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 |
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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.
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| | A BILL FOR |
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| 1 | | AN ACT concerning prepaid funeral or burial contracts.
| 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 | | adding Section 245.3 as follows: | 6 | | (215 ILCS 5/245.3 new) | 7 | | Sec. 245.3. Irrevocable assignment of life insurance to a | 8 | | funeral home. Neither any provision of this Code nor any other | 9 | | law prohibits an insured or any other person who may be the | 10 | | owner of rights under a policy of life insurance from making an | 11 | | irrevocable assignment of all or a part of his or her rights, | 12 | | not to exceed the purchase price of the prepaid funeral or | 13 | | burial contract, under the policy to a funeral home and to have | 14 | | an individual policy issued in accordance with paragraphs (G), | 15 | | (H), and (K) of Section 231.1. Subject to the terms of the | 16 | | policy or a contract relating to the policy, including, but | 17 | | not limited to, a prepaid funeral or burial contract, an | 18 | | irrevocable assignment by an insured or other owner of rights | 19 | | under a policy made before or after the effective date of this | 20 | | amendatory Act of the 102nd General Assembly is valid for the | 21 | | purpose of vesting in the assignee, in accordance with the | 22 | | policy or contract as to the time at which it is effective, all | 23 | | rights assigned. That irrevocable assignment is, however, |
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| 1 | | without prejudice to the company on account of any payment it | 2 | | makes or individual policy it issues in accordance with | 3 | | paragraphs (G), (H), and (K) of Section 231.1 before receipt | 4 | | of notice of the assignment. This amendatory Act of the 102nd | 5 | | General Assembly acknowledges, declares, and codifies the | 6 | | existing right of assignment of interests under life insurance | 7 | | policies. | 8 | | Section 10. The Illinois Funeral or Burial Funds Act is | 9 | | amended 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 | 13 | | insurance policy or
tax-deferred annuity contract to fund the | 14 | | pre-need contract, the application
and collected premium shall | 15 | | be mailed within 30 days of signing the pre-need
contract.
| 16 | | (b) If life insurance or an annuity is used to fund a
| 17 | | pre-need contract,
the seller or provider shall not be named | 18 | | as the owner or beneficiary of the
policy or annuity. No person | 19 | | whose only insurable interest in the insured is
the receipt of | 20 | | proceeds from the policy or in naming who shall receive the
| 21 | | proceeds nor any trust acting on behalf of such person or | 22 | | seller or provider
shall be named as owner or beneficiary of | 23 | | the policy or annuity.
| 24 | | (c) Nothing shall prohibit the purchaser from irrevocably |
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| 1 | | assigning
ownership of the policy or annuity used to fund a | 2 | | guaranteed price pre-need
contract to a funeral home person or | 3 | | trust for the purpose of obtaining favorable
consideration for | 4 | | Medicaid, Supplemental Security Income, or another public
| 5 | | assistance program, as permitted under federal law. The seller | 6 | | or contract
provider may be named a
nominal owner of the life | 7 | | insurance policy only for such
time as it takes to immediately | 8 | | transfer the policy into a
trust. Except for this purpose, | 9 | | neither the
seller nor the contract provider shall be named | 10 | | the owner
or the beneficiary of the policy or annuity.
| 11 | | (d) If a life insurance policy or annuity contract is used | 12 | | to fund a
pre-need contract, except for guaranteed price | 13 | | contracts permitted in Section
4(a) of this Act, the pre-need | 14 | | contract must be revocable, and any
assignment
provision in | 15 | | the pre-need contract must contain the following disclosure in | 16 | | 12
point bold type:
| 17 | | THIS ASSIGNMENT MAY BE REVOKED BY THE ASSIGNOR OR | 18 | | ASSIGNOR'S SUCCESSOR OR, IF
THE ASSIGNOR IS ALSO THE INSURED | 19 | | AND DECEASED, BY THE REPRESENTATIVE OF THE
INSURED'S ESTATE | 20 | | BEFORE THE RENDERING TO THE CEMETERY SERVICES OR GOODS OR
| 21 | | FUNERAL SERVICES OR GOODS. IF THE ASSIGNMENT IS REVOKED, THE | 22 | | DEATH BENEFIT
UNDER THE LIFE INSURANCE POLICY OR ANNUITY | 23 | | CONTRACT SHALL BE PAID IN ACCORDANCE
WITH THE BENEFICIARY | 24 | | DESIGNATION UNDER THE INSURANCE POLICY OR ANNUITY
CONTRACT.
