Illinois General Assembly - Full Text of HB4574
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Full Text of HB4574  97th General Assembly




State of Illinois
2011 and 2012


Introduced 2/1/2012, by Rep. JoAnn D. Osmond


215 ILCS 122/5-3
215 ILCS 122/5-4 new
215 ILCS 122/5-5
215 ILCS 122/5-15
215 ILCS 122/5-16 new
215 ILCS 122/5-21 new
215 ILCS 122/5-25

    Amends the Illinois Health Benefits Exchange Law. Makes changes concerning the legislative intent of the Law. Sets forth definitions. Establishes the Illinois Health Benefits Exchange as an independent, non-profit entity formed and organized under the laws of the State. Provides that the Exchange shall be a public entity, but shall not be considered a department, institution, or agency of the State. Deletes references to the Illinois Health Benefits Exchange Legislative Study Committee and establishes instead the Illinois Health Benefits Exchange Legislative Oversight Committee within the Commission on Government Forecasting and Accountability. Provides that the governing and administrative powers of the Exchange shall be vested in a body known as the Illinois Health Benefits Exchange Board and sets forth provisions concerning appointments, terms, meetings, structure, recusal, budget, and purpose. Sets forth provisions concerning enrollment through brokers and agents and producer compensation. Provides that the Law shall be null and void if the U.S. Supreme Court strikes down the federal Affordable Care Act in whole or in part. Makes other changes. Effective immediately.

LRB097 16803 RPM 61983 b






HB4574LRB097 16803 RPM 61983 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 Health Benefits Exchange Law is
5amended by changing Sections 5-3, 5-5, 5-15, and 5-25 and by
6adding Sections 5-4, 5-16, and 5-21 as follows:
7    (215 ILCS 122/5-3)
8    Sec. 5-3. Legislative intent. The General Assembly finds
9the health benefits exchanges authorized by the federal Patient
10Protection and Affordable Care Act represent one of a number of
11ways in which the State can address coverage gaps and provide
12individual consumers and small employers access to greater
13coverage options. The General Assembly also finds that the
14State is best positioned to implement an exchange that is
15sensitive to the coverage gaps and market landscape unique to
16this State.
17    The purpose of this Law is to provide for the establishment
18of an Illinois Health Benefits Exchange (the Exchange) to
19facilitate the purchase and sale of qualified health plans and
20qualified dental plans in the individual market in this State
21and to provide for the establishment of a Small Business Health
22Options Program (SHOP Exchange) to assist qualified small
23employers in this State in facilitating the enrollment of their



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1employees in qualified health plans and qualified dental plans
2offered in the small group market. The intent of the Exchange
3is to supplement the existing health insurance market to
4simplify shopping for individual and small employers by
5increasing access to benefit options, encouraging a robust and
6competitive market both inside and outside the Exchange,
7reducing the number of uninsured, and providing a transparent
8marketplace and effective consumer education and programmatic
9assistance tools. The purpose of this Law is to ensure that the
10State is making sufficient progress towards establishing an
11exchange within the guidelines outlined by the federal law and
12to protect Illinoisans from undue federal regulation. Although
13the federal law imposes a number of core requirements on
14state-level exchanges, the State has significant flexibility
15in the design and operation of a State exchange that make it
16prudent for the State to carefully analyze, plan, and prepare
17for the exchange. The General Assembly finds that in order for
18the State to craft a tenable exchange that meets the
19fundamental goals outlined by the Patient Protection and
20Affordable Care Act of expanding access to affordable coverage
21and improving the quality of care, the implementation process
22should (1) provide for broad stakeholder representation; (2)
23foster a robust and competitive marketplace, both inside and
24outside of the exchange; and (3) provide for a broad-based
25approach to the fiscal solvency of the exchange.
26(Source: P.A. 97-142, eff. 7-14-11.)



