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1     AN ACT concerning insurance.
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4     Section 5. The Illinois Insurance Code is amended by
5 changing Section 363 as follows:
6     (215 ILCS 5/363)  (from Ch. 73, par. 975)
7     Sec. 363. Medicare supplement policies; minimum standards.
8     (1) Except as otherwise specifically provided therein,
9 this Section and Section 363a of this Code shall apply to:
10         (a) all Medicare supplement policies and subscriber
11     contracts delivered or issued for delivery in this State on
12     and after January 1, 1989; and
13         (b) all certificates issued under group Medicare
14     supplement policies or subscriber contracts, which
15     certificates are issued or issued for delivery in this
16     State on and after January 1, 1989.
17     This Section shall not apply to "Accident Only" or
18 "Specified Disease" types of policies. The provisions of this
19 Section are not intended to prohibit or apply to policies or
20 health care benefit plans, including group conversion
21 policies, provided to Medicare eligible persons, which
22 policies or plans are not marketed or purported or held to be
23 Medicare supplement policies or benefit plans.



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1     (2) For the purposes of this Section and Section 363a, the
2 following terms have the following meanings:
3         (a) "Applicant" means:
4             (i) in the case of individual Medicare supplement
5         policy, the person who seeks to contract for insurance
6         benefits, and
7             (ii) in the case of a group Medicare policy or
8         subscriber contract, the proposed certificate holder.
9         (b) "Certificate" means any certificate delivered or
10     issued for delivery in this State under a group Medicare
11     supplement policy.
12         (c) "Medicare supplement policy" means an individual
13     policy of accident and health insurance, as defined in
14     paragraph (a) of subsection (2) of Section 355a of this
15     Code, or a group policy or certificate delivered or issued
16     for delivery in this State by an insurer, fraternal benefit
17     society, voluntary health service plan, or health
18     maintenance organization, other than a policy issued
19     pursuant to a contract under Section 1876 of the federal
20     Social Security Act (42 U.S.C. Section 1395 et seq.) or a
21     policy issued under a demonstration project specified in 42
22     U.S.C. Section 1395ss(g)(1), or any similar organization,
23     that is advertised, marketed, or designed primarily as a
24     supplement to reimbursements under Medicare for the
25     hospital, medical, or surgical expenses of persons
26     eligible for Medicare.



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1         (d) "Issuer" includes insurance companies, fraternal
2     benefit societies, voluntary health service plans, health
3     maintenance organizations, or any other entity providing
4     Medicare supplement insurance, unless the context clearly
5     indicates otherwise.
6         (e) "Medicare" means the Health Insurance for the Aged
7     Act, Title XVIII of the Social Security Amendments of 1965.
8     (3) No Medicare supplement insurance policy, contract, or
9 certificate, that provides benefits that duplicate benefits
10 provided by Medicare, shall be issued or issued for delivery in
11 this State after December 31, 1988. No such policy, contract,
12 or certificate shall provide lesser benefits than those
13 required under this Section or the existing Medicare Supplement
14 Minimum Standards Regulation, except where duplication of
15 Medicare benefits would result.
16     (4) Medicare supplement policies or certificates shall
17 have a notice prominently printed on the first page of the
18 policy or attached thereto stating in substance that the
19 policyholder or certificate holder shall have the right to
20 return the policy or certificate within 30 days of its delivery
21 and to have the premium refunded directly to him or her in a
22 timely manner if, after examination of the policy or
23 certificate, the insured person is not satisfied for any
24 reason.
25     (5) A Medicare supplement policy or certificate may not
26 deny a claim for losses incurred more than 6 months from the



