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90_SB0659enr
215 ILCS 5/107.05 from Ch. 73, par. 719.05
215 ILCS 5/107.07 from Ch. 73, par. 719.07
215 ILCS 5/107.12 from Ch. 73, par. 719.12
215 ILCS 5/107.13 from Ch. 73, par. 719.13
215 ILCS 5/107.13a from Ch. 73, par. 719.13a
215 ILCS 5/107.14 from Ch. 73, par. 719.14
215 ILCS 5/107.15b new
215 ILCS 5/107.27 from Ch. 73, par. 719.27
215 ILCS 5/107.23 rep.
Amends the Insurance Exchange Article of the Illinois
Insurance Code. Authorizes the exchange to establish annual
fees for the admission of syndicates and limited syndicates.
Provides that the Director of Insurance shall, rather than
may, be responsible for examining the financial records of
the Exchange and related parties. Requires the Exchange to
file an annual financial statement with the Department of
Insurance. Requires syndicates to file quarterly statements,
actuarial opinions, and audited financial reports with the
Department and the Board. Provides that liquidation expenses
of the Illinois Insurance Exchange Immediate Access
Association and any liquidator shall be paid from the
insolvent syndicate's trust or custodial account. Abolishes
limit on examination fees. Provides that the Board of
Trustees of the exchange may adopt rules. Authorizes the
Department of Insurance to disapprove a rule. Provides that
all rules adopted before the effective date of this
amendatory Act shall be deemed to have been approved.
Effective January 1, 1998.
LRB9000419JSgcA
SB659 Enrolled LRB9000419JSgcA
1 AN ACT concerning insurance company privilege taxes,
2 amending named Acts.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Insurance Code is amended by
6 changing Sections 408, 409, 444, 444.1, and 531.13 as
7 follows:
8 (215 ILCS 5/408) (from Ch. 73, par. 1020)
9 Sec. 408. Fees and charges.
10 (1) The Director shall charge, collect and give proper
11 acquittances for the payment of the following fees and
12 charges:
13 (a) For filing all documents submitted for the
14 incorporation or organization or certification of a
15 domestic company, except for a fraternal benefit society,
16 $1,000.
17 (b) For filing all documents submitted for the
18 incorporation or organization of a fraternal benefit
19 society, $250.
20 (c) For filing amendments to articles of
21 incorporation and amendments to declaration of
22 organization, except for a fraternal benefit society, a
23 mutual benefit association, a burial society or a farm
24 mutual, $100.
25 (d) For filing amendments to articles of
26 incorporation of a fraternal benefit society, a mutual
27 benefit association or a burial society, $50.
28 (e) For filing amendments to articles of
29 incorporation of a farm mutual, $25.
30 (f) For filing bylaws or amendments thereto, $25.
31 (g) For filing agreement of merger or
SB659 Enrolled -2- LRB9000419JSgcA
1 consolidation:
2 (i) for a domestic company, except for a
3 fraternal benefit society, a mutual benefit
4 association, a burial society, or a farm mutual,
5 $1,000.
6 (ii) for a foreign or alien company, except
7 for a fraternal benefit society, $300.
8 (iii) for a fraternal benefit society, a
9 mutual benefit association, a burial society, or a
10 farm mutual, $100.
11 (h) For filing agreements of reinsurance by a
12 domestic company, $100.
13 (i) For filing all documents submitted by a foreign
14 or alien company to be admitted to transact business or
15 accredited as a reinsurer in this State, except for a
16 fraternal benefit society, $2,500.
17 (j) For filing all documents submitted by a foreign
18 or alien fraternal benefit society to be admitted to
19 transact business in this State, $250.
20 (k) For filing declaration of withdrawal of a
21 foreign or alien company, $25.
22 (l) For filing annual statement, except a fraternal
23 benefit society, a mutual benefit association, a burial
24 society, or a farm mutual, $100.
25 (m) For filing annual statement by a fraternal
26 benefit society, $50.
27 (n) For filing annual statement by a farm mutual, a
28 mutual benefit association, or a burial society, $25.
29 (o) For issuing a certificate of authority or
30 renewal thereof except to a fraternal benefit society,
31 $100.
32 (p) For issuing a certificate of authority or
33 renewal thereof to a fraternal benefit society, $50.
34 (q) For issuing an amended certificate of
SB659 Enrolled -3- LRB9000419JSgcA
1 authority, $25.
2 (r) For each certified copy of certificate of
3 authority, $10.
4 (s) For each certificate of deposit, or valuation,
5 or compliance or surety certificate, $10.
6 (t) For copies of papers or records per page, $1.
7 (u) For each certification to copies of papers or
8 records, $10.
9 (v) For multiple copies of documents or
10 certificates listed in subparagraphs (r), (s), and (u) of
11 paragraph (1) of this Section, $10 for the first copy of
12 a certificate of any type and $5 for each additional copy
13 of the same certificate requested at the same time,
14 unless, pursuant to paragraph (2) of this Section, the
15 Director finds these additional fees excessive.
16 (w) For issuing a permit to sell shares or increase
17 paid-up capital:
18 (i) in connection with a public stock
19 offering, $150;
20 (ii) in any other case, $50.