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1    (215 ILCS 122/5-4 new)
2    Sec. 5-4. Definitions. In this Law:
3    "Board" means the Illinois Health Benefits Exchange Board
4established pursuant to this Law.
5    "Director" means the Director of Insurance.
6    "Educated health care consumer" means an individual who is
7knowledgeable about the health care system, and has background
8or experience in making informed decisions regarding health,
9medical, and scientific matters.
10    "Essential health benefits" has the meaning provided under
11Section 1302(b) of the Federal Act.
12    "Exchange" means the Illinois Health Benefits Exchange
13established by this Law and includes the Individual Exchange
14and the SHOP Exchange, unless otherwise specified.
15    "Executive Director" means the Executive Director of the
16Illinois Health Benefits Exchange.
17    "Federal Act" means the federal Patient Protection and
18Affordable Care Act (Public Law 111-148), as amended by the
19federal Health Care and Education Reconciliation Act of 2010
20(Public Law 111-152), and any amendments thereto, or
21regulations or guidance issued under, those Acts.
22    "Health benefit plan" means a policy, contract,
23certificate, or agreement offered or issued by a health carrier
24to provide, deliver, arrange for, pay for, or reimburse any of
25the costs of health care services. "Health benefit plan" does



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1not include:
2        (1) coverage for accident only or disability income
3    insurance or any combination thereof;
4        (2) coverage issued as a supplement to liability
5    insurance;
6        (3) liability insurance, including general liability
7    insurance and automobile liability insurance;
8        (4) workers' compensation or similar insurance;
9        (5) automobile medical payment insurance;
10        (6) credit-only insurance;
11        (7) coverage for on-site medical clinics; or
12        (8) other similar insurance coverage, specified in
13    federal regulations issued pursuant to Public Law 104-191,
14    under which benefits for health care services are secondary
15    or incidental to other insurance benefits.
16    "Health benefit plan" does not include the following
17benefits if they are provided under a separate policy,
18certificate, or contract of insurance or are otherwise not an
19integral part of the plan:
20        (a) limited scope dental or vision benefits;
21        (b) benefits for long-term care, nursing home care,
22    home health care, community-based care, or any combination
23    thereof; or
24        (c) other similar, limited benefits specified in
25    federal regulations issued pursuant to Public Law 104-191.
26    "Health benefit plan" does not include the following



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1benefits if the benefits are provided under a separate policy,
2certificate, or contract of insurance, there is no coordination
3between the provision of the benefits and any exclusion of
4benefits under any group health plan maintained by the same
5plan sponsor, and the benefits are paid with respect to an
6event without regard to whether benefits are provided with
7respect to such an event under any group health plan maintained
8by the same plan sponsor:
9        (i) coverage only for a specified disease or illness;
10    or
11        (ii) hospital indemnity or other fixed indemnity
12    insurance.
13    "Health benefit plan" does not include the following if
14offered as a separate policy, certificate, or contract of
16        (A) Medicare supplemental health insurance as defined
17    under Section 1882(g)(1) of the federal Social Security
18    Act;
19        (B) coverage supplemental to the coverage provided
20    under Chapter 55 of Title 10, United States Code (Civilian
21    Health and Medical Program of the Uniformed Services
22    (CHAMPUS)); or
23        (C) similar supplemental coverage provided to coverage
24    under a group health plan.
25    "Health benefit plan" does not include a group health plan
26or multiple employer welfare arrangement to the extent the plan



