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


Rep. Natalie A. Manley

Filed: 4/20/2021





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2    AMENDMENT NO. ______. Amend House Bill 295, AS AMENDED, by
3replacing everything after the enacting clause with the
5    "Section 5. The Illinois Insurance Code is amended by
6adding Section 245.3 as follows:
7    (215 ILCS 5/245.3 new)
8    Sec. 245.3. Irrevocable assignment of life insurance to a
9funeral home. An insured or any other person who may be the
10owner of rights under a policy of life insurance may make an
11irrevocable assignment of all or a part of his or her rights
12under the policy to a funeral home in accordance with Section
132b of the Illinois Funeral or Burial Funds Act and have an
14individual 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



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1not limited to, a prepaid funeral or burial contract, an
2irrevocable assignment by an insured or other owner of rights
3under a policy made before or after the effective date of this
4amendatory Act of the 102nd General Assembly is valid for the
5purpose of vesting in the assignee, in accordance with the
6policy or contract as to the time at which it is effective, all
7rights assigned. That irrevocable assignment is, however,
8without prejudice to the company on account of any payment it
9makes or individual policy it issues in accordance with
10paragraphs (G), (H), and (K) of Section 231.1 before receipt
11of notice of the assignment. The insurance company shall
12within 15 business days notify the funeral home and owner of
13the policy of its receipt of the form. A policy owner who
14executes a designation of beneficiary form pursuant to Section
152b of the Illinois Funeral or Burial Funds Act also
16irrevocably waives and cannot exercise the following rights:
17        (1) The right to collect from the insurance company
18    the net proceeds of the policy when it becomes a claim by
19    death.
20        (2) The right to surrender the policy and receive the
21    cash surrender value of the policy.
22        (3) The right to obtain a policy loan.
23        (4) The right to designate as primary beneficiary of
24    the policy anyone other than as provided in that Act.
25        (5) The right to collect or receive income,
26    distributions, or shares of surplus, dividend deposits,



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1    refunds of premium, or additions to the policy.
2    This amendatory Act of the 102nd General Assembly
3acknowledges, declares, and codifies the existing right of
4assignment of interests under life insurance policies.
5    Section 10. The Illinois Funeral or Burial Funds Act is
6amended by changing Section 2a and by by adding Section 2b as
8    (225 ILCS 45/2a)
9    Sec. 2a. Purchase of insurance or annuity.
10    (a) If a purchaser selects the purchase of a life
11insurance policy or tax-deferred annuity contract to fund the
12pre-need contract, the application and collected premium shall
13be mailed within 30 days of signing the pre-need contract.
14    (b) If life insurance or an annuity is used to fund a
15pre-need contract, the seller or provider shall not be named
16as the owner or beneficiary of the policy or annuity. No person
17whose only insurable interest in the insured is the receipt of
18proceeds from the policy or in naming who shall receive the
19proceeds nor any trust acting on behalf of such person or
20seller or provider shall be named as owner or beneficiary of
21the policy or annuity.
22    (c) Nothing shall prohibit the purchaser from irrevocably
23assigning ownership of the policy or annuity used to fund a
24guaranteed price pre-need contract to a person or trust or



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1from irrevocably assigning the benefits of the policy or
2annuity to a funeral home for the purpose of obtaining
3favorable consideration for Medicaid, Supplemental Security
4Income, or another public assistance program, as permitted
5under federal law. The seller or contract provider may be
6named a nominal owner of the life insurance policy only for
7such time as it takes to immediately transfer the policy into a
8trust. Except for this purpose, neither the seller nor the
9contract provider shall be named the owner or the beneficiary
10of 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:
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    (225 ILCS 45/2b new)
7    Sec. 2b. Irrevocable designation of beneficiary of
8existing whole life insurance.
9    (a) In accordance with Section 245.3 of the Illinois
10Insurance Code, an insured or any other person who may be the
11owner of rights under an existing policy of whole life
12insurance may make an irrevocable assignment of all or a part
13of his or her rights under the policy to a provider in
14consideration for signing a guaranteed pre-need contract for
15the purpose of obtaining favorable consideration for Medicaid,
16Supplemental Security Income, or another public assistance
17program. The form prepared by the Department of Healthcare and
18Family Services under paragraph (4) of subsection (c) of
19Section 3-1.2 of the Illinois Public Aid Code or by the
20insurance company shall provide for an irrevocable designation
21of beneficiary of one or more life insurance policies. The
22insured or any other person who may be the owner of rights
23under an existing policy of whole life insurance shall sign a
24guaranteed pre-need contract with the provider that describes
25the cost of the funeral goods and services to be provided upon