21 (x) For issuing any other certificate required or
22 permissible under the law, $25.
23 (y) For filing a plan of exchange of the stock of a
24 domestic stock insurance company, a plan of
25 demutualization of a domestic mutual company, or a plan
26 of reorganization under Article XII, $1,000.
27 (z) For filing a statement of acquisition of a
28 domestic company as defined in Section 131.4 of this
29 Code, $1,000.
30 (aa) For filing an agreement to purchase the
31 business of an organization authorized under the Dental
32 Service Plan Act or the Voluntary Health Services Plans
33 Act or of a health maintenance organization or a limited
34 health service organization, $1,000.
SB659 Enrolled -4- LRB9000419JSgcA
1 (bb) For filing a statement of acquisition of a
2 foreign or alien insurance company as defined in Section
3 131.12a of this Code, $500.
4 (cc) For filing a registration statement as
5 required in Sections 131.13 and 131.14, the notification
6 as required by Sections 131.16, 131.20a, or 141.4, or an
7 agreement or transaction required by Sections 124.2(2),
8 141, 141a, or 141.1, $100.
9 (dd) For filing an application for licensing of:
10 (i) a religious or charitable risk pooling
11 trust or a workers' compensation pool, $500;
12 (ii) a workers' compensation service company,
13 $250;
14 (iii) a self-insured automobile fleet, $100;
15 or
16 (iv) a renewal of or amendment of any license
17 issued pursuant to (i), (ii), or (iii) above, $50.
18 (ee) For filing articles of incorporation for a
19 syndicate to engage in the business of insurance through
20 the Illinois Insurance Exchange, $1,000.
21 (ff) For filing amended articles of incorporation
22 for a syndicate engaged in the business of insurance
23 through the Illinois Insurance Exchange, $50.
24 (gg) For filing articles of incorporation for a
25 limited syndicate to join with other subscribers or
26 limited syndicates to do business through the Illinois
27 Insurance Exchange, $500.
28 (hh) For filing amended articles of incorporation
29 for a limited syndicate to do business through the
30 Illinois Insurance Exchange, $50.
31 (ii) For a permit to solicit subscriptions to a
32 syndicate or limited syndicate, $50.
33 (jj) For the filing of each form as required in
34 Section 143 of this Code, $25 per form. The fee for
SB659 Enrolled -5- LRB9000419JSgcA
1 advisory and rating organizations shall be $100 per form.
2 (i) For the purposes of the form filing fee,
3 filings made on insert page basis will be considered
4 one form at the time of its original submission.
5 Changes made to a form subsequent to its approval
6 shall be considered a new filing.
7 (ii) Only one fee shall be charged for a form,
8 regardless of the number of other forms or policies
9 with which it will be used.
10 (iii) Fees charged for a policy filed as it
11 will be issued regardless of the number of forms
12 comprising that policy shall not exceed $500 or
13 $1000 for advisory or rating organizations.
14 (iv) The Director may by rule exempt forms
15 from such fees.
16 (kk) For filing an application for licensing of a
17 reinsurance intermediary, $250.
18 (ll) For filing an application for renewal of a
19 license of a reinsurance intermediary, $100.
20 (2) When printed copies or numerous copies of the same
21 paper or records are furnished or certified, the Director may
22 reduce such fees for copies if he finds them excessive. He
23 may, when he considers it in the public interest, furnish
24 without charge to state insurance departments and persons
25 other than companies, copies or certified copies of reports
26 of examinations and of other papers and records.
27 (3) The expenses incurred in any performance examination
28 authorized by law shall be paid by the company or person
29 being examined. The charge shall be reasonably related to the
30 cost of the examination including but not limited to
31 compensation of examiners, electronic data processing costs,
32 supervision and preparation of an examination report and
33 lodging and travel expenses. All lodging and travel expenses
34 shall be in accord with the applicable travel regulations as
SB659 Enrolled -6- LRB9000419JSgcA
1 published by the Department of Central Management Services
2 and approved by the Governor's Travel Control Board, except
3 that out-of-state lodging and travel expenses related to
4 examinations authorized under Section 132 shall be in
5 accordance with travel rates prescribed under paragraph
6 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
7 for reimbursement of subsistence expenses incurred during
8 official travel. All lodging and travel expenses may be
9 reimbursed directly upon authorization of the Director. With
10 the exception of the direct reimbursements authorized by the
11 Director, all performance examination charges collected by
12 the Department shall be paid to the Insurance Producers
13 Administration Fund, however, the electronic data processing
14 costs incurred by the Department in the performance of any
15 examination shall be billed directly to the company being
16 examined for payment to the Statistical Services Revolving
17 Fund.
18 (4) At the time of any service of process on the
19 Director as attorney for such service, the Director shall
20 charge and collect the sum of $10.00, which may be recovered
21 as taxable costs by the party to the suit or action causing
22 such service to be made if he prevails in such suit or
23 action.
24 (5) (a) The costs incurred by the Department of
25 Insurance in conducting any hearing authorized by law shall
26 be assessed against the parties to the hearing in such
27 proportion as the Director of Insurance may determine upon
28 consideration of all relevant circumstances including: (1)
29 the nature of the hearing; (2) whether the hearing was
30 instigated by, or for the benefit of a particular party or
31 parties; (3) whether there is a successful party on the
32 merits of the proceeding; and (4) the relative levels of
33 participation by the parties.
