Full Text of HB0295 102nd General Assembly
HB0295ham003 102ND GENERAL ASSEMBLY | Rep. Natalie A. Manley Filed: 4/20/2021
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| 1 | | AMENDMENT TO HOUSE BILL 295
| 2 | | AMENDMENT NO. ______. Amend House Bill 295, AS AMENDED, by | 3 | | replacing everything after the enacting clause with the | 4 | | following:
| 5 | | "Section 5. The Illinois Insurance Code is amended by | 6 | | adding Section 245.3 as follows: | 7 | | (215 ILCS 5/245.3 new) | 8 | | Sec. 245.3. Irrevocable assignment of life insurance to a | 9 | | funeral home. An insured or any other person who may be the | 10 | | owner of rights under a policy of life insurance may make an | 11 | | irrevocable assignment of all or a part of his or her rights | 12 | | under the policy to a funeral home in accordance with Section | 13 | | 2b of the Illinois Funeral or Burial Funds Act and have an | 14 | | 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 |
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| 1 | | not limited to, a prepaid funeral or burial contract, an | 2 | | irrevocable assignment by an insured or other owner of rights | 3 | | under a policy made before or after the effective date of this | 4 | | amendatory Act of the 102nd General Assembly is valid for the | 5 | | purpose of vesting in the assignee, in accordance with the | 6 | | policy or contract as to the time at which it is effective, all | 7 | | rights assigned. That irrevocable assignment is, however, | 8 | | without prejudice to the company on account of any payment it | 9 | | makes or individual policy it issues in accordance with | 10 | | paragraphs (G), (H), and (K) of Section 231.1 before receipt | 11 | | of notice of the assignment. The insurance company shall | 12 | | within 15 business days notify the funeral home and owner of | 13 | | the policy of its receipt of the form. A policy owner who | 14 | | executes a designation of beneficiary form pursuant to Section | 15 | | 2b of the Illinois Funeral or Burial Funds Act also | 16 | | irrevocably 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 | 3 | | acknowledges, declares, and codifies the existing right of | 4 | | assignment of interests under life insurance policies. | 5 | | Section 10. The Illinois Funeral or Burial Funds Act is | 6 | | amended by changing Section 2a and by by adding Section 2b as | 7 | | follows:
| 8 | | (225 ILCS 45/2a)
| 9 | | Sec. 2a. Purchase of insurance or annuity.
| 10 | | (a) If a purchaser selects the purchase of a life | 11 | | insurance policy or
tax-deferred annuity contract to fund the | 12 | | pre-need contract, the application
and collected premium shall | 13 | | be mailed within 30 days of signing the pre-need
contract.
| 14 | | (b) If life insurance or an annuity is used to fund a
| 15 | | pre-need contract,
the seller or provider shall not be named | 16 | | as the owner or beneficiary of the
policy or annuity. No person | 17 | | whose only insurable interest in the insured is
the receipt of | 18 | | proceeds from the policy or in naming who shall receive the
| 19 | | proceeds nor any trust acting on behalf of such person or | 20 | | seller or provider
shall be named as owner or beneficiary of | 21 | | the policy or annuity.
| 22 | | (c) Nothing shall prohibit the purchaser from irrevocably | 23 | | assigning
ownership of the policy or annuity used to fund a | 24 | | guaranteed price pre-need
contract to a person or trust or |
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| 1 | | from irrevocably assigning the benefits of the policy or | 2 | | annuity to a funeral home for the purpose of obtaining | 3 | | favorable
consideration for Medicaid, Supplemental Security | 4 | | Income, or another public
assistance program, as permitted | 5 | | under federal law. The seller or contract
provider may be | 6 | | named a
nominal owner of the life insurance policy only for | 7 | | such
time as it takes to immediately transfer the policy into a
| 8 | | trust. Except for this purpose, neither the
seller nor the | 9 | | contract provider shall be named the owner
or the beneficiary | 10 | | 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 | | (225 ILCS 45/2b new) | 7 | | Sec. 2b. Irrevocable designation of beneficiary of | 8 | | existing whole life insurance. | 9 | | (a) In accordance with Section 245.3 of the Illinois | 10 | | Insurance Code, an insured or any other person who may be the | 11 | | owner of rights under an existing policy of whole life | 12 | | insurance may make an irrevocable assignment of all or a part | 13 | | of his or her rights under the policy to a provider in | 14 | | consideration for signing a guaranteed pre-need contract for | 15 | | the purpose of obtaining favorable consideration for Medicaid, | 16 | | Supplemental Security Income, or another public assistance | 17 | | program. The form prepared by the Department of Healthcare and | 18 | | Family Services under paragraph (4) of subsection (c) of | 19 | | Section 3-1.2 of the Illinois Public Aid Code or by the | 20 | | insurance company shall provide for an irrevocable designation | 21 | | of beneficiary of one or more life insurance policies. The | 22 | | insured or any other person who may be the owner of rights | 23 | | under an existing policy of whole life insurance shall sign a | 24 | | guaranteed pre-need contract with the provider that describes | 25 | | the cost of the funeral goods and services to be provided upon |