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1or arrangement is not subject to State insurance regulation
2under Section 514 of the federal Employee Retirement Income
3Security Act of 1974.
4    "Health carrier" or "carrier" means an entity subject to
5the insurance laws and regulations of this State, or subject to
6the jurisdiction of the Director, that contracts or offers to
7contract to provide, deliver, arrange for, pay for, or
8reimburse any of the costs of health care services, including a
9sickness and accident insurance company, a health maintenance
10organization, a nonprofit hospital and health service
11corporation, or any other entity providing a plan of health
12insurance, health benefits or health services.
13    "Individual Exchange" means the exchange marketplace
14established by this Law through which qualified individuals may
15obtain coverage through an individual market qualified health
17    "Principal place of business" means the location in a state
18where an employer has its headquarters or significant place of
19business and where the persons with direction and control
20authority over the business are employed.
21    "Qualified dental plan" means a limited scope dental plan
22that has been certified in accordance with this Law.
23    "Qualified employee" means an eligible individual employed
24by a qualified employer who has been offered health insurance
25coverage by that qualified employer through the SHOP on the



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1    "Qualified employer" means a small employer that elects to
2make its full-time employees eligible for one or more qualified
3health plans or qualified dental plans offered through the SHOP
4Exchange, and at the option of the employer, some or all of its
5part-time employees, provided that the employer has its
6principal place of business in this State and elects to provide
7coverage through the SHOP Exchange to all of its eligible
8employees, wherever employed.
9    "Qualified health plan" or "QHP" means a health benefit
10plan that has in effect a certification that the plan meets the
11criteria for certification described in Section 1311(c) of the
12Federal Act.
13    "Qualified health plan issuer" or "QHP issuer" means a
14health insurance issuer that offers a health plan that the
15Exchange has certified as a qualified health plan.
16    "Qualified individual" means an individual, including a
17minor, who:
18        (1) is seeking to enroll in a qualified health plan or
19    qualified dental plan offered to individuals through the
20    Exchange;
21        (2) resides in this State;
22        (3) at the time of enrollment, is not incarcerated,
23    other than incarceration pending the disposition of
24    charges; and
25        (4) is, and is reasonably expected to be, for the
26    entire period for which enrollment is sought, a citizen or



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1    national of the United States or an alien lawfully present
2    in the United States.
3    "Secretary" means the Secretary of the federal Department
4of Health and Human Services.
5    "SHOP Exchange" means the Small Business Health Options
6Program established under this Law through which a qualified
7employer can provide small group qualified health plans to its
8qualified employees.
9    "Small employer" means, in connection with a group health
10plan with respect to a calendar year and a plan year, an
11employer who employed an average of at least 2 but not more
12than 50 employees on business days during the preceding
13calendar year and who employs at least one employee on the
14first day of the plan year. Beginning January 1, 2016, the
15definition of a "small employer" shall mean, in connection with
16a group health plan with respect to a calendar year and a plan
17year, an employer who employed an average of at least 2 but not
18more than 100 employees on business days during the preceding
19calendar year and who employs at least one employee on the
20first day of the plan year. For purposes of this definition:
21        (a) all persons treated as a single employer under
22    subsection (b), (c), (m) or (o) of Section 414 of the
23    federal Internal Revenue Code of 1986 shall be treated as a
24    single employer;
25        (b) an employer and any predecessor employer shall be
26    treated as a single employer;



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1        (c) employees shall be counted in accordance with
2    federal law and regulations and State law and regulations;
3        (d) if an employer was not in existence throughout the
4    preceding calendar year, then the determination of whether
5    that employer is a small employer shall be based on the
6    average number of employees that is reasonably expected
7    that employer will employ on business days in the current
8    calendar year; and
9        (e) an employer that makes enrollment in qualified
10    health plans or qualified dental plans available to its
11    employees through the SHOP Exchange, and would cease to be
12    a small employer by reason of an increase in the number of
13    its employees, shall continue to be treated as a small
14    employer for purposes of this Law as long as it
15    continuously makes enrollment through the SHOP Exchange
16    available to its employees.
17    (215 ILCS 122/5-5)
18    Sec. 5-5. Establishment of the Exchange State health
19benefits exchange.
20    (a) It is declared that this State, beginning October 1,
212013, in accordance with Section 1311 of the federal Patient
22Protection and Affordable Care Act, shall establish a State
23health benefits exchange to be known as the Illinois Health
24Benefits Exchange in order to help individuals and small
25employers with no more than 50 employees shop for, select, and