34 (b) For purposes of this subsection (5) costs incurred
SB659 Enrolled -7- LRB9000419JSgcA
1 shall mean the hearing officer fees, court reporter fees, and
2 travel expenses of Department of Insurance officers and
3 employees; provided however, that costs incurred shall not
4 include hearing officer fees or court reporter fees unless
5 the Department has retained the services of independent
6 contractors or outside experts to perform such functions.
7 (c) The Director shall make the assessment of costs
8 incurred as part of the final order or decision arising out
9 of the proceeding; provided, however, that such order or
10 decision shall include findings and conclusions in support of
11 the assessment of costs. This subsection (5) shall not be
12 construed as permitting the payment of travel expenses unless
13 calculated in accordance with the applicable travel
14 regulations of the Department of Central Management Services,
15 as approved by the Governor's Travel Control Board. The
16 Director as part of such order or decision shall require all
17 assessments for hearing officer fees and court reporter fees,
18 if any, to be paid directly to the hearing officer or court
19 reporter by the party(s) assessed for such costs. The
20 assessments for travel expenses of Department officers and
21 employees shall be reimbursable to the Director of Insurance
22 for deposit to the fund out of which those expenses had been
23 paid.
24 (d) The provisions of this subsection (5) shall apply in
25 the case of any hearing conducted by the Director of
26 Insurance not otherwise specifically provided for by law.
27 (6) The Director shall charge and collect an annual
28 financial regulation fee from every domestic company for
29 examination and analysis of its financial condition and to
30 fund the internal costs and expenses of the Interstate
31 Insurance Receivership Commission as may be allocated to the
32 State of Illinois and companies doing an insurance business
33 in this State pursuant to Article X of the Interstate
34 Insurance Receivership Compact. The fee shall be the greater
SB659 Enrolled -8- LRB9000419JSgcA
1 fixed amount based upon the combination of nationwide direct
2 premium income and nationwide reinsurance assumed premium
3 income or upon admitted assets calculated under this
4 subsection as follows:
5 (a) Combination of nationwide direct premium income
6 and nationwide reinsurance assumed premium.
7 (i) $100, if the premium is less than $500,000
8 and there is no reinsurance assumed premium;
9 (ii) $500, if the premium is $500,000 or more,
10 but less than $5,000,000 and there is no reinsurance
11 assumed premium; or if the premium is less than
12 $5,000,000 and the reinsurance assumed premium is
13 less than $10,000,000;
14 (iii) $2,500, if the premium is less than
15 $5,000,000 and the reinsurance assumed premium is
16 $10,000,000 or more;
17 (iv) $5,000, if the premium is $5,000,000 or
18 more, but less than $10,000,000;
19 (v) $12,000 $7,500, if the premium is
20 $10,000,000 or more, but less than $25,000,000;
21 (vi) $15,000 $10,000, if the premium is
22 $25,000,000 or more, but less than $50,000,000;
23 (vii) $20,000 $14,000, if the premium is
24 $50,000,000 or more, but less than $100,000,000;
25 (viii) $25,000 $16,000, if the premium is
26 $100,000,000 or more.
27 (b) Admitted assets.
28 (i) $100, if admitted assets are less than
29 $1,000,000;
30 (ii) $500, if admitted assets are $1,000,000
31 or more, but less than $5,000,000;
32 (iii) 2,500, if admitted assets are $5,000,000
33 or more, but less than $25,000,000;
34 (iv) $5,000, if admitted assets are
SB659 Enrolled -9- LRB9000419JSgcA
1 $25,000,000 or more, but less than $50,000,000;
2 (v) $12,000 $7,500, if admitted assets are
3 $50,000,000 or more, but less than $100,000,000;
4 (vi) $15,000 $10,000, if admitted assets are
5 $100,000,000 or more, but less than $500,000,000;
6 (vii) $20,000 $14,000, if admitted assets are
7 $500,000,000 or more, but less than $1,000,000,000;
8 (viii) $25,000 $16,000, if admitted assets are
9 $1,000,000,000 or more.
10 (c) The sum of financial regulation fees charged to
11 the domestic companies of the same domestic affiliated
12 group shall not exceed $100,000 in the aggregate in any
13 single year and shall be billed by the Director to the
14 member company designated by the group.
