Illinois General Assembly - Full Text of HB4979
Illinois General Assembly

  Bills & Resolutions  
  Compiled Statutes  
  Public Acts  
  Legislative Reports  
  IL Constitution  
  Legislative Guide  
  Legislative Glossary  

 Search By Number
 (example: HB0001)
Search Tips

Search By Keyword

Full Text of HB4979  102nd General Assembly

HB4979sam001 102ND GENERAL ASSEMBLY

Sen. John Connor

Filed: 4/4/2022

 

 


 

 


 
10200HB4979sam001LRB102 22458 KTG 38124 a

1
AMENDMENT TO HOUSE BILL 4979

2    AMENDMENT NO. ______. Amend House Bill 4979 by replacing
3everything after the enacting clause with the following:
 
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. An insured or any other person who may be the
9owner of rights under a policy of life insurance may make an
10irrevocable assignment of all or a part of his or her rights
11under the policy to a funeral home in accordance with Section
122b of the Illinois Funeral or Burial Funds Act. Subject to the
13terms of the policy or a contract relating to the policy,
14including, but not limited to, a prepaid funeral or burial
15contract, an irrevocable assignment by an insured or other
16owner of rights under a policy made before or after the

 

 

10200HB4979sam001- 2 -LRB102 22458 KTG 38124 a

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

 

 

10200HB4979sam001- 3 -LRB102 22458 KTG 38124 a

1    Section 10. The Illinois Funeral or Burial Funds Act is
2amended by changing Section 2a and by adding Section 2b as
3follows:
 
4    (225 ILCS 45/2a)
5    Sec. 2a. Purchase of insurance or annuity.
6    (a) If a purchaser selects the purchase of a life
7insurance policy or tax-deferred annuity contract to fund the
8pre-need contract, the application and collected premium shall
9be mailed within 30 days of signing the pre-need contract.
10    (b) If life insurance or an annuity is used to fund a
11pre-need contract, the seller or provider shall not be named
12as the owner or beneficiary of the policy or annuity. No person
13whose only insurable interest in the insured is the receipt of
14proceeds from the policy or in naming who shall receive the
15proceeds nor any trust acting on behalf of such person or
16seller or provider shall be named as owner or beneficiary of
17the policy or annuity.
18    (c) Nothing shall prohibit the purchaser from irrevocably
19assigning ownership of the policy or annuity used to fund a
20guaranteed price pre-need contract to a person or trust or
21from irrevocably assigning the benefits of the policy or
22annuity to a funeral home for the purpose of obtaining
23favorable consideration for Medicaid, Supplemental Security
24Income, or another public assistance program, as permitted
25under federal law. The seller or contract provider may be

 

 

10200HB4979sam001- 4 -LRB102 22458 KTG 38124 a

1named a nominal owner of the life insurance policy only for
2such time as it takes to immediately transfer the policy into a
3trust. Except for this purpose, neither the seller nor the
4contract provider shall be named the owner or the beneficiary
5of the policy or annuity.
6    (d) If a life insurance policy or annuity contract is used
7to fund a pre-need contract, except for guaranteed price
8contracts permitted in Section 4(a) of this Act, the pre-need
9contract must be revocable, and any assignment provision in
10the pre-need contract must contain the following disclosure in
1112 point bold type:
12    THIS ASSIGNMENT MAY BE REVOKED BY THE ASSIGNOR OR
13ASSIGNOR'S SUCCESSOR OR, IF THE ASSIGNOR IS ALSO THE INSURED
14AND DECEASED, BY THE REPRESENTATIVE OF THE INSURED'S ESTATE
15BEFORE THE RENDERING TO THE CEMETERY SERVICES OR GOODS OR
16FUNERAL SERVICES OR GOODS. IF THE ASSIGNMENT IS REVOKED, THE
17DEATH BENEFIT UNDER THE LIFE INSURANCE POLICY OR ANNUITY
18CONTRACT SHALL BE PAID IN ACCORDANCE WITH THE BENEFICIARY
19DESIGNATION UNDER THE INSURANCE POLICY OR ANNUITY CONTRACT.
20    (e) Sales proceeds shall not be used to purchase life
21insurance policies or tax-deferred annuities unless the
22company issuing the life insurance policies or tax-deferred
23annuities is licensed with the Illinois Department of
24Insurance, and the insurance producer or annuity seller is
25licensed to do business in the State of Illinois.
26(Source: P.A. 92-419, eff. 1-1-02.)
 