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1enroll in qualified, affordable private health plans that fit
2their needs at competitive prices. The Exchange shall separate
3coverage pools for individuals and small employers and shall
4supplement and not supplant any existing private health
5insurance market for individuals and small employers.
6    (b) There is hereby created and established an independent,
7non-profit entity formed and organized under the laws of the
8State named the Illinois Health Benefits Exchange. The Exchange
9shall be a public entity, but shall not be considered a
10department, institution, or agency of the State.
11    (c) The Exchange shall be comprised of an individual and a
12small business health options (SHOP) exchange. Pursuant to
13Section 1311(b)(2) of the Federal Act, the Exchange shall
14provide individual exchange services to qualified individuals
15and SHOP exchange services to qualified employers under a
16single governance and administrative structure.
17    (d) The Exchange shall promote a competitive and robust
18marketplace that does not limit consumer access to affordable
19health coverage options. The Exchange, therefore, shall allow
20and certify all health insurance issuers to offer health plans
21on the individual and SHOP exchange, as applicable, provided
22that any such health plan meets the requirements set forth in
23Section 1311(c) of the Federal Act. The Exchange shall not
24solicit bids for or engage in the purchase of insurance.
25    (e) The Exchange shall not duplicate or replace the
26functions of the Department of Insurance, including, but not



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1limited to, the Department of Insurance's rate review
3(Source: P.A. 97-142, eff. 7-14-11.)
4    (215 ILCS 122/5-15)
5    Sec. 5-15. Illinois Health Benefits Exchange Legislative
6Oversight Study Committee.
7    (a) There is created an Illinois Health Benefits Exchange
8Legislative Oversight Study Committee within the Commission on
9Government Forecasting and Accountability to provide
10accountability for conduct a study regarding State
11implementation and establishment of the Illinois Health
12Benefits Exchange and to ensure Exchange operations and
13functions align with the goals and duties outlined by this Law.
14The Committee shall also be responsible for providing policy
15recommendations to ensure the Exchange aligns with the Federal
16Act, amendments to the Federal Act, and regulations promulgated
17pursuant to the Federal Act.
18    (b) Members of the Legislative Oversight Study Committee
19shall be appointed as follows: 3 members of the Senate shall be
20appointed by the President of the Senate; 3 members of the
21Senate shall be appointed by the Minority Leader of the Senate;
223 members of the House of Representatives shall be appointed by
23the Speaker of the House of Representatives; and 3 members of
24the House of Representatives shall be appointed by the Minority
25Leader of the House of Representatives. Each legislative leader



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1shall select one member to serve as co-chair of the committee.
2    (c) Members of the Legislative Oversight Study Committee
3shall be appointed no later than June 1, 2012 within 30 days
4after the effective date of this Law. The co-chairs shall
5convene the first meeting of the committee no later than 45
6days after the effective date of this Law.
7(Source: P.A. 97-142, eff. 7-14-11.)
8    (215 ILCS 122/5-16 new)
9    Sec. 5-16. Exchange governance. The governing and
10administrative powers of the Exchange shall be vested in a body
11known as the Illinois Health Benefits Exchange Board. The
12following provisions shall apply:
13        (1) The Board shall consist of 9 voting members.
14    Members of the Board of Directors shall be appointed as
15    follows: 2 members shall be appointed by the President of
16    the Senate; 2 members shall be appointed by the Minority
17    Leader of the Senate; 2 members shall be appointed by the
18    Speaker of the House of Representatives; 2 members shall be
19    appointed by the Minority Leader of the House of
20    Representatives; and the Governor shall appoint one member
21    in good standing of the American Academy of Actuaries with
22    experience in Illinois health insurance markets to serve on
23    the Board. In addition, the Director of Insurance, the
24    Director of Healthcare and Family Services, and the
25    Executive Director of the Exchange shall serve as



