Illinois General Assembly - Full Text of HB0295
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Full Text of HB0295  102nd General Assembly

HB0295 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB0295

 

Introduced 1/29/2021, by Rep. Natalie A. Manley

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/245.3 new
225 ILCS 45/2a
305 ILCS 5/3-1.2  from Ch. 23, par. 3-1.2

    Amends the Illinois Insurance Code. Provides that no provision of the Illinois Insurance Code or any other law prohibits an insured under any policy of life insurance, or any other person who may be the owner of any rights under such policy, from making an irrevocable assignment of all or any part of his or her rights and privileges, not to exceed the purchase price of the prepaid burial contract, under the policy to a funeral home and to have an individual policy issued in accordance with specified provisions of the Illinois Insurance Code. Amends the Illinois Funeral or Burial Funds Act. Provides that nothing shall prohibit the purchaser of a life insurance policy or tax-deferred annuity contract for the purpose of funding a pre-need contract from irrevocably assigning ownership of the policy or annuity to a funeral home (rather than person) or trust for the purpose of obtaining favorable consideration for Medicaid, Supplemental Security Income, or another public assistance program, as permitted under federal law. Amends the Illinois Public Aid Code. In a provision requiring the Department of Healthcare and Family Services to exempt certain prepaid funeral or burial contracts from consideration when making an eligibility determination for medical assistance, provides that at any time after submitting an application for medical assistance and before the Department makes a final determination of eligibility, an applicant may use available resources to purchase one of the exempted prepaid funeral or burial contracts.


LRB102 04798 KTG 14817 b

 

 

A BILL FOR

 

HB0295LRB102 04798 KTG 14817 b

1    AN ACT concerning prepaid funeral or burial contracts.
 
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
5adding Section 245.3 as follows:
 
6    (215 ILCS 5/245.3 new)
7    Sec. 245.3. Irrevocable assignment of life insurance to a
8funeral home. Neither any provision of this Code nor any other
9law prohibits an insured or any other person who may be the
10owner of rights under a policy of life insurance from making an
11irrevocable assignment of all or a part of his or her rights,
12not to exceed the purchase price of the prepaid funeral or
13burial contract, under the policy to a funeral home and to have
14an individual policy issued in accordance with paragraphs (G),
15(H), and (K) of Section 231.1. Subject to the terms of the
16policy or a contract relating to the policy, including, but
17not limited to, a prepaid funeral or burial contract, an
18irrevocable assignment by an insured or other owner of rights
19under a policy made before or after the effective date of this
20amendatory Act of the 102nd General Assembly is valid for the
21purpose of vesting in the assignee, in accordance with the
22policy or contract as to the time at which it is effective, all
23rights assigned. That irrevocable assignment is, however,

 

 

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1without prejudice to the company on account of any payment it
2makes or individual policy it issues in accordance with
3paragraphs (G), (H), and (K) of Section 231.1 before receipt
4of notice of the assignment. This amendatory Act of the 102nd
5General Assembly acknowledges, declares, and codifies the
6existing right of assignment of interests under life insurance
7policies.
 
8    Section 10. The Illinois Funeral or Burial Funds Act is
9amended by changing Section 2a as follows:
 
10    (225 ILCS 45/2a)
11    Sec. 2a. Purchase of insurance or annuity.
12    (a) If a purchaser selects the purchase of a life
13insurance policy or tax-deferred annuity contract to fund the
14pre-need contract, the application and collected premium shall
15be mailed within 30 days of signing the pre-need contract.
16    (b) If life insurance or an annuity is used to fund a
17pre-need contract, the seller or provider shall not be named
18as the owner or beneficiary of the policy or annuity. No person
19whose only insurable interest in the insured is the receipt of
20proceeds from the policy or in naming who shall receive the
21proceeds nor any trust acting on behalf of such person or
22seller or provider shall be named as owner or beneficiary of
23the policy or annuity.
24    (c) Nothing shall prohibit the purchaser from irrevocably

 

 