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1the person's death, up to $6,774, except that any portion of a
2contract that clearly represents the purchase of burial space,
3as that term is defined for purposes of the Supplemental
4Security Income program, is exempt regardless of value. This
5amount shall be adjusted annually by the Department of Human
6Services for any increase in the Consumer Price Index. The
7guaranteed pre-need contract must provide a complete
8description and cost of the goods and services. More than one
9policy may be subject to this Section if the total face value
10of the policies is necessary to pay the amount described in the
11guaranteed pre-need contract with the provider. All policies
12shall be listed on the form. The insured or any other person
13who may be the owner of rights under an existing policy of
14whole life insurance shall be given a copy of the executed
15form. The licensee shall retain copies for inspection by the
16Comptroller and shall report annually to the Comptroller the
17following: the name of the insured, the insurance policy
18number, the amount of the guaranteed pre-need contract, the
19current value of the policy or benefits designated, and the
20name of the insurance company issuing the policy.
21    (b) The insured or any other person who may be the owner of
22rights under an existing policy of whole life insurance shall
23acknowledge that by making this assignment irrevocable, the
24policy cannot be cancelled, although it does not affect the
25right of the policy owner to cancel the insurance policy
26within the examination period provided under the policy.



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1    (c) Upon the death of the insured, the proceeds of the life
2insurance policies subject to this Section shall be paid to
3the provider, who shall apply such proceeds in the following
4order or priority:
5        (1) first, to the provider in an amount equal to the
6    lesser of:
7            (A) the amount of the guaranteed pre-need
8        contract; or
9            (B) the actual value of the personal property,
10        merchandise, and services provided;
11        (2) second, to the State of Illinois, up to an amount
12    equal to the total medical assistance paid on behalf of
13    the insured; and
14        (3) third, payment of proceeds to a secondary
15    beneficiary (if any) listed on the policy, or to the
16    estate of the decedent if no secondary beneficiary is
17    named on the policy in the event the proceeds exceed the
18    lesser of the prearranged costs or actual value of the
19    personal property, merchandise, and services provided and
20    the total medical assistance paid on behalf of the
21    insured.
22    (d) The provider shall receive and disburse these proceeds
23notwithstanding any other prohibition in law against serving
24as a trustee.
25    (e) Further assignment. The rights and obligations of the
26provider subject to the irrevocable designation of beneficiary



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1may be assigned to another provider upon the choice of the
2insured or the approved representative or the power of
3attorney for property of the insured, or upon the insolvency
4or bankruptcy of the provider. The assignee provider shall:
5(i) be bound to the terms of the irrevocable designation of
6beneficiary; (ii) notify the insurance company or companies of
7the assignment; (iii) notify the Department of Healthcare and
8Family Services of the change in provider; and (iv) retain a
9copy of the assignment for inspection by the Comptroller.
10    Section 15. The Illinois Public Aid Code is amended by
11changing Section 3-1.2 as follows:
12    (305 ILCS 5/3-1.2)  (from Ch. 23, par. 3-1.2)
13    Sec. 3-1.2. Need.
14    (a) Income available to the person, when added to
15contributions in money, substance, or services from other
16sources, including contributions from legally responsible
17relatives, must be insufficient to equal the grant amount
18established by Department regulation for such person. In
19determining earned income to be taken into account,
20consideration shall be given to any expenses reasonably
21attributable to the earning of such income. If federal law or
22regulations permit or require exemption of earned or other
23income and resources, the Illinois Department shall provide by
24rule and regulation that the amount of income to be