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| 1 | | the person's death, up to $6,774, except that any portion of a | 2 | | contract that clearly represents the purchase of burial space, | 3 | | as that term is defined for purposes of the Supplemental | 4 | | Security Income program, is exempt regardless of value. This | 5 | | amount shall be adjusted annually by the Department of Human | 6 | | Services for any increase in the Consumer Price Index. The | 7 | | guaranteed pre-need contract must provide a complete | 8 | | description and cost of the goods and services. More than one | 9 | | policy may be subject to this Section if the total face value | 10 | | of the policies is necessary to pay the amount described in the | 11 | | guaranteed pre-need contract with the provider. All policies | 12 | | shall be listed on the form. The insured or any other person | 13 | | who may be the owner of rights under an existing policy of | 14 | | whole life insurance shall be given a copy of the executed | 15 | | form. The licensee shall retain copies for inspection by the | 16 | | Comptroller and shall report annually to the Comptroller the | 17 | | following: the name of the insured, the insurance policy | 18 | | number, the amount of the guaranteed pre-need contract, the | 19 | | current value of the policy or benefits designated, and the | 20 | | name of the insurance company issuing the policy. | 21 | | (b) The insured or any other person who may be the owner of | 22 | | rights under an existing policy of whole life insurance shall | 23 | | acknowledge that by making this assignment irrevocable, the | 24 | | policy cannot be cancelled, although it does not affect the | 25 | | right of the policy owner to cancel the insurance policy | 26 | | within the examination period provided under the policy. |
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| 1 | | (c) Upon the death of the insured, the proceeds of the life | 2 | | insurance policies subject to this Section shall be paid to | 3 | | the provider, who shall apply such proceeds in the following | 4 | | order 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 | 23 | | notwithstanding any other prohibition in law against serving | 24 | | as a trustee. | 25 | | (e) Further assignment. The rights and obligations of the | 26 | | provider subject to the irrevocable designation of beneficiary |
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| 1 | | may be assigned to another provider upon the choice of the | 2 | | insured or the approved representative or the power of | 3 | | attorney for property of the insured, or upon the insolvency | 4 | | or bankruptcy of the provider. The assignee provider shall: | 5 | | (i) be bound to the terms of the irrevocable designation of | 6 | | beneficiary; (ii) notify the insurance company or companies of | 7 | | the assignment; (iii) notify the Department of Healthcare and | 8 | | Family Services of the change in provider; and (iv) retain a | 9 | | copy of the assignment for inspection by the Comptroller. | 10 | | Section 15. The Illinois Public Aid Code is amended by | 11 | | changing 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
| 15 | | contributions in money, substance, or services from other | 16 | | sources,
including contributions from legally responsible | 17 | | relatives, must be
insufficient to equal the grant amount | 18 | | established by Department regulation
for such person. In | 19 | | determining earned income to be taken into account, | 20 | | consideration
shall be given to any expenses reasonably | 21 | | attributable to the earning of
such income. If federal law or | 22 | | regulations permit or require exemption
of earned or other | 23 | | income and resources, the Illinois Department shall
provide by | 24 | | rule and regulation that the amount of income to be
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| 1 | | disregarded be increased (1) to the maximum extent so required | 2 | | and (2)
to the maximum extent permitted by federal law or | 3 | | regulation in effect
as of the date this amendatory Act | 4 | | becomes law. The Illinois Department
may also provide by rule | 5 | | and regulation that the amount of resources to
be disregarded | 6 | | be increased to the maximum extent so permitted or required. | 7 | | (b) Subject to federal approval, resources (for example, | 8 | | land, buildings, equipment, supplies, or tools), including | 9 | | farmland property and personal property used in the | 10 | | income-producing operations related to the farmland (for | 11 | | example, equipment and supplies, motor vehicles, or tools), | 12 | | necessary for self-support, up to $6,000 of the person's | 13 | | equity in the income-producing property, provided that the | 14 | | property produces a net annual income of at least 6% of the | 15 | | excluded equity value of the property, are exempt. Equity | 16 | | value in excess of $6,000 shall not be excluded. If the | 17 | | activity produces income that is less than 6% of the exempt | 18 | | equity due to reasons beyond the person's control (for | 19 | | example, the person's illness or crop failure) and there is a | 20 | | reasonable expectation that the property will again produce | 21 | | income equal to or greater than 6% of the equity value (for | 22 | | example, a medical prognosis that the person is expected to | 23 | | respond to treatment or that drought-resistant corn will be | 24 | | planted), the equity value in the property up to $6,000 is | 25 | | exempt. If the person owns more than one piece of property and | 26 | | each produces income, each piece of property shall be looked |
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| 1 | | at to determine whether the 6% rule is met, and then the | 2 | | amounts of the person's equity in all of those properties | 3 | | shall be totaled to determine whether the total equity is | 4 | | $6,000 or less. The total equity value of all properties that | 5 | | is exempt shall be limited to $6,000.