 

 

10200HB4979sam001- 5 -LRB102 22458 KTG 38124 a

1    (225 ILCS 45/2b new)
2    Sec. 2b. Irrevocable designation of beneficiary of
3existing life insurance.
4    (a) In accordance with Section 245.3 of the Illinois
5Insurance Code, an insured or any other person who may be the
6owner of rights under an existing policy of life insurance may
7make an irrevocable assignment of all or a part of his or her
8rights under the policy to a provider in consideration for
9signing a guaranteed pre-need contract for the purpose of
10obtaining favorable consideration for Medicaid, Supplemental
11Security Income, or another public assistance program. The
12form that shall effectuate the irrevocable assignment and
13thereby provide for the irrevocable designation of beneficiary
14of one or more life insurance policies, which shall comply
15with all applicable federal laws and regulations, shall be
16prepared by the Department of Healthcare and Family Services
17under paragraph (4) of subsection (c) of Section 3-1.2 of the
18Illinois Public Aid Code or such form, approved in advance by
19the Department of Healthcare and Family Services, that has
20been prepared by an insurance company licensed to operate in
21the State of Illinois. The insured or any other person who may
22be the owner of rights under an existing policy of life
23insurance shall sign a guaranteed pre-need contract with the
24provider that describes the cost of the funeral goods and
25services to be provided upon the person's death, up to $7,248,

 

 

10200HB4979sam001- 6 -LRB102 22458 KTG 38124 a

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

 

 

10200HB4979sam001- 7 -LRB102 22458 KTG 38124 a

1    (c) No commission may be sought or received in connection
2with any cash advance allowance included in the guaranteed
3pre-need contract.
4    (d) For guaranteed pre-need contracts with cash advances,
5the contract shall include a disclosure, in 12 point bold type
6and located immediately above such cash advance allowance,
7that states: "No interment, inurnment, or entombment right has
8been selected or reserved with this allowance; cash advances
9are merely an allowance toward the then-current costs for the
10involved items, to be purchased after death. Burial space
11allowances may only be excluded from resources under Medicaid
12if a separate contract is executed for such burial space with a
13cemetery."
14    (e) Upon the death of the insured, the proceeds of the life
15insurance policies subject to this Section shall be paid to
16the provider, who shall apply such proceeds in the following
17order or priority:
18        (1) first, to the provider in an amount equal to the
19    lesser of:
20            (A) the amount of the guaranteed pre-need contract
21        for payment of all services, goods, and cash advances
22        in the amounts indicated on the pre-need contract; or
23            (B) the actual value of the services, goods, and
24        cash advances, not to exceed the amounts indicated in
25        the pre-need contract;
26        (2) second, to the State of Illinois, up to an amount

 

 

10200HB4979sam001- 8 -LRB102 22458 KTG 38124 a

1    equal to the total medical assistance paid on behalf of
2    the insured; and
3        (3) third, payment of proceeds to a secondary
4    beneficiary (if any) listed on the policy, or to the
5    estate of the decedent if no secondary beneficiary is
6    named on the policy in the event the proceeds exceed the
7    amount of the pre-need contract for payment of all
8    services, goods and cash advances in the amounts indicated
9    on the pre-need contract and the total medical assistance
10    paid on behalf of the insured.
11    (f) The provider shall receive and disburse these proceeds
12notwithstanding any other prohibition in law against serving
13as a trustee. The provider shall promptly deposit these funds
14into a non-interest bearing checking or share account that has
15been established to receive proceeds of this type. These
16proceeds shall not be commingled with any other account of the
17provider. The account may contain the funds of more than one
18client. The provider may disburse these funds to itself for
19goods and services. The provider shall maintain a ledger
20indicating the amount of proceeds received and the
21disbursement of those proceeds. A copy of this ledger shall be
22provided to the Comptroller and the Department of Healthcare
23and Family Services, and to the estate or heirs of the insured,
24as applicable, if requested by them. For the purpose of this
25Section, the providers who receive and disburse these proceeds
26from life insurance policies shall be funeral homes.