15 (7) The Director shall charge and collect an annual
16 financial regulation fee from every foreign or alien company,
17 except fraternal benefit societies, for the examination and
18 analysis of its financial condition and to fund the internal
19 costs and expenses of the Interstate Insurance Receivership
20 Commission as may be allocated to the State of Illinois and
21 companies doing an insurance business in this State pursuant
22 to Article X of the Interstate Insurance Receivership
23 Compact. The fee shall be a fixed amount based upon Illinois
24 direct premium income and nationwide reinsurance assumed
25 premium income in accordance with the following schedule:
26 (a) $100, if the premium is less than $500,000 and
27 there is no reinsurance assumed premium;
28 (b) $500, if the premium is $500,000 or more, but
29 less than $5,000,000 and there is no reinsurance assumed
30 premium; or if the premium is less than $5,000,000 and
31 the reinsurance assumed premium is less than $10,000,000;
32 (c) $2,500, if the premium is less than $5,000,000
33 and the reinsurance assumed premium is $10,000,000 or
34 more;
SB659 Enrolled -10- LRB9000419JSgcA
1 (d) $5,000, if the premium is $5,000,000 or more,
2 but less than $10,000,000;
3 (e) $12,000, if the premium is $10,000,000 or more,
4 but less than $25,000,000;
5 (f) $15,000, if the premium is $25,000,000 or more,
6 but less than $50,000,000;
7 (g) $20,000, if the premium is $50,000,000 or more,
8 but less than $100,000,000;
9 (h) $25,000, if the premium is $100,000,000 or
10 more.
11 The sum of financial regulation fees under this
12 subsection (7) charged to the foreign or alien companies
13 within the same affiliated group shall not exceed $100,000 in
14 the aggregate in any single year and shall be billed by the
15 Director to the member company designated by the group.
16 (8) Beginning January 1, 1992, the financial regulation
17 fees imposed under subsections (6) and (7) of this Section
18 shall be paid by each company or domestic affiliated group
19 annually. After January 1, 1994, the fee shall be billed by
20 Department invoice based upon the company's premium income or
21 admitted assets as shown in its annual statement for the
22 preceding calendar year. The invoice is due upon receipt and
23 must be paid no later than June 30 of each calendar year.
24 All financial regulation fees collected by the Department
25 shall be paid to the Insurance Financial Regulation Fund.
26 The Department may not collect financial examiner per diem
27 charges from companies subject to subsections (6) and (7) of
28 this Section undergoing financial examination after June 30,
29 1992.
30 (9) In addition to the financial regulation fee required
31 by this Section, a company undergoing any financial
32 examination authorized by law shall pay the following costs
33 and expenses incurred by the Department: electronic data
34 processing costs, the expenses authorized under Section
SB659 Enrolled -11- LRB9000419JSgcA
1 131.21 and subsection (d) of Section 132.4 of this Code, and
2 lodging and travel expenses.
3 Electronic data processing costs incurred by the
4 Department in the performance of any examination shall be
5 billed directly to the company undergoing examination for
6 payment to the Statistical Services Revolving Fund. Except
7 for direct reimbursements authorized by the Director or
8 direct payments made under Section 131.21 or subsection (d)
9 of Section 132.4 of this Code, all financial regulation fees
10 and all financial examination charges collected by the
11 Department shall be paid to the Insurance Financial
12 Regulation Fund.
13 All lodging and travel expenses shall be in accordance
14 with applicable travel regulations published by the
15 Department of Central Management Services and approved by the
16 Governor's Travel Control Board, except that out-of-state
17 lodging and travel expenses related to examinations
18 authorized under Sections 132.1 through 132.7 shall be in
19 accordance with travel rates prescribed under paragraph
20 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
21 for reimbursement of subsistence expenses incurred during
22 official travel. All lodging and travel expenses may be
23 reimbursed directly upon the authorization of the Director.
24 In the case of an organization or person not subject to
25 the financial regulation fee, the expenses incurred in any
26 financial examination authorized by law shall be paid by the
27 organization or person being examined. The charge shall be
28 reasonably related to the cost of the examination including,
29 but not limited to, compensation of examiners and other costs
30 described in this subsection.
31 (10) Any company, person, or entity failing to make any
32 payment of $100 or more as required under this Section shall
33 be subject to the penalty and interest provisions provided
34 for in subsections (4) and (7) of Section 412.
SB659 Enrolled -12- LRB9000419JSgcA
1 (11) Unless otherwise specified, all of the fees
2 collected under this Section shall be paid into the Insurance
3 Financial Regulation Fund.
4 (12) For purposes of this Section:
5 (a) "domestic company" means a company as defined
6 in Section 2 of this Code which is incorporated or
7 organized under the laws of this State, and in addition
8 includes a not-for-profit corporation authorized under
9 the Dental, Pharmaceutical, or Voluntary Health Service
10 Plan Acts, and a health maintenance organization and a
11 limited health service organization;
12 (b) "foreign company" means a company as defined in
13 Section 2 of this Code which is incorporated or organized
14 under the laws of any state of the United States other
15 than this State and in addition includes a health
16 maintenance organization and a limited health service
17 organization which is incorporated or organized under the
18 laws of any state of the United States other than this
19 State;
20 (c) "alien company" means a company as defined in
21 Section 2 of this Code which is incorporated or organized
22 under the laws of any country other than the United
23 States;
24 (d) "fraternal benefit society" means a
25 corporation, society, order, lodge or voluntary
26 association as defined in Section 282.1 of this Code;
27 (e) "mutual benefit association" means a company,
28 association or corporation authorized by the Director to
29 do business in this State under the provisions of Article
30 XVIII of this Code;
31 (f) "burial society" means a person, firm,
32 corporation, society or association of individuals
33 authorized by the Director to do business in this State
34 under the provisions of Article XIX of this Code; and
SB659 Enrolled -13- LRB9000419JSgcA
1 (g) "farm mutual" means a district, county and
2 township mutual insurance company authorized by the
3 Director to do business in this State under the
4 provisions of the Farm Mutual Insurance Company Act of
5 1986.