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1 effective date of coverage for a preexisting condition. The
2 policy may not define a preexisting condition more
3 restrictively than a condition for which medical advice was
4 given or treatment was recommended by or received from a
5 physician within 6 months before the effective date of
6 coverage.
7     (6) An issuer of a Medicare supplement policy shall:
8         (a) not deny coverage to an applicant under 65 years of
9     age who meets any of the following criteria:
10             (i) becomes eligible for Medicare by reason of
11         disability if the person makes application for a
12         Medicare supplement policy within 6 months of the first
13         day on which the person enrolls for benefits under
14         Medicare Part B; for a person who is retroactively
15         enrolled in Medicare Part B due to a retroactive
16         eligibility decision made by the Social Security
17         Administration, the application must be submitted
18         within a 6-month period beginning with the month in
19         which the person received notice of retroactive
20         eligibility to enroll;
21             (ii) has Medicare and an employer group health plan
22         (either primary or secondary to Medicare) that
23         terminates or ceases to provide all such supplemental
24         health benefits;
25             (iii) is insured by a Medicare Advantage plan that
26         includes a Health Maintenance Organization, a



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1         Preferred Provider Organization, and a Private
2         Fee-For-Service or Medicare Select plan and the
3         applicant moves out of the plan's service area; the
4         insurer goes out of business, withdraws from the
5         market, or has its Medicare contract terminated; or the
6         plan violates its contract provisions or is
7         misrepresented in its marketing; or
8             (iv) is insured by a Medicare supplement policy and
9         the insurer goes out of business, withdraws from the
10         market, or the insurance company or agents
11         misrepresent the plan and the applicant is without
12         coverage;
13         (b) make available to persons eligible for Medicare by
14     reason of disability each type of Medicare supplement
15     policy the issuer makes available to persons eligible for
16     Medicare by reason of age;
17         (c) not charge individuals who become eligible for
18     Medicare by reason of disability and who are under the age
19     of 65 premium rates for any medical supplemental insurance
20     benefit plan offered by the issuer that exceed the issuer's
21     premium rates charged for that plan to individuals who are
22     age 65 or older; and
23         (d) provide the rights granted by items (a) through
24     (d), for 6 months after the effective date of this
25     amendatory Act of the 95th General Assembly, to any person
26     who had enrolled for benefits under Medicare Part B prior



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1     to this amendatory Act of the 95th General Assembly who
2     otherwise would have been eligible for coverage under item
3     (a).
4     (7) (6) The Director shall issue reasonable rules and
5 regulations for the following purposes:
6         (a) To establish specific standards for policy
7     provisions of Medicare policies and certificates. The
8     standards shall be in accordance with the requirements of
9     this Code. No requirement of this Code relating to minimum
10     required policy benefits, other than the minimum standards
11     contained in this Section and Section 363a, shall apply to
12     medicare supplement policies and certificates. The
13     standards may cover, but are not limited to the following:
14             (A) Terms of renewability.
15             (B) Initial and subsequent terms of eligibility.
16             (C) Non-duplication of coverage.
17             (D) Probationary and elimination periods.
18             (E) Benefit limitations, exceptions and
19         reductions.
20             (F) Requirements for replacement.
21             (G) Recurrent conditions.
22             (H) Definition of terms.
23             (I) Requirements for issuing rebates or credits to
24         policyholders if the policy's loss ratio does not
25         comply with subsection (7) of Section 363a.
26             (J) Uniform methodology for the calculating and



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1         reporting of loss ratio information.
2             (K) Assuring public access to loss ratio
3         information of an issuer of Medicare supplement
4         insurance.
5             (L) Establishing a process for approving or
6         disapproving proposed premium increases.
7             (M) Establishing a policy for holding public
8         hearings prior to approval of premium increases.
9             (N) Establishing standards for Medicare Select
10         policies.
11             (O) Prohibited policy provisions not otherwise
12         specifically authorized by statute that, in the
13         opinion of the Director, are unjust, unfair, or
14         unfairly discriminatory to any person insured or
15         proposed for coverage under a medicare supplement
16         policy or certificate.
17         (b) To establish minimum standards for benefits and
18     claims payments, marketing practices, compensation
19     arrangements, and reporting practices for Medicare
20     supplement policies.
21         (c) To implement transitional requirements of Medicare
22     supplement insurance benefits and premiums of Medicare
23     supplement policies and certificates to conform to
24     Medicare program revisions.
25 (Source: P.A. 88-313; 89-484, eff. 6-21-96.)