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1disregarded be increased (1) to the maximum extent so required
2and (2) to the maximum extent permitted by federal law or
3regulation in effect as of the date this amendatory Act
4becomes law. The Illinois Department may also provide by rule
5and regulation that the amount of resources to be disregarded
6be increased to the maximum extent so permitted or required.
7    (b) Subject to federal approval, resources (for example,
8land, buildings, equipment, supplies, or tools), including
9farmland property and personal property used in the
10income-producing operations related to the farmland (for
11example, equipment and supplies, motor vehicles, or tools),
12necessary for self-support, up to $6,000 of the person's
13equity in the income-producing property, provided that the
14property produces a net annual income of at least 6% of the
15excluded equity value of the property, are exempt. Equity
16value in excess of $6,000 shall not be excluded. If the
17activity produces income that is less than 6% of the exempt
18equity due to reasons beyond the person's control (for
19example, the person's illness or crop failure) and there is a
20reasonable expectation that the property will again produce
21income equal to or greater than 6% of the equity value (for
22example, a medical prognosis that the person is expected to
23respond to treatment or that drought-resistant corn will be
24planted), the equity value in the property up to $6,000 is
25exempt. If the person owns more than one piece of property and
26each produces income, each piece of property shall be looked



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1at to determine whether the 6% rule is met, and then the
2amounts of the person's equity in all of those properties
3shall be totaled to determine whether the total equity is
4$6,000 or less. The total equity value of all properties that
5is exempt shall be limited to $6,000.
6    (c) In determining the resources of an individual or any
7dependents, the Department shall exclude from consideration
8the value of funeral and burial spaces, funeral and burial
9insurance the proceeds of which can only be used to pay the
10funeral and burial expenses of the insured and funds
11specifically set aside for the funeral and burial arrangements
12of the individual or his or her dependents, including prepaid
13funeral and burial plans, to the same extent that such items
14are excluded from consideration under the federal Supplemental
15Security Income program (SSI). At any time after submitting an
16application for medical assistance and before a final
17determination of eligibility has been made by the Department,
18an applicant may use available resources to purchase one of
19the prepaid funeral or burial contracts exempted under this
21    Prepaid funeral or burial contracts are exempt to the
22following extent:
23        (1) Funds in a revocable prepaid funeral or burial
24    contract are exempt up to $1,500, 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.
3        (2) Funds in an irrevocable prepaid funeral or burial
4    contract are exempt up to $6,774 $5,874, except that any
5    portion of a contract that clearly represents the purchase
6    of burial space, as that term is defined for purposes of
7    the Supplemental Security Income program, is exempt
8    regardless of value. This amount shall be adjusted
9    annually for any increase in the Consumer Price Index. The
10    amount exempted shall be limited to the price of the
11    funeral goods and services to be provided upon death. The
12    contract must provide a complete description of the
13    funeral goods and services to be provided and the price
14    thereof. Any amount in the contract not so specified shall
15    be treated as a transfer of assets for less than fair
16    market value.
17        (3) A prepaid, guaranteed-price funeral or burial
18    contract, funded by an irrevocable assignment of a
19    person's life insurance policy to a trust or a funeral
20    home, is exempt. The amount exempted shall be limited to
21    the amount of the insurance benefit designated for the
22    cost of the funeral goods and services to be provided upon
23    the person's death. The contract must provide a complete
24    description of the funeral goods and services to be
25    provided and the price thereof. Any amount in the contract
26    not so specified shall be treated as a transfer of assets



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1    for less than fair market value. The trust must include a
2    statement that, upon the death of the person, the State
3    will receive all amounts remaining in the trust, including
4    any remaining payable proceeds under the insurance policy
5    up to an amount equal to the total medical assistance paid
6    on behalf of the person. The trust is responsible for
7    ensuring that the provider of funeral services under the
8    contract receives the proceeds of the policy when it
9    provides the funeral goods and services specified under
10    the contract. The irrevocable assignment of ownership of
11    the insurance policy must be acknowledged by the insurance
12    company.
13        (4) Existing life insurance policies are exempt if
14    there has been an irrevocable declaration of proceeds at
15    the death of the insured in compliance with this
16    subsection. A person shall sign a contract with a funeral
17    home that describes the cost of the funeral goods and
18    services to be provided upon the person's death, up to
19    $6,774, except that any portion of a contract that clearly
20    represents the purchase of burial space, as that term is
21    defined for purposes of the Supplemental Security Income
22    program, is exempt regardless of value. This amount shall
23    be adjusted annually for any increase in the Consumer
24    Price Index. The contract must provide a complete
25    description of the goods and services to be provided and
26    the price thereof. The person shall sign an irrevocable