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1    non-voting, ex-officio members of the Board. The Governor
2    shall also appoint as non-voting, ex-officio members one
3    economist with experience in the health care markets and
4    one educated health care consumer advocate. All Board
5    members shall be appointed no later than January 31, 2012.
6        (2) The President of the Senate, Minority Leader of the
7    Senate, Speaker of the House of Representatives, and
8    Minority Leader of the House of Representatives shall
9    coordinate appointments to ensure that there is broad
10    representation within the skill sets specified in this
11    Section and shall consider the geographic, cultural, and
12    ethnic diversity of this State when making the
13    appointments. A majority of the voting members must be
14    employers or individuals who are not employed by a health
15    insurance issuer and none shall be State employees or been
16    employed by the State within one year prior to their
17    appointment.
18        No more than 4 of the voting members may be individuals
19    who are employed by, consultants to, or members of a board
20    of directors of:
21            (i) an insurer or third party administrator;
22            (ii) an insurance producer; or
23            (iii) a health care provider, health care
24        facility, or health clinic;
25        Each person appointed to the Board should have
26    demonstrated expertise in no less than 2 of the following



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1    areas:
2            (A) individual health insurance coverage;
3            (B) small employer health insurance;
4            (C) health benefits administration;
5            (D) health care finance;
6            (E) administration of a public or private health
7        care delivery system;
8            (F) the provision of health care services;
9            (G) the purchase of health insurance coverage;
10            (H) health care consumer navigation or assistance;
11            (I) health care economics or health care actuarial
12    sciences;
13            (J) information technology; or
14            (K) starting a small business with 50 or fewer
15    employees.
16        (3) The Board shall elect one voting member of the
17    Board to serve as chairperson and one voting member to
18    serve as vice-chairperson, upon approval of a majority of
19    the Board.
20        (4) The Exchange shall be administered by an Executive
21    Director, who shall be appointed, and may be removed, by a
22    majority of the Board. The Board shall have the power to
23    determine compensation for the Executive Director. The
24    Executive Director may not be a State employee or have been
25    employed by or have had a contract with the State in the 3
26    years prior to his or her appointment.



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1        (5) The terms of the non-voting, ex-officio members of
2    the Board shall run concurrent with their terms of
3    appointment to office, or in the case of the Executive
4    Director, his or her term of appointment to that position,
5    subject to the determination of the Board. The terms of the
6    members, including those non-voting, ex-officio members
7    appointed by the Governor, shall be 4 years. Each member of
8    the General Assembly identified in paragraph (1) of this
9    Section shall initially appoint one member to a 3-year
10    term, and one member to a 4-year term. Upon conclusion of
11    the initial term, the next term and every term subsequent
12    to it shall run for 3 years. Voting members shall serve no
13    more than 3 consecutive terms.
14        A person appointed to fill a vacancy and complete the
15    unexpired term of a member of the Board shall only be
16    appointed to serve out the unexpired term by the individual
17    who made the original appointment within 45 days after the
18    initial vacancy. A person appointed to fill a vacancy and
19    complete the unexpired term of a member of the Board may be
20    re-appointed to the Board for another term, but shall not
21    serve than more than 2 consecutive terms following their
22    completion of the unexpired term of a member of the Board.
23        If a voting Board member's qualifications change due to
24    a change in employment during the term of their
25    appointment, then the Board member shall resign their
26    position, subject to reappointment by the individual who



