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093_HB3162eng
HB3162 Engrossed LRB093 08537 LRD 11985 b
1 AN ACT in relation to 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 424 as follows:
6 (215 ILCS 5/424) (from Ch. 73, par. 1031)
7 Sec. 424. Unfair methods of competition and unfair or
8 deceptive acts or practices defined. The following are
9 hereby defined as unfair methods of competition and unfair
10 and deceptive acts or practices in the business of insurance:
11 (1) The commission by any person of any one or more of
12 the acts defined or prohibited by Sections 134, 143.24c, 147,
13 148, 149, 151, 155.22, 155.22a, 236, 237, 364, and 469 of
14 this Code.
15 (2) Entering into any agreement to commit, or by any
16 concerted action committing, any act of boycott, coercion or
17 intimidation resulting in or tending to result in
18 unreasonable restraint of, or monopoly in, the business of
19 insurance.
20 (3) Making or permitting, in the case of insurance of
21 the types enumerated in Classes 1, 2, and 3 of Section 4, any
22 unfair discrimination between individuals or risks of the
23 same class or of essentially the same hazard and expense
24 element because of the race, color, religion, or national
25 origin of such insurance risks or applicants. The
26 application of this Article to the types of insurance
27 enumerated in Class 1 of Section 4 shall in no way limit,
28 reduce, or impair the protections and remedies already
29 provided for by Sections 236 and 364 of this Code or any
30 other provision of this Code.
31 (4) Engaging in any of the acts or practices defined in
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1 or prohibited by Sections 154.5 through 154.8 of this Code.
2 (5) Making or charging any rate for insurance against
3 losses arising from the use or ownership of a motor vehicle
4 which requires a higher premium of any person by reason of
5 his physical handicap, race, color, religion, or national
6 origin.
7 (6) Issuing a new policy within an individual health
8 insurance market after notice of withdrawal from that market
9 has been given according to item (i) of subparagraph (a) of
10 paragraph (2) of subsection (C) of Section 50 of the Illinois
11 Health Insurance Portability and Accountability Act if that
12 coverage was among the types of coverage for which notice of
13 withdrawal has been given.
14 (Source: P.A. 92-399, eff. 8-16-01; 92-651, eff. 7-11-02;
15 92-669, eff. 1-1-03.)
16 Section 10. The Illinois Health Insurance Portability
17 and Accountability Act is amended by changing Section 50 and
18 adding Section 60 as follows:
19 (215 ILCS 97/50)
20 Sec. 50. Guaranteed renewability of individual health
21 insurance coverage.
22 (A) In general. Except as provided in this Section, a
23 health insurance issuer that provides individual health
24 insurance coverage to an individual shall renew or continue
25 in force such coverage at the option of the individual.
26 (B) General exceptions. A health insurance issuer may
27 nonrenew or discontinue health insurance coverage of an
28 individual in the individual market based only on one or more
29 of the following:
30 (1) Nonpayment of premiums. The individual has
31 failed to pay premiums or contributions in accordance
32 with the terms of the health insurance coverage or the
HB3162 Engrossed -3- LRB093 08537 LRD 11985 b
1 issuer has not received timely premium payments.
2 (2) Fraud. The individual has performed an act or
3 practice that constitutes fraud or made an intentional
4 misrepresentation of material fact under the terms of the
5 coverage.
6 (3) Termination of plan. The issuer is ceasing to
7 offer coverage in the individual market in accordance
8 with subsection (C) of this Section and applicable
9 Illinois law.
10 (4) Movement outside the service area. In the case
11 of a health insurance issuer that offers health insurance
12 coverage in the market through a network plan, the
13 individual no longer resides, lives, or works in the
14 service area (or in an area for which the issuer is
15 authorized to do business), but only if such coverage is
16 terminated under this paragraph uniformly without regard
17 to any health status-related factor of covered
18 individuals.
19 (5) Association membership ceases. In the case of
20 health insurance coverage that is made available in the
21 individual market only through one or more bona fide
22 associations, the membership of the individual in the
23 association (on the basis of which the coverage is
24 provided) ceases, but only if such coverage is terminated
25 under this paragraph uniformly without regard to any
26 health status-related factor of covered individuals.
27 (C) Requirements for uniform termination of coverage.
28 (1) Particular type of coverage not offered. In
29 any case in which an issuer decides to discontinue
30 offering a particular type of health insurance coverage
31 offered in the individual market, coverage of such type
32 may be discontinued by the issuer only if:
33 (a) the issuer provides notice to each covered
34 individual provided coverage of this type in such
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1 market of such discontinuation at least 90 days
2 prior to the date of the discontinuation of such
3 coverage;
4 (b) the issuer offers, to each individual in
5 the individual market provided coverage of this
6 type, the option to purchase any other individual
7 health insurance coverage currently being offered by
8 the issuer for individuals in such market; and
9 (c) in exercising the option to discontinue
10 coverage of that type and in offering the option of
11 coverage under subparagraph (b), the issuer acts
12 uniformly without regard to any health
13 status-related factor of enrolled individuals or
14 individuals who may become eligible for such
15 coverage.