| 25 | | (e) Sales proceeds shall not be used to purchase life | 26 | | insurance policies
or tax-deferred annuities unless the |
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| 1 | | company issuing the life insurance
policies or tax-deferred | 2 | | annuities is licensed with the Illinois Department of
| 3 | | Insurance, and the insurance producer or annuity seller is | 4 | | licensed 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 | 7 | | changing 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 | 10 | | added to
contributions in money, substance, or services from | 11 | | other sources,
including contributions from legally | 12 | | responsible relatives, must be
insufficient to equal the grant | 13 | | amount established by Department regulation
for such person.
| 14 | | In determining earned income to be taken into account, | 15 | | consideration
shall be given to any expenses reasonably | 16 | | attributable to the earning of
such income. If federal law or | 17 | | regulations permit or require exemption
of earned or other | 18 | | income and resources, the Illinois Department shall
provide by | 19 | | rule and regulation that the amount of income to be
| 20 | | disregarded be increased (1) to the maximum extent so required | 21 | | and (2)
to the maximum extent permitted by federal law or | 22 | | regulation in effect
as of the date this amendatory Act | 23 | | becomes law. The Illinois Department
may also provide by rule | 24 | | and regulation that the amount of resources to
be disregarded |
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| 1 | | be increased to the maximum extent so permitted or required. | 2 | | Subject to federal approval, resources (for example, land, | 3 | | buildings, equipment, supplies, or tools), including farmland | 4 | | property and personal property used in the income-producing | 5 | | operations related to the farmland (for example, equipment and | 6 | | supplies, motor vehicles, or tools), necessary for | 7 | | self-support, up to $6,000 of the person's equity in the | 8 | | income-producing property, provided that the property produces | 9 | | a net annual income of at least 6% of the excluded equity value | 10 | | of the property, are exempt. Equity value in excess of $6,000 | 11 | | shall not be excluded. If the activity produces income that is | 12 | | less than 6% of the exempt equity due to reasons beyond the | 13 | | person's control (for example, the person's illness or crop | 14 | | failure) and there is a reasonable expectation that the | 15 | | property will again produce income equal to or greater than 6% | 16 | | of the equity value (for example, a medical prognosis that the | 17 | | person is expected to respond to treatment or that | 18 | | drought-resistant corn will be planted), the equity value in | 19 | | the property up to $6,000 is exempt. If the person owns more | 20 | | than one piece of property and each produces income, each | 21 | | piece of property shall be looked at to determine whether the | 22 | | 6% rule is met, and then the amounts of the person's equity in | 23 | | all of those properties shall be totaled to determine whether | 24 | | the total equity is $6,000 or less. The total equity value of | 25 | | all properties that is exempt shall be limited to $6,000.