 

 

10200HB4979sam001- 9 -LRB102 22458 KTG 38124 a

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

 

 

10200HB4979sam001- 10 -LRB102 22458 KTG 38124 a

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

 

 

10200HB4979sam001- 11 -LRB102 22458 KTG 38124 a

1planted), the equity value in the property up to $6,000 is
2exempt. If the person owns more than one piece of property and
3each produces income, each piece of property shall be looked
4at to determine whether the 6% rule is met, and then the
5amounts of the person's equity in all of those properties
6shall be totaled to determine whether the total equity is
7$6,000 or less. The total equity value of all properties that
8is exempt shall be limited to $6,000.
9    (c) In determining the resources of an individual or any
10dependents, the Department shall exclude from consideration
11the value of funeral and burial spaces, funeral and burial
12insurance the proceeds of which can only be used to pay the
13funeral and burial expenses of the insured and funds
14specifically set aside for the funeral and burial arrangements
15of the individual or his or her dependents, including prepaid
16funeral and burial plans, to the same extent that such items
17are excluded from consideration under the federal Supplemental
18Security Income program (SSI). At any time prior to or after
19submitting an application for medical assistance and before a
20final determination of eligibility has been made by the
21Department, an applicant may use available resources to
22purchase one of the prepaid funeral or burial contracts
23exempted under this Section.
24    Prepaid funeral or burial contracts are exempt to the
25following extent:
26        (1) Funds in a revocable prepaid funeral or burial

 

 

10200HB4979sam001- 12 -LRB102 22458 KTG 38124 a

1    contract are exempt up to $1,500, except that any portion
2    of a contract that clearly represents the purchase of
3    burial space, as that term is defined for purposes of the
4    Supplemental Security Income program, is exempt regardless
5    of value.
6        (2) Funds in an irrevocable prepaid funeral or burial
7    contract are exempt up to $7,248 $5,874, except that any
8    portion of a contract that clearly represents the purchase
9    of burial space, as that term is defined for purposes of
10    the Supplemental Security Income program, is exempt
11    regardless of value. This amount shall be adjusted
12    annually for any increase in the Consumer Price Index. The
13    amount exempted shall be limited to the price of the
14    funeral goods and services to be provided upon death. The
15    contract must provide a complete description of the
16    funeral goods and services to be provided and the price
17    thereof. Any amount in the contract not so specified shall
18    be treated as a transfer of assets for less than fair
19    market value.
20        (3) A prepaid, guaranteed-price funeral or burial
21    contract, funded by an irrevocable assignment of a
22    person's life insurance policy to a trust or a funeral
23    home, is exempt. The amount exempted shall be limited to
24    the amount of the insurance benefit designated for the
25    cost of the funeral goods and services to be provided upon
26    the person's death. The contract must provide a complete

 

 

10200HB4979sam001- 13 -LRB102 22458 KTG 38124 a

1    description of the funeral goods and services to be
2    provided and the price thereof. Any amount in the contract
3    not so specified shall be treated as a transfer of assets
4    for less than fair market value. The trust must include a
5    statement that, upon the death of the person, the State
6    will receive all amounts remaining in the trust, including
7    any remaining payable proceeds under the insurance policy
8    up to an amount equal to the total medical assistance paid
9    on behalf of the person. The trust is responsible for
10    ensuring that the provider of funeral services under the
11    contract receives the proceeds of the policy when it
12    provides the funeral goods and services specified under
13    the contract. The irrevocable assignment of ownership of
14    the insurance policy must be acknowledged by the insurance
15    company.
16        (4) Existing life insurance policies are exempt if
17    there has been an irrevocable assignment in compliance
18    with Section 2b of the Illinois Funeral or Burial Funds
19    Act. A person shall sign a contract with a funeral home,
20    which is licensed under the Illinois Funeral or Burial
21    Funds Act, that describes the cost of the funeral goods
22    and services to be provided upon the person's death, up to
23    $7,248, except that any portion of a contract that clearly
24    represents the purchase of burial space, as that term is
25    defined for purposes of the Supplemental Security Income
26    program, is exempt regardless of value. This amount shall