16 (2) Discontinuance of all coverage.
17 (a) In general. Subject to subparagraph (c),
18 in any case in which a health insurance issuer
19 elects to discontinue offering all health insurance
20 coverage in the individual market in Illinois,
21 health insurance coverage may be discontinued by the
22 issuer only if:
23 (i) the issuer provides notice to the
24 Director and to each individual of the
25 discontinuation at least 180 days prior to the
26 date of the expiration of such coverage; and
27 (ii) all health insurance issued or
28 delivered for issuance in Illinois in such
29 market is discontinued and coverage under such
30 health insurance coverage in such market is not
31 renewed.
32 (a-5) A health insurance issuer may not
33 discontinue offering health insurance coverage in an
34 individual market in Illinois if another health
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1 insurance issuer in the same family of companies
2 continues selling health insurance in that market.
3 Any health insurance issuer that discontinued
4 coverage after January 1, 2001, in such a way as to
5 not comply with this subparagraph (a-5) shall
6 reunderwrite all policyholders affected by that
7 discontinuation under terms and conditions identical
8 to those enjoyed by the affected policyholders
9 immediately prior to their policies'
10 discontinuation. The terms and conditions include,
11 but are not limited to, any fees and deductible
12 amounts. To be reunderwritten under these terms and
13 conditions, affected policyholders must notify the
14 relevant insurance issuer in writing by January 1,
15 2005, of their desire to be reunderwritten.
16 (b) Prohibition on market reentry. In the
17 case of a discontinuation under subparagraph (a) in
18 the individual market, the issuer may not provide
19 for the issuance of any health insurance coverage in
20 Illinois involved during the 5-year period beginning
21 on the date of the discontinuation of the last
22 health insurance coverage not so renewed.
23 (D) Exception for uniform modification of coverage. At
24 the time of coverage renewal, a health insurance issuer may
25 modify the health insurance coverage for a policy form
26 offered to individuals in the individual market so long as
27 the modification is consistent with Illinois law and
28 effective on a uniform basis among all individuals with that
29 policy form. A modification of coverage by a health
30 insurance issuer is not uniform if another health insurance
31 issuer in the same family of companies does not make the same
32 modification of coverage. Any health insurance issuer that
33 modified coverage after January 1, 2001, in such a way as to
34 not comply with this paragraph (D) shall reunderwrite all
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1 policyholders affected by that discontinuation under terms
2 and conditions identical to those enjoyed by the affected
3 policyholders immediately prior to their policies'
4 modification. The terms and conditions include, but are not
5 limited to, any fees and deductible amounts. To be
6 reunderwritten under these terms and conditions, affected
7 policyholders must notify the relevant insurance issuer in
8 writing by January 1, 2005.
9 (E) Application to coverage offered only through
10 associations. In applying this Section in the case of health
11 insurance coverage that is made available by a health
12 insurance issuer in the individual market to individuals only
13 through one or more associations, a reference to an
14 "individual" is deemed to include a reference to such an
15 association (of which the individual is a member).
16 (F) For the purpose of this Section:
17 "Family of companies" means a business entity consisting
18 of a parent company and any subidiaries in which the parent
19 company holds a 50% or greater ownership stake.
20 "Parent company" means a company identified by an
21 employer identification number that holds a 50% or greater
22 ownership stake in one or more other companies.
23 "Subsidiary" means an insurance issuer licensed to do
24 business in the State of Illinois and in which another
25 company holds a 50% or greater ownership stake.
26 (Source: P.A. 90-567, eff. 1-23-98.)
27 (215 ILCS 97/60 new)
28 Sec. 60. Notice requirement to the Department. In any
29 case where a health insurance issuer elects to uniformly
30 modify coverage, uniformly terminate coverage, or discontinue
31 coverage in a marketplace in accordance with Sections 30 and
32 50 of this Act, the issuer shall provide notice to the
33 Department prior to notifying the plan sponsors,
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1 participants, beneficiaries, and covered individuals. The
2 notice shall be sent by certified mail to the Department 90
3 days in advance of any notification of the company's actions.
4 The notice shall include: (i) a complete description of the
5 action to be taken, (ii) a specific description of the type
6 of coverage affected, (iii) the total number of covered lives
7 affected, (iv) a sample draft of all letters being sent to
8 the plan sponsors and participants, beneficiaries, or covered
9 individuals, (v) time frames for the actions being taken,
10 (vi) options the plans sponsors, participants, beneficiaries,
11 or covered individuals may have available to them under the
12 federal Health Insurance Portability and Accountability Act,
13 and (vii) any other information as required by the
14 Department.
15 Section 95. Severability. The provisions of this Act are
16 severable under Section 1.31 of the Statute on Statutes.
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