| 26 | | In determining the resources of an individual or any |
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| 1 | | dependents, the
Department shall exclude from consideration | 2 | | the value of funeral and burial
spaces, funeral and
burial | 3 | | insurance the proceeds of which can only be used to pay the | 4 | | funeral
and burial expenses of the insured and funds | 5 | | specifically set aside for the
funeral and burial arrangements | 6 | | of the individual or his or her dependents,
including prepaid | 7 | | funeral and burial plans, to the same extent that such
items | 8 | | are excluded from consideration under the federal Supplemental
| 9 | | Security Income program (SSI). At any time after submitting an | 10 | | application for medical assistance and before a final | 11 | | determination of eligibility has been made by the Department, | 12 | | an applicant may use available resources to purchase one of | 13 | | the prepaid funeral or burial contracts exempted under this | 14 | | Section. | 15 | | Prepaid funeral or burial contracts are exempt to the | 16 | | following 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 | 7 | | contrary, an irrevocable trust containing the resources of a | 8 | | person who is determined to have a disability shall be | 9 | | considered exempt from consideration. A pooled trust must be | 10 | | established and managed by a non-profit association that pools | 11 | | funds but maintains a separate account for each beneficiary. | 12 | | The trust may be established by the person, a parent, | 13 | | grandparent, legal guardian, or court. It must be established | 14 | | for the sole benefit of the person and language contained in | 15 | | the trust shall stipulate that any amount remaining in the | 16 | | trust (up to the amount expended by the Department on medical | 17 | | assistance) that is not retained by the trust for reasonable | 18 | | administrative costs related to wrapping up the affairs of the | 19 | | subaccount shall be paid to the Department upon the death of | 20 | | the person. After a person reaches age 65, any funding by or on | 21 | | behalf of the person to the trust shall be treated as a | 22 | | transfer of assets for less than fair market value unless the | 23 | | person is a ward of a county public guardian or the State | 24 | | Guardian pursuant to Section 13-5 of the Probate Act of 1975 or | 25 | | Section 30 of the Guardianship and Advocacy Act and lives in | 26 | | the community, or the person is a ward of a county public |
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| 1 | | guardian or the State Guardian pursuant to Section 13-5 of the | 2 | | Probate Act of 1975 or Section 30 of the Guardianship and | 3 | | Advocacy Act and a court has found that any expenditures from | 4 | | the trust will maintain or enhance the person's quality of | 5 | | life. If the trust contains proceeds from a personal injury | 6 | | settlement, any Department charge must be satisfied in order | 7 | | for the transfer to the trust to be treated as a transfer for | 8 | | fair market value. | 9 | | The homestead shall be exempt from consideration except to | 10 | | the extent
that it meets the income and shelter needs of the | 11 | | person. "Homestead"
means the dwelling house and contiguous | 12 | | real estate owned and occupied
by the person, regardless of | 13 | | its value. Subject to federal approval, a person shall not be | 14 | | eligible for long-term care services, however, if the person's | 15 | | equity interest in his or her homestead exceeds the minimum | 16 | | home equity as allowed and increased annually under federal | 17 | | law. Subject to federal approval, on and after the effective | 18 | | date of this amendatory Act of the 97th General Assembly, | 19 | | homestead property transferred to a trust shall no longer be | 20 | | considered homestead property.
| 21 | | Occasional or irregular gifts in cash, goods or services | 22 | | from persons
who are not legally responsible relatives which | 23 | | are of nominal value or
which do not have significant effect in | 24 | | meeting essential requirements
shall be disregarded. The | 25 | | eligibility of any applicant for or recipient
of public aid | 26 | | under this Article is not affected by the payment of any
grant |
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| 1 | | under the "Senior Citizens and Disabled Persons Property Tax
| 2 | | Relief Act" or any distributions or items of
income described | 3 | | under subparagraph (X) of paragraph (2) of subsection (a) of
| 4 | | Section 203 of the Illinois Income Tax Act.
| 5 | | The Illinois Department may, after appropriate | 6 | | investigation, establish
and implement a consolidated standard | 7 | | to determine need and eligibility
for and amount of benefits | 8 | | under this Article or a uniform cash supplement
to the federal | 9 | | Supplemental Security Income program for all or any part
of | 10 | | the then current recipients under this Article; provided, | 11 | | however, that
the establishment or implementation of such a | 12 | | standard or supplement shall
not result in reductions in | 13 | | benefits under this Article for the then current
recipients of | 14 | | such benefits.
| 15 | | (Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)
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