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1assigning ownership of the policy or annuity used to fund a
2guaranteed price pre-need contract to a funeral home person or
3trust for the purpose of obtaining favorable consideration for
4Medicaid, Supplemental Security Income, or another public
5assistance program, as permitted under federal law. The seller
6or contract provider may be named a nominal owner of the life
7insurance policy only for such time as it takes to immediately
8transfer the policy into a trust. Except for this purpose,
9neither the seller nor the contract provider shall be named
10the owner or the beneficiary of the policy or annuity.
11    (d) If a life insurance policy or annuity contract is used
12to fund a pre-need contract, except for guaranteed price
13contracts permitted in Section 4(a) of this Act, the pre-need
14contract must be revocable, and any assignment provision in
15the pre-need contract must contain the following disclosure in
1612 point bold type:
17    THIS ASSIGNMENT MAY BE REVOKED BY THE ASSIGNOR OR
18ASSIGNOR'S SUCCESSOR OR, IF THE ASSIGNOR IS ALSO THE INSURED
19AND DECEASED, BY THE REPRESENTATIVE OF THE INSURED'S ESTATE
20BEFORE THE RENDERING TO THE CEMETERY SERVICES OR GOODS OR
21FUNERAL SERVICES OR GOODS. IF THE ASSIGNMENT IS REVOKED, THE
22DEATH BENEFIT UNDER THE LIFE INSURANCE POLICY OR ANNUITY
23CONTRACT SHALL BE PAID IN ACCORDANCE WITH THE BENEFICIARY
24DESIGNATION UNDER THE INSURANCE POLICY OR ANNUITY CONTRACT.
25    (e) Sales proceeds shall not be used to purchase life
26insurance policies or tax-deferred annuities unless the

 

 

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1company issuing the life insurance policies or tax-deferred
2annuities is licensed with the Illinois Department of
3Insurance, and the insurance producer or annuity seller is
4licensed to do business in the State of Illinois.
5(Source: P.A. 92-419, eff. 1-1-02.)
 
6    Section 15. The Illinois Public Aid Code is amended by
7changing Section 3-1.2 as follows:
 
8    (305 ILCS 5/3-1.2)  (from Ch. 23, par. 3-1.2)
9    Sec. 3-1.2. Need. Income available to the person, when
10added to contributions in money, substance, or services from
11other sources, including contributions from legally
12responsible relatives, must be insufficient to equal the grant
13amount established by Department regulation for such person.
14    In determining earned income to be taken into account,
15consideration shall be given to any expenses reasonably
16attributable to the earning of such income. If federal law or
17regulations permit or require exemption of earned or other
18income and resources, the Illinois Department shall provide by
19rule and regulation that the amount of income to be
20disregarded be increased (1) to the maximum extent so required
21and (2) to the maximum extent permitted by federal law or
22regulation in effect as of the date this amendatory Act
23becomes law. The Illinois Department may also provide by rule
24and regulation that the amount of resources to be disregarded

 

 

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1be increased to the maximum extent so permitted or required.
2Subject to federal approval, resources (for example, land,
3buildings, equipment, supplies, or tools), including farmland
4property and personal property used in the income-producing
5operations related to the farmland (for example, equipment and
6supplies, motor vehicles, or tools), necessary for
7self-support, up to $6,000 of the person's equity in the
8income-producing property, provided that the property produces
9a net annual income of at least 6% of the excluded equity value
10of the property, are exempt. Equity value in excess of $6,000
11shall not be excluded. If the activity produces income that is
12less than 6% of the exempt equity due to reasons beyond the
13person's control (for example, the person's illness or crop
14failure) and there is a reasonable expectation that the
15property will again produce income equal to or greater than 6%
16of the equity value (for example, a medical prognosis that the
17person is expected to respond to treatment or that
18drought-resistant corn will be planted), the equity value in
19the property up to $6,000 is exempt. If the person owns more
20than one piece of property and each produces income, each
21piece of property shall be looked at to determine whether the
226% rule is met, and then the amounts of the person's equity in
23all of those properties shall be totaled to determine whether
24the total equity is $6,000 or less. The total equity value of
25all properties that is exempt shall be limited to $6,000.
26    In determining the resources of an individual or any

 

 

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1dependents, the Department shall exclude from consideration
2the value of funeral and burial spaces, funeral and burial
3insurance the proceeds of which can only be used to pay the
4funeral and burial expenses of the insured and funds
5specifically set aside for the funeral and burial arrangements
6of the individual or his or her dependents, including prepaid
7funeral and burial plans, to the same extent that such items
8are excluded from consideration under the federal Supplemental
9Security Income program (SSI). At any time after submitting an
10application for medical assistance and before a final
11determination of eligibility has been made by the Department,
12an applicant may use available resources to purchase one of
13the prepaid funeral or burial contracts exempted under this
14Section.
15    Prepaid funeral or burial contracts are exempt to the
16following extent:
17        (1) Funds in a revocable prepaid funeral or burial
18    contract are exempt up to $1,500, except that any portion
19    of a contract that clearly represents the purchase of
20    burial space, as that term is defined for purposes of the
21    Supplemental Security Income program, is exempt regardless
22    of value.
23        (2) Funds in an irrevocable prepaid funeral or burial
24    contract are exempt up to $5,874, except that any portion
25    of a contract that clearly represents the purchase of
26    burial space, as that term is defined for purposes of the

