization to pay
12 any refund authorized under this Section.
13 (Source: P.A. 91-357, eff. 7-29-99; 91-406, eff. 1-1-00;
14 91-549, eff. 8-14-99; 91-605, eff. 12-14-99; 91-788, eff.
15 6-9-00; 92-764, eff. 1-1-03.)
16 Section 15. The Voluntary Health Services Plans Act is
17 amended by changing Section 15.5 as follows:
18 (215 ILCS 165/15.5) (from Ch. 32, par. 609.5)
19 Sec. 15.5. Conversion Privilege-Group Type Contracts.
20 (1) Every service plan contract of a health service plan
21 corporation which provides that the continued coverage of a
22 beneficiary is contingent upon the continued employment or
23 membership of the subscriber with a particular employer,
24 union, or association shall further provide for the right of
25 said person to make application for an individual service
26 plan contract under the circumstances and in accordance with
27 the requirements set forth in Sections Section 367e and
28 367e.1 of the "Illinois Insurance Code". The application of
29 Sections Section 367e and 367e.1 of the Code shall not be
30 construed in such a manner as to require a health service
31 plan corporation to furnish a service or kind of benefit not
32 customarily provided by such corporation and which is
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1 inconsistent with the provision of this Act.
2 (2) The requirements of this Section shall apply to all
3 such contracts delivered, issued for delivery, renewed or
4 amended on or after 180 days following the effective date of
5 this Section.
6 (Source: P.A. 82-498.)".