| 6 | | (c) In determining the resources of an individual or any | 7 | | dependents, the
Department shall exclude from consideration | 8 | | the value of funeral and burial
spaces, funeral and
burial | 9 | | insurance the proceeds of which can only be used to pay the | 10 | | funeral
and burial expenses of the insured and funds | 11 | | specifically set aside for the
funeral and burial arrangements | 12 | | of the individual or his or her dependents,
including prepaid | 13 | | funeral and burial plans, to the same extent that such
items | 14 | | are excluded from consideration under the federal Supplemental
| 15 | | Security Income program (SSI). At any time after submitting an | 16 | | application for medical assistance and before a final | 17 | | determination of eligibility has been made by the Department, | 18 | | an applicant may use available resources to purchase one of | 19 | | the prepaid funeral or burial contracts exempted under this | 20 | | Section. | 21 | | Prepaid funeral or burial contracts are exempt to the | 22 | | following 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 | 20 | | the contrary, an irrevocable trust containing the resources of | 21 | | a person who is determined to have a disability shall be | 22 | | considered exempt from consideration. A pooled trust must be | 23 | | established and managed by a non-profit association that pools | 24 | | funds but maintains a separate account for each beneficiary. | 25 | | The trust may be established by the person, a parent, | 26 | | grandparent, legal guardian, or court. It must be established |
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| 1 | | for the sole benefit of the person and language contained in | 2 | | the trust shall stipulate that any amount remaining in the | 3 | | trust (up to the amount expended by the Department on medical | 4 | | assistance) that is not retained by the trust for reasonable | 5 | | administrative costs related to wrapping up the affairs of the | 6 | | subaccount shall be paid to the Department upon the death of | 7 | | the person. After a person reaches age 65, any funding by or on | 8 | | behalf of the person to the trust shall be treated as a | 9 | | transfer of assets for less than fair market value unless the | 10 | | person is a ward of a county public guardian or the State | 11 | | Guardian pursuant to Section 13-5 of the Probate Act of 1975 or | 12 | | Section 30 of the Guardianship and Advocacy Act and lives in | 13 | | the community, or the person is a ward of a county public | 14 | | guardian or the State Guardian pursuant to Section 13-5 of the | 15 | | Probate Act of 1975 or Section 30 of the Guardianship and | 16 | | Advocacy Act and a court has found that any expenditures from | 17 | | the trust will maintain or enhance the person's quality of | 18 | | life. If the trust contains proceeds from a personal injury | 19 | | settlement, any Department charge must be satisfied in order | 20 | | for the transfer to the trust to be treated as a transfer for | 21 | | fair market value. | 22 | | (e) The homestead shall be exempt from consideration | 23 | | except to the extent
that it meets the income and shelter needs | 24 | | of the person. "Homestead"
means the dwelling house and | 25 | | contiguous real estate owned and occupied
by the person, | 26 | | regardless of its value. Subject to federal approval, a person |
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| 1 | | shall not be eligible for long-term care services, however, if | 2 | | the person's equity interest in his or her homestead exceeds | 3 | | the minimum home equity as allowed and increased annually | 4 | | under federal law. Subject to federal approval, on and after | 5 | | the effective date of this amendatory Act of the 97th General | 6 | | Assembly, homestead property transferred to a trust shall no | 7 | | longer be considered homestead property.
| 8 | | (f) Occasional or irregular gifts in cash, goods or | 9 | | services from persons
who are not legally responsible | 10 | | relatives which are of nominal value or
which do not have | 11 | | significant effect in meeting essential requirements
shall be | 12 | | disregarded. | 13 | | (g) The eligibility of any applicant for or recipient
of | 14 | | public aid under this Article is not affected by the payment of | 15 | | any
grant under the "Senior Citizens and Disabled Persons | 16 | | Property Tax
Relief Act" or any distributions or items of
| 17 | | income described under subparagraph (X) of paragraph (2) of | 18 | | subsection (a) of
Section 203 of the Illinois Income Tax Act.
| 19 | | (h) The Illinois Department may, after appropriate | 20 | | investigation, establish
and implement a consolidated standard | 21 | | to determine need and eligibility
for and amount of benefits | 22 | | under this Article or a uniform cash supplement
to the federal | 23 | | Supplemental Security Income program for all or any part
of | 24 | | the then current recipients under this Article; provided, | 25 | | however, that
the establishment or implementation of such a | 26 | | standard or supplement shall
not result in reductions in |
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| 1 | | benefits under this Article for the then current
recipients of | 2 | | such benefits.
| 3 | | (Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)".
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