6 (Source: P.A. 89-97, eff. 7-7-95; 89-247, eff. 1-1-96;
7 89-626, eff. 8-9-96; 90-177, eff. 7-23-97.)
8 (215 ILCS 5/409) (from Ch. 73, par. 1021)
9 Sec. 409. Annual privilege tax payable by foreign or
10 alien companies.
11 (1) As of January 1, 1999 for all health maintenance
12 organization premiums written; as of July 1, 1998 for all
13 premiums written as accident and health business, voluntary
14 health service plan business, dental service plan business,
15 or limited health service organization business; and as of
16 January 1, 1998 for all other types of insurance premiums
17 written, every company doing any form of insurance business
18 in this State, including, but not limited to, every risk
19 retention group, and excluding all fraternal benefit
20 societies, all farm mutual companies, all religious
21 charitable risk pooling trusts, and excluding all statutory
22 residual market and special purpose entities in which
23 companies are statutorily required to participate, whether
24 incorporated or otherwise, shall pay, for the privilege of
25 doing business in this State, to the Director for the State
26 treasury a State tax equal to 0.5% of the net taxable premium
27 written, together with any amounts due under Section 444 of
28 this Code, except that the tax to be paid on any premium
29 derived from any accident and health insurance or on any
30 insurance business written by any company operating as a
31 health maintenance organization, voluntary health service
32 plan, dental service plan, or limited health service
33 organization shall be equal to 0.4% of such net taxable
SB659 Enrolled -14- LRB9000419JSgcA
1 premium written, together with any amounts due under Section
2 444. Upon the failure of any company to pay any such tax
3 due, the Director may, by order, revoke or suspend the
4 company's certificate of authority after giving 20 days
5 written notice to the company, or commence proceedings for
6 the suspension of business in this State under the procedures
7 set forth by Section 401.1 of this Code. The gross taxable
8 premium written shall be the gross amount of premiums
9 received on direct business during the calendar year on
10 contracts covering risks in this State, except premiums on
11 annuities, premiums on which State premium taxes are
12 prohibited by federal law, premiums paid by the State for
13 health care coverage for Medicaid eligible insureds as
14 described in Section 5-2 of the Illinois Public Aid Code,
15 premiums paid for health care services included as an element
16 of tuition charges at any university or college owned and
17 operated by the State of Illinois, premiums on group
18 insurance contracts under the State Employees Group Insurance
19 Act of 1971, and except premiums for deferred compensation
20 plans for employees of the State, units of local government,
21 or school districts. The net taxable premium shall be the
22 gross taxable premium written reduced only by the following:
23 (a) the amount of premiums returned thereon which
24 shall be limited to premiums returned during the same
25 preceding calendar year and shall not include the return
26 of cash surrender values or death benefits on life
27 policies including annuities;
28 (b) dividends on such direct business that have
29 been paid in cash, applied in reduction of premiums or
30 left to accumulate to the credit of policyholders or
31 annuitants. In the case of life insurance, no deduction
32 shall be made for the payment of deferred dividends paid
33 in cash to policyholders on maturing policies; dividends
34 left to accumulate to the credit of policyholders or
SB659 Enrolled -15- LRB9000419JSgcA
1 annuitants shall be included as gross taxable premium
2 written when such dividend accumulations are applied to
3 purchase paid-up insurance or to shorten the endowment or
4 premium paying period.
5 (2) The annual privilege tax payment due from a company
6 under subsection (4) of this Section may be reduced by: (a)
7 the excess amount, if any, by which the aggregate income
8 taxes paid by the company, on a cash basis, for the preceding
9 calendar year under subsections (a) through (d) of Section
10 201 of the Illinois Income Tax Act exceed 1.5% of the
11 company's net taxable premium written for that prior calendar
12 year, as determined under subsection (1) of this Section; and
13 (b) the amount of any fire department taxes paid by the
14 company during the preceding calendar year under Section
15 11-10-1 of the Illinois Municipal Code. Any deductible
16 amount or offset allowed under items (a) and (b) of this
17 subsection for any calendar year will not be allowed as a
18 deduction or offset against the company's privilege tax
19 liability for any other taxing period or calendar year.
20 (3) If a company survives or was formed by a merger,
21 consolidation, reorganization, or reincorporation, the
22 premiums received and amounts returned or paid by all
23 companies party to the merger, consolidation, reorganization,
24 or reincorporation shall, for purposes of determining the
25 amount of the tax imposed by this Section, be regarded as
26 received, returned, or paid by the surviving or new company.
27 (4)(a) All companies subject to the provisions of this
28 Section shall make an annual return for the preceding
29 calendar year on or before March 15 setting forth such
30 information on such forms as the Director may reasonably
31 require. Payments of quarterly installments of the
32 taxpayer's total estimated tax for the current calendar year
33 shall be due on or before April 15, June 15, September 15,
34 and December 15 of such year, except that all companies
SB659 Enrolled -16- LRB9000419JSgcA
1 transacting insurance in this State whose annual tax for the
2 immediately preceding calendar year was less than $5,000
3 shall make only an annual return. Failure of a company to
4 make the annual payment, or to make the quarterly payments,
5 if required, of at least 25% of either (i) the total tax paid
6 during the previous calendar year or (ii) 80% of the actual
7 tax for the current calendar year shall subject it to the
8 penalty provisions set forth in Section 412 of this Code.
