Illinois General Assembly - Full Text of HB3976
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Full Text of HB3976  97th General Assembly




State of Illinois
2011 and 2012


Introduced 1/11/2012, by Rep. Karen May


215 ILCS 5/44.1 new
805 ILCS 310/22  from Ch. 32, par. 326
805 ILCS 310/30 new

    Amends the Illinois Insurance Code. Sets forth provisions concerning health care cooperatives. Provides that in addition to all other provisions of the Article concerning domestic mutual companies, a company seeking to organize as a health care cooperative shall meet certain requirements. Sets forth provisions concerning the naming of and applications for entities seeking to organize as health care cooperatives. Amends the Co-operative Act. Exempts domestic mutual insurance companies licensed as health care cooperatives by the Director of Insurance from the prohibition against using the term "Co-operative" as part of a corporate or other business name or title without complying with the provisions of the Co-operative Act. Sets forth provisions concerning health benefit purchasing cooperatives. Provides that the purpose of a health benefit purchasing cooperative is to provide health care benefits for certain eligible individuals under a single group health care policy or plan through a contract between the health benefit purchasing cooperative and an insurer authorized to do health insurance business in the State. Sets forth provisions concerning the design, the articles, the membership basis and capital stock, the membership criteria, the health care benefits, and the annual progress report of health benefit purchasing cooperatives. Effective immediately.

LRB097 16441 RPM 61604 b





HB3976LRB097 16441 RPM 61604 b

1    AN ACT concerning insurance.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Insurance Code is amended by adding
5Section 44.1 as follows:
6    (215 ILCS 5/44.1 new)
7    Sec. 44.1. Health care cooperatives.
8    (a) In addition to all other provisions of this Article not
9in conflict with this Section, a company seeking to organize
10under this Article as a health care cooperative shall meet all
11of the following requirements:
12        (1) The company shall comply with all provisions
13    applicable to domestic mutual insurance companies under
14    this Code.
15        (2) The articles of incorporation of the company shall
16    demonstrate that the company is to be organized as a
17    nonprofit member corporation and that the governance of the
18    company shall be subject to a majority vote of all members.
19        (3) The activities of the company shall be limited to
20    the issuance of health care plans in the individual and
21    small group markets.
22        (4) Either the articles of incorporation or the bylaws
23    of the company shall incorporate ethics and conflict of



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1    interest standards and the governance requirements set
2    forth in Section 1322(c)(3)(C) of the federal Patient
3    Protection and Affordable Care Act.
4        (5) The company or a related entity or any predecessor
5    of either shall not have been a health insurance issuer on
6    July 16, 2009.
7        (6) The company shall not be sponsored by a State or
8    local government, any political subdivision thereof, or
9    any instrumentality of such government or political
10    subdivision.
11        (7) Excess surplus shall be used to lower premiums, to
12    improve benefits, or for other programs intended to improve
13    the quality of health care delivered to its members.
14        (8) No representative of a federal, State, or local
15    government, or any political instrumentality thereof, and
16    no representative of a company described in paragraph (5)
17    of subsection (a) of this Section may serve on the board of
18    directors of the company.
19    (b) Notwithstanding Section 37 of this Article, the
20corporate name of any organization seeking to organize under
21this Article as a health care cooperative need not contain the
22word "Mutual" but shall contain the phrase "Health Care
23Cooperative". The corporate name shall not be the same as, or
24deceptively similar to, the name of any domestic organization
25or of any foreign or alien organization authorized to transact
26business in this State.



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1    (c) A company seeking to be organized as a health care
2cooperative shall submit an application to the Director
3according to procedures and meeting such requirements as the
4Director shall adopt by rule. No company shall transact any
5business of insurance until it has received a certificate of
6authority as set forth in Section 51 of this Article.
7    Section 10. The Co-operative Act is amended by changing
8Section 22 and by adding Section 30 as follows:
9    (805 ILCS 310/22)  (from Ch. 32, par. 326)
10    Sec. 22. No corporation or association hereafter organized
11or doing business for profit in this State shall be entitled to
12use the term "Co-operative" as a part of its corporate or other
13business name or title unless it has complied with the
14provisions of this Act, except (1) a corporation organized
15under the Business Corporation Act of 1983 for the purpose of
16ownership or administration of residential property on a
17cooperative basis, or (2) a cooperative corporation organized
18under the General Not For Profit Corporation Act of 1986 or its
19predecessor or successor statutes, or (3) a domestic mutual
20insurance company licensed as a health care cooperative by the
21Director of Insurance under Article III of the Illinois
22Insurance Code. Any corporation or association violating the
23provision of this Section may be enjoined from doing business
24under such name at the instance of any shareholder of any



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1association or corporation organized under this Act.
2(Source: P.A. 95-368, eff. 8-23-07.)
3    (805 ILCS 310/30 new)
4    Sec. 30. Health benefit purchasing cooperative.
5    (a) Notwithstanding any other provisions of this Act,
6health benefit purchasing cooperatives may be organized under
7this Section by one or more persons.
8    (b) The purpose of a health benefit purchasing cooperative
9is to provide health care benefits for the individuals
10specified in subsection (h) of this Section, under a single
11group health care policy or plan through a contract between the
12health benefit purchasing cooperative and an insurer
13authorized to do health insurance business in this State.
14    (c) A health benefit purchasing cooperative shall be
15designed so that all of the following are accomplished:
16        (1) The members become better informed about health
17    care trends and cost increases.
18        (2) All members receive their health care benefits
19    under the group health care policy or plan negotiated under
20    subsection (h) of this Section.
21        (3) The members are actively engaged in designing
22    health care benefit options that are offered by the insurer
23    and that meet the needs of their community.
24        (4) The health insurance risk of all of the members is
25    pooled.



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1        (5) The members actively participate in health
2    improvement decisions for their community.
3    (d) The articles of a health benefit purchasing cooperative
4shall set forth the name and address of at least one
5incorporator who will act as the temporary board.
6    (e) Each health benefit purchasing cooperative shall be
7organized on a membership basis with no capital stock.
8    (f) Any person that does business in, is located in, has a
9principal office in, or resides in the geographic area in which
10a health benefit purchasing cooperative is organized, that
11meets the membership criteria established by the health benefit
12purchasing cooperative in its bylaws, and that pays the
13membership fee may be a member of the health benefit purchasing
15    (g) Each health benefit purchasing cooperative shall file
16its membership criteria, as well as any amendments to the
17criteria, with the Director.
18    (h) The health care benefits offered by a health benefit
19purchasing cooperative shall be negotiated between the health
20benefit purchasing cooperative and the insurer. Eligible
21members include:
22        (1) An individual who is a member, officer, or eligible
23    employee of a member of the health benefit purchasing
24    cooperative.
25        (2) A self-employed individual who is a member of the
26    health benefit purchasing cooperative.



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1        (3) A dependent of an individual under items (1) and
2    (2) of this subsection (h) who receives coverage.
3    (i) Each health benefit purchasing cooperative shall
4submit to the Director annually, no later than September 30, a
5report on the progress of the health benefit purchasing
6arrangement described in this Section.
7    (j) As used in this Section, "Director" means the Director
8of Insurance.
9    Section 99. Effective date. This Act takes effect upon
10becoming law.