 

 

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1    Supplemental Security Income program, is exempt regardless
2    of value. This amount shall be adjusted annually for any
3    increase in the Consumer Price Index. The amount exempted
4    shall be limited to the price of the funeral goods and
5    services to be provided upon death. The contract must
6    provide a complete description of the funeral goods and
7    services to be provided and the price thereof. Any amount
8    in the contract not so specified shall be treated as a
9    transfer of assets for less than fair market value.
10        (3) A prepaid, guaranteed-price funeral or burial
11    contract, funded by an irrevocable assignment of a
12    person's life insurance policy to a trust, is exempt. The
13    amount exempted shall be limited to the amount of the
14    insurance benefit designated for the cost of the funeral
15    goods and services to be provided upon the person's death.
16    The contract must provide a complete description of the
17    funeral goods and services to be provided and the price
18    thereof. Any amount in the contract not so specified shall
19    be treated as a transfer of assets for less than fair
20    market value. The trust must include a statement that,
21    upon the death of the person, the State will receive all
22    amounts remaining in the trust, including any remaining
23    payable proceeds under the insurance policy up to an
24    amount equal to the total medical assistance paid on
25    behalf of the person. The trust is responsible for
26    ensuring that the provider of funeral services under the

 

 

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1    contract receives the proceeds of the policy when it
2    provides the funeral goods and services specified under
3    the contract. The irrevocable assignment of ownership of
4    the insurance policy must be acknowledged by the insurance
5    company.
6    Notwithstanding any other provision of this Code to the
7contrary, an irrevocable trust containing the resources of a
8person who is determined to have a disability shall be
9considered exempt from consideration. A pooled trust must be
10established and managed by a non-profit association that pools
11funds but maintains a separate account for each beneficiary.
12The trust may be established by the person, a parent,
13grandparent, legal guardian, or court. It must be established
14for the sole benefit of the person and language contained in
15the trust shall stipulate that any amount remaining in the
16trust (up to the amount expended by the Department on medical
17assistance) that is not retained by the trust for reasonable
18administrative costs related to wrapping up the affairs of the
19subaccount shall be paid to the Department upon the death of
20the person. After a person reaches age 65, any funding by or on
21behalf of the person to the trust shall be treated as a
22transfer of assets for less than fair market value unless the
23person is a ward of a county public guardian or the State
24Guardian pursuant to Section 13-5 of the Probate Act of 1975 or
25Section 30 of the Guardianship and Advocacy Act and lives in
26the community, or the person is a ward of a county public

 

 

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1guardian or the State Guardian pursuant to Section 13-5 of the
2Probate Act of 1975 or Section 30 of the Guardianship and
3Advocacy Act and a court has found that any expenditures from
4the trust will maintain or enhance the person's quality of
5life. If the trust contains proceeds from a personal injury
6settlement, any Department charge must be satisfied in order
7for the transfer to the trust to be treated as a transfer for
8fair market value.
9    The homestead shall be exempt from consideration except to
10the extent that it meets the income and shelter needs of the
11person. "Homestead" means the dwelling house and contiguous
12real estate owned and occupied by the person, regardless of
13its value. Subject to federal approval, a person shall not be
14eligible for long-term care services, however, if the person's
15equity interest in his or her homestead exceeds the minimum
16home equity as allowed and increased annually under federal
17law. Subject to federal approval, on and after the effective
18date of this amendatory Act of the 97th General Assembly,
19homestead property transferred to a trust shall no longer be
20considered homestead property.
21    Occasional or irregular gifts in cash, goods or services
22from persons who are not legally responsible relatives which
23are of nominal value or which do not have significant effect in
24meeting essential requirements shall be disregarded. The
25eligibility of any applicant for or recipient of public aid
26under this Article is not affected by the payment of any grant

 

 

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1under the "Senior Citizens and Disabled Persons Property Tax
2Relief Act" or any distributions or items of income described
3under subparagraph (X) of paragraph (2) of subsection (a) of
4Section 203 of the Illinois Income Tax Act.
5    The Illinois Department may, after appropriate
6investigation, establish and implement a consolidated standard
7to determine need and eligibility for and amount of benefits
8under this Article or a uniform cash supplement to the federal
9Supplemental Security Income program for all or any part of
10the then current recipients under this Article; provided,
11however, that the establishment or implementation of such a
12standard or supplement shall not result in reductions in
13benefits under this Article for the then current recipients of
14such benefits.
15(Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)