9 (b) Notwithstanding the foregoing provisions, no annual
10 return shall be required or made on March 15, 1998, under
11 this subsection. For the calendar year 1998:
12 (i) each health maintenance organization shall have
13 no estimated tax installments;
14 (ii) all companies subject to the tax as of July 1,
15 1998 as set forth in subsection (1) shall have estimated
16 tax installments due on September 15 and December 15 of
17 1998 which installments shall each amount to no less than
18 one-half of 80% of the actual tax on its net taxable
19 premium written during the period July 1, 1998, through
20 December 31, 1998; and
21 (iii) all other companies shall have estimated tax
22 installments due on June 15, September 15, and December
23 15 of 1998 which installments shall each amount to no
24 less than one-third of 80% of the actual tax on its net
25 taxable premium written during the calendar year 1998.
26 In the year 1999 and thereafter all companies shall make
27 annual and quarterly installments of their estimated tax as
28 provided by paragraph (a) of this subsection.
29 (5) In addition to the authority specifically granted
30 under Article XXV of this Code, the Director shall have such
31 authority to adopt rules and establish forms as may be
32 reasonably necessary for purposes of determining the
33 allocation of Illinois corporate income taxes paid under
34 subsections (a) through (d) of Section 201 of the Illinois
SB659 Enrolled -17- LRB9000419JSgcA
1 Income Tax Act amongst members of a business group that files
2 an Illinois corporate income tax return on a unitary basis,
3 for purposes of regulating the amendment of tax returns, for
4 purposes of defining terms, and for purposes of enforcing the
5 provisions of Article XXV of this Code. The Director shall
6 also have authority to defer, waive, or abate the tax imposed
7 by this Section if in his opinion the company's solvency and
8 ability to meet its insured obligations would be immediately
9 threatened by payment of the tax due.
10 (1) Every foreign or alien company doing an insurance
11 business in this State, except fraternal benefit societies,
12 shall, for the privilege of doing business in this State by
13 renewal of certificate of authority as provided in Section
14 114, pay to the Director for the State treasury a State tax
15 equal to 2 per cent of the net taxable premium income,
16 together with any amounts due under Section 444. Every
17 domestic insurance company, except a fraternal benefit
18 society, which fails to comply with all the requirements of
19 subsection (4) of this Section must pay to the Director for
20 payment into the State Treasury a State tax equal to 2 per
21 cent of the net taxable premium income and upon the failure
22 of any company to pay any such tax due, the Director may, by
23 order, revoke the company's certificate of authority after
24 giving 20 days written notice to the company. The gross
25 taxable premium income shall be the gross amount of premiums
26 received on direct business during the preceding calendar
27 year on contracts covering risks in this State, except
28 premiums on annuities and except premiums on group insurance
29 contracts awarded after the effective date of this amendatory
30 Act of 1976 under the State Employees Group Insurance Act of
31 1971, and except premiums for deferred compensation plans for
32 employees of the State, units of local government or school
33 districts. The net taxable premium income shall be the gross
34 taxable premium income reduced only by the following:
SB659 Enrolled -18- LRB9000419JSgcA
1 (a) the amount of premiums returned thereon which
2 shall be limited to premiums returned during the
3 preceding calendar year and shall not include the return
4 of cash surrender values or death benefits on life
5 policies;
6 (b) dividends on such direct business that have
7 been paid in cash, applied in reduction of premiums or
8 left to accumulate to the credit of policyholders or
9 annuitants. In the case of life insurance, no deduction
10 shall be made for the payment of deferred dividends paid
11 in cash to policyholders on maturing policies; dividends
12 left to accumulate to the credit of policyholders or
13 annuitants shall be included as gross taxable premium
14 income when such dividend accumulations are applied to
15 purchase paid-up insurance or to shorten the endowment or
16 premium paying period.
17 (2) There shall be deducted from the tax thus computed,
18 but only to the extent thereof, the amount, if any, paid
19 during the preceding calendar year: (a) for the benefit of
20 organized fire departments, to cities, villages, incorporated
21 towns and fire protection districts of this State as a tax on
22 premiums received by such company in such cities, villages,
23 incorporated towns and fire protection districts, and (b) as
24 a tax to this State or any subdivision thereof on or measured
25 by net income, and (c) as a tax to this State or any
26 subdivision thereof on or measured by the value of the
27 company in excess of the value of its tangible property, and
28 (d) as a fee or charge for the valuation of life insurance
29 policies, and (e) if the company is not an Illinois domestic
30 company, as a financial regulation fee under subsection (7)
31 of Section 408 of this Code for the examination and analysis
32 of financial condition, and the remainder shall be paid by
33 such company as its annual privilege tax, and (f) for fees
34 paid pursuant to Section 408 (1) (jj).