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1    made the original appointment.
2        (6) The Board may, as necessary, create and appoint
3    qualified persons with requisite expertise to Exchange
4    technical advisory groups. These Exchange technical
5    advisory groups shall meet in a manner and frequency
6    determined by the Board to discuss exchange-related issues
7    and to provide exchange-related guidance, advice, and
8    recommendations to the Board and the Exchange.
9        (7) The Board shall meet no less than quarterly on a
10    schedule established by the chairperson. Meetings shall be
11    public and public records shall be maintained, subject to
12    the Open Meetings Act. A majority of the Board shall
13    constitute a quorum and the affirmative vote of a majority
14    is necessary for any action of the Board. No vacancy shall
15    impair the ability of the Board to act provided a quorum is
16    reached. Members shall serve without pay, but shall be
17    reimbursed for their actual and reasonable expenses
18    incurred in the performance of their duties. The
19    chairperson of the Board shall file a written report
20    regarding the activities of the Board and the Exchange to
21    the Governor and General Assembly annually, and the
22    Legislative Oversight Committee established in Section
23    5-15 quarterly, beginning on July 1, 2012 through December
24    31, 2014.
25        (8) The Board shall adopt conflict of interest rules
26    and recusal procedures. Such rules and procedures shall (i)



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1    prohibit a member of the Board from performing an official
2    act that may have a direct economic benefit on a business
3    or other endeavor in which that member has a direct or
4    substantial financial interest and (ii) require a member of
5    the Board to recuse himself or herself from an official
6    matter, whether direct or indirect. All recusals must be in
7    advance, in writing, and specify the reason and date of the
8    recusal. All recusals shall be maintained by the Executive
9    Director and shall be disclosed to any person upon written
10    request.
11        (9) The Board shall develop a preliminary budget for
12    the implementation and operation of the Exchange through
13    December 31, 2014. The preliminary budget shall include
14    proposed compensation levels for the Executive Director
15    and identify personnel and staffing needs for the
16    implementation and operation of the Exchange. The Board
17    shall submit its preliminary budget to the Legislative
18    Oversight Committee established in Section 5-15 no later
19    than October 1, 2012.
20        (10) The purpose of the Board shall be to implement the
21    Exchange in accordance with this Section and shall be
22    authorized to establish procedures for the operation of the
23    Exchange, subject to legislative approval.
24    (215 ILCS 122/5-21 new)
25    Sec. 5-21. Enrollment through brokers and agents; producer



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2    (a) In accordance with Section 1312(e) of the Federal Act,
3the Exchange shall allow licensed insurance producers to (1)
4enroll qualified individuals in any qualified health plan, for
5which the individual is eligible, in the individual exchange,
6(2) assist qualified individuals in applying for premium tax
7credits and cost-sharing reductions for qualified health plans
8purchased through the individual exchange, and (3) enroll
9qualified employers in any qualified health plan, for which the
10employer is eligible, offered through the SHOP exchange.
11Nothing in this subsection (a) shall be construed as to require
12a qualified individual or qualified employer to utilize a
13licensed insurance producer for any of the purposes outlined in
14this subsection (a).
15    (b) In order to enroll individuals and small employers in
16qualified health plans on the Exchange, licensed producers must
17complete a certification program. The Department of Insurance
18may develop and implement a certification program for licensed
19insurance producers who enroll individuals and employers in the
20exchange. The Department of Insurance may charge a reasonable
21fee, by regulation, to producers for the certification program.
22The Department of Insurance may approve certification programs
23developed and instructed by others, charging a reasonable fee,
24by regulation, for approval.
25    (c) The Exchange shall include on its Internet website a
26producer locator section, featured prominently, through which



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1individuals and small employers can find exchange-certified
3    (d) The Exchange shall have no role in developing or
4determining the manner or amount of compensation producers
5receive from qualified health plans for individuals or
6employers enrolled in health plans through the Exchange.
7    (215 ILCS 122/5-25)
8    Sec. 5-25. Federal action. This Law shall be null and void
9if Congress and the President take action to repeal or replace,
10or both, Section 1311 of the Affordable Care Act or the U.S.
11Supreme Court strikes down the Affordable Care Act in whole or
12in part.
13(Source: P.A. 97-142, eff. 7-14-11.)
14    Section 99. Effective date. This Act takes effect upon
15becoming law.