 

 

10200HB4979sam001- 14 -LRB102 22458 KTG 38124 a

1    be adjusted annually for any increase in the Consumer
2    Price Index. The contract must provide a complete
3    description of the goods and services and any cash
4    advances to be provided and the price thereof. The person
5    shall sign an irrevocable designation of beneficiary form
6    declaring that any amounts payable from the policies not
7    used for goods and services and any cash advances as set
8    forth in the contract shall be received by the State, up to
9    an amount equal to the total medical assistance paid on
10    behalf of the person; any funds remaining after payment to
11    the State shall be paid to a secondary beneficiary (if
12    any) listed on the policy, or to the estate of the
13    purchaser if no secondary beneficiary is named on the
14    policy in the event the proceeds exceed the prearranged
15    costs of merchandise and services and any cash advances
16    and the total medical assistance paid on behalf of the
17    insured. More than one policy may be subject to this
18    subsection if the total face value of the policies is
19    necessary to pay the amount described in the contract with
20    the funeral home; policies that are not necessary to pay
21    the amount described in the contract are not exempt. The
22    licensed funeral home to which the life insurance policy
23    benefits have been irrevocably assigned shall retain
24    copies for inspection by the Comptroller and shall report
25    annually to the Comptroller the following: the name of the
26    insured, the name of the insurance company and policy

 

 

10200HB4979sam001- 15 -LRB102 22458 KTG 38124 a

1    number, an itemized account of the amount of the contract
2    for goods and services and any cash advances provided, and
3    the current value of the policy of benefits designated
4    with a record of all amounts paid back to the State or
5    other beneficiary. The Department of Healthcare and Family
6    Services shall adopt rules and forms to implement this
7    Section.
8    (d) Notwithstanding any other provision of this Code to
9the contrary, an irrevocable trust containing the resources of
10a person who is determined to have a disability shall be
11considered exempt from consideration. A pooled trust must be
12established and managed by a non-profit association that pools
13funds but maintains a separate account for each beneficiary.
14The trust may be established by the person, a parent,
15grandparent, legal guardian, or court. It must be established
16for the sole benefit of the person and language contained in
17the trust shall stipulate that any amount remaining in the
18trust (up to the amount expended by the Department on medical
19assistance) that is not retained by the trust for reasonable
20administrative costs related to wrapping up the affairs of the
21subaccount shall be paid to the Department upon the death of
22the person. After a person reaches age 65, any funding by or on
23behalf of the person to the trust shall be treated as a
24transfer of assets for less than fair market value unless the
25person is a ward of a county public guardian or the State
26Guardian pursuant to Section 13-5 of the Probate Act of 1975 or

 

 

10200HB4979sam001- 16 -LRB102 22458 KTG 38124 a

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

 

 

10200HB4979sam001- 17 -LRB102 22458 KTG 38124 a

1disregarded.
2    (g) The eligibility of any applicant for or recipient of
3public aid under this Article is not affected by the payment of
4any grant under the "Senior Citizens and Disabled Persons
5Property Tax Relief Act" or any distributions or items of
6income described under subparagraph (X) of paragraph (2) of
7subsection (a) of Section 203 of the Illinois Income Tax Act.
8    (h) The Illinois Department may, after appropriate
9investigation, establish and implement a consolidated standard
10to determine need and eligibility for and amount of benefits
11under this Article or a uniform cash supplement to the federal
12Supplemental Security Income program for all or any part of
13the then current recipients under this Article; provided,
14however, that the establishment or implementation of such a
15standard or supplement shall not result in reductions in
16benefits under this Article for the then current recipients of
17such benefits.
18    (i) The provisions under paragraph (4) of subsection (c)
19are subject to federal approval. The Department of Healthcare
20and Family Services shall apply for any necessary federal
21waivers or approvals to implement by January 1, 2023 the
22changes made to this Section by this amendatory Act of the
23102nd General Assembly.
24(Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)
 
25    Section 99. Effective date. This Act takes effect upon

 

 

10200HB4979sam001- 18 -LRB102 22458 KTG 38124 a

1becoming law.".