SB659 Enrolled -19- LRB9000419JSgcA
1 (3) If a company survives or was formed by a merger,
2 consolidation, reorganization or reincorporation, the
3 premiums received, and amounts returned or paid, by all
4 foreign or alien companies parties to such merger,
5 consolidation, reorganization or reincorporation, shall, for
6 the purposes of determining the amount of the tax imposed by
7 this Section, be regarded as received, returned or paid by
8 such surviving or new company.
9 (4) A domestic company must pay the State tax in
10 subsection (1) of this Section unless:
11 (a) it maintains its principal place of business in
12 this State; and
13 (b) it maintains in this State officers and
14 personnel knowledgeable of and responsible for the
15 company's operation, books, records, administration, and
16 annual statement; and
17 (c) it conducts in this State substantially all of
18 its underwriting, policy issuing, and serving operations
19 relating to Illinois policyholders and certificate
20 holders; and
21 (d) it complies with the provisions of Section 133
22 (2) of this Code.
23 Payments shall be due on an estimated basis for all of
24 calendar year 1969 on or before September 1, 1969. Effective
25 January 1, 1970, a company shall make an annual return for
26 the preceding calendar year on or before March 1st setting
27 forth such information on such forms as the Director may
28 reasonably require. Payments of quarterly installments of
29 the taxpayer's total estimated tax for the current calendar
30 year shall be due on or before April 15th, June 15th,
31 September 15th and December 15th, unless for the calendar
32 year 1971, and each calendar year thereafter, insurers
33 transacting insurance in this State whose annual tax for the
34 preceding calendar year was less than $5,000, shall then make
SB659 Enrolled -20- LRB9000419JSgcA
1 only an annual return. Failure of a company to make
2 quarterly payments, if required, of at least one-fourth of
3 either (a) the total tax paid during the previous calendar
4 year or (b) 80% of the actual tax for the current calendar
5 year shall subject it to the penalty provisions set forth in
6 Section 412 of this Act.
7 (Source: P.A. 86-753; 87-108.)
8 (215 ILCS 5/444) (from Ch. 73, par. 1056)
9 Sec. 444. Retaliation.
10 (1) Whenever the existing or future laws of any other
11 state or country shall require of companies incorporated or
12 organized under the laws of this State as a condition
13 precedent to their doing business in such other state or
14 country, compliance with laws, rules, regulations, and
15 prohibitions more onerous or burdensome than the rules and
16 regulations imposed by this State on foreign or alien
17 companies, or shall require any deposit of securities or
18 other obligations in such state or country, for the
19 protection of policyholders or otherwise or require of such
20 companies or agents thereof or brokers the payment of
21 penalties, fees, charges, or taxes greater than the
22 penalties, fees, charges, or taxes required in the aggregate
23 for like purposes by this Code or any other law of this
24 State, of foreign or alien companies, agents thereof or
25 brokers, then such laws, rules, regulations, and prohibitions
26 of said other state or country shall apply to companies
27 incorporated or organized under the laws of such state or
28 country doing business in this State, and all such companies,
29 agents thereof, or brokers doing business in this State,
30 shall be required to make deposits, pay penalties, fees,
31 charges, and taxes, in amounts equal to those required in the
32 aggregate for like purposes of Illinois companies doing
33 business in such state or country, agents thereof or brokers.
SB659 Enrolled -21- LRB9000419JSgcA
1 Whenever any other state or country shall refuse to permit
2 any insurance company incorporated or organized under the
3 laws of this State to transact business according to its
4 usual plan in such other state or country, the director may,
5 if satisfied that such company of this State is solvent,
6 properly managed, and can operate legally under the laws of
7 such other state or country, forthwith suspend or cancel the
8 license of every insurance company doing business in this
9 State which is incorporated or organized under the laws of
10 such other state or country to the extent that it insures in
11 this State against any of the risks or hazards which are
12 sought to be insured against by the company of this State in
13 such other state or country.
14 (2) The provisions of this Section shall not apply to
15 residual market or special purpose assessments or guaranty
16 fund or guaranty association assessments, both under the laws
17 of this State and under the laws of any other state or
18 country, and any tax offset or credit for any such assessment
19 shall, for purposes of this Section, be treated as a tax paid
20 both under the laws of this State and under the laws of any
21 other state or country.
22 (3) The terms "penalties", "fees", "charges", and
23 "taxes" in subsection (1) of this Section shall include: the
24 penalties, fees, charges, and taxes collected under State law
25 and referenced within Article XXV exclusive of any items
26 referenced by subsection (2) of this Section, but including
27 any tax offset allowed under Section 531.13 of this Code; the
28 Illinois corporate income taxes imposed under subsections (a)
29 through (d) of Section 201 of the Illinois Income Tax Act
30 after any tax offset allowed under Section 531.13 of this
31 Code; income or personal property taxes imposed by other
32 states or countries; penalties, fees, charges, and taxes of
33 other states or countries imposed for purposes like those of
34 the penalties, fees, charges, and taxes specified in Article
SB659 Enrolled -22- LRB9000419JSgcA
1 XXV of this Code exclusive of any item referenced in
2 subsection (2) of this Section; and any penalties, fees,
3 charges, and taxes required as a franchise, privilege, or
4 licensing tax for conducting the business of insurance
5 whether calculated as a percentage of income, gross receipts,
6 premium, or otherwise.