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1    designation of beneficiary form declaring that any amounts
2    payable from the policies not used for goods and services
3    as set forth in the contract shall be received by the
4    State, up to an amount equal to the total medical
5    assistance paid on behalf of the person; any funds
6    remaining after payment to the State shall be paid to a
7    secondary beneficiary (if any) listed on the policy, or to
8    the estate of the purchaser if no secondary beneficiary is
9    named on the policy in the event the proceeds exceed the
10    prearranged costs of merchandise and services and the
11    total medical assistance paid on behalf of the insured.
12    More than one policy may be subject to this subsection if
13    the total face value of the policies is necessary to pay
14    the amount described in the contract with the funeral
15    home; policies that are not necessary to pay the amount
16    described in the contract are not exempt. The Department
17    of Healthcare and Family Services shall adopt rules and
18    forms to implement this Section.
19    (d) Notwithstanding any other provision of this Code to
20the contrary, an irrevocable trust containing the resources of
21a person who is determined to have a disability shall be
22considered exempt from consideration. A pooled trust must be
23established and managed by a non-profit association that pools
24funds but maintains a separate account for each beneficiary.
25The trust may be established by the person, a parent,
26grandparent, legal guardian, or court. It must be established



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1for the sole benefit of the person and language contained in
2the trust shall stipulate that any amount remaining in the
3trust (up to the amount expended by the Department on medical
4assistance) that is not retained by the trust for reasonable
5administrative costs related to wrapping up the affairs of the
6subaccount shall be paid to the Department upon the death of
7the person. After a person reaches age 65, any funding by or on
8behalf of the person to the trust shall be treated as a
9transfer of assets for less than fair market value unless the
10person is a ward of a county public guardian or the State
11Guardian pursuant to Section 13-5 of the Probate Act of 1975 or
12Section 30 of the Guardianship and Advocacy Act and lives in
13the community, or the person is a ward of a county public
14guardian or the State Guardian pursuant to Section 13-5 of the
15Probate Act of 1975 or Section 30 of the Guardianship and
16Advocacy Act and a court has found that any expenditures from
17the trust will maintain or enhance the person's quality of
18life. If the trust contains proceeds from a personal injury
19settlement, any Department charge must be satisfied in order
20for the transfer to the trust to be treated as a transfer for
21fair market value.
22    (e) The homestead shall be exempt from consideration
23except to the extent that it meets the income and shelter needs
24of the person. "Homestead" means the dwelling house and
25contiguous real estate owned and occupied by the person,
26regardless of its value. Subject to federal approval, a person



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1shall not be eligible for long-term care services, however, if
2the person's equity interest in his or her homestead exceeds
3the minimum home equity as allowed and increased annually
4under federal law. Subject to federal approval, on and after
5the effective date of this amendatory Act of the 97th General
6Assembly, homestead property transferred to a trust shall no
7longer be considered homestead property.
8    (f) Occasional or irregular gifts in cash, goods or
9services from persons who are not legally responsible
10relatives which are of nominal value or which do not have
11significant effect in meeting essential requirements shall be
13    (g) The eligibility of any applicant for or recipient of
14public aid under this Article is not affected by the payment of
15any grant under the "Senior Citizens and Disabled Persons
16Property Tax Relief Act" or any distributions or items of
17income described under subparagraph (X) of paragraph (2) of
18subsection (a) of Section 203 of the Illinois Income Tax Act.
19    (h) The Illinois Department may, after appropriate
20investigation, establish and implement a consolidated standard
21to determine need and eligibility for and amount of benefits
22under this Article or a uniform cash supplement to the federal
23Supplemental Security Income program for all or any part of
24the then current recipients under this Article; provided,
25however, that the establishment or implementation of such a
26standard or supplement shall not result in reductions in



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1benefits under this Article for the then current recipients of
2such benefits.
3(Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)".