7 (4) Nothing contained in this Section or Section 409 or
8 Section 444.1 is intended to authorize or expand any power of
9 local governmental units or municipalities to impose taxes,
10 fees, or charges.
11 (Source: Laws 1941, vol. 1, p. 837.)
12 (215 ILCS 5/444.1) (from Ch. 73, par. 1056.1)
13 Sec. 444.1. Payment of retaliatory taxes.
14 (1) Every foreign or alien company doing insurance
15 business in this State shall pay the Director the retaliatory
16 tax determined in accordance with Section 444.
17 (2) (a) All companies subject to the provisions of this
18 Section shall make an annual return for the preceding
19 calendar year on or before March 15 setting forth such
20 information on such forms as the Director may reasonably
21 require. Payments of quarterly installments of the
22 taxpayer's total estimated retaliatory tax for the current
23 calendar year shall be due on or before April 15, June 15,
24 September 15, and December 15 of such year, except that all
25 companies transacting insurance business in this State whose
26 annual tax for the immediately preceding calendar year was
27 less than $5,000 shall make only an annual return. Failure
28 of a company to make the annual payment, or to make the
29 quarterly payments, if required, of at least one-fourth of
30 either (i) the total tax paid during the previous calendar
31 year or (ii) 80% of the actual tax for the current calendar
32 year shall subject it to the penalty provisions set forth in
33 Section 412 of this Code.
SB659 Enrolled -23- LRB9000419JSgcA
1 (b) Notwithstanding the foregoing provisions of
2 paragraph (a) of this subsection, the retaliatory tax
3 liability of companies under Section 444 of this Code for the
4 calendar year ended December 31, 1997 shall be determined in
5 accordance with this amendatory Act of 1998 and shall include
6 in the aggregate comparative tax burden for the State of
7 Illinois, any tax offset allowed under Section 531.13 of this
8 Code and any income taxes paid for the year 1997 under
9 subsections (a) through (d) of Section 201 of the Illinois
10 Income Tax Act after any tax offset allowed under Section
11 531.13 of this Code.
12 (i) Any annual retaliatory tax returns and payments
13 made for the year ended December 31, 1997 and any
14 quarterly installments of the taxpayer's total estimated
15 1998 retaliatory tax liability paid prior to the
16 effective date of this Amendatory Act of 1998 that do not
17 include the items specified by subsection (1) of this
18 Section shall be amended and restated, at the taxpayer's
19 election, on forms prepared by the Director so as to
20 provide for the inclusion of such items. An amended and
21 restated return for the year ended December 31, 1997
22 filed under this subparagraph shall treat any payment of
23 estimated privilege taxes under Section 409 as in effect
24 prior to October 23, 1997 as a payment of estimated
25 retaliatory taxes for the year ended December 31, 1997.
26 (ii) Any overpayment resulting from such amended
27 return and restated tax liability shall be allowed as a
28 credit against any subsequent privilege or retaliatory
29 tax obligations of the taxpayer.
30 (iii) In the year 1999 and thereafter all companies
31 shall make annual and quarterly installments of their
32 estimated tax as provided by paragraph (a) of this
33 subsection. The Director may order that payments of such
34 tax shall be due on an estimated basis for the 1982
SB659 Enrolled -24- LRB9000419JSgcA
1 calendar year as provided in Section 409 on or before
2 April 15, June 15, September 15 and December 15. For the
3 1983 calendar year, and each calendar year thereafter,
4 the Director may order that payments of quarterly
5 installments of the total estimated tax shall be due and
6 payable on or before April 15, June 15, September 15 and
7 December 15 pursuant to this Section, and such payments
8 shall be in lieu of retaliatory tax payments otherwise
9 required by Section 409. For the 1983 calendar year, and
10 each calendar year thereafter, the taxpayer shall make
11 only an annual return if the annual tax for the preceding
12 calendar year was less than $5,000. Effective January 1,
13 1983, a company shall make an annual return for the
14 preceding calendar year on or before March 1 setting
15 forth such information on such forms as the Director may
16 reasonably require.
17 (3) Any tax payment made under this Section and any tax
18 returns prepared in compliance with Section 410 shall give
19 full consideration to the impact of any future reduction in
20 or elimination of a taxpayer's liability under Section 409,
21 whether such reduction or elimination is due to an operation
22 of law or an Act of the General Assembly.
23 (4) Any foreign or alien taxpayer who makes, under
24 protest, a tax payment required by Section 409 shall, at the
25 time of payment, file a retaliatory tax return sufficient to
26 disclose the full amount of retaliatory taxes which would be
27 due and owing for the tax period in question if the protest
28 were upheld. Notwithstanding the provisions of the State
29 Officers and Employees Money Disposition Act "An Act in
30 relation to the payment and disposition of moneys received by
31 officers and employees of the State of Illinois by virtue of
32 their office or employment", approved June 9, 1911, as now or
33 hereafter amended, or any other laws of this State, the
34 protested payment, to the extent of the retaliatory tax so
SB659 Enrolled -25- LRB9000419JSgcA
1 disclosed, shall be deposited directly in the General Revenue
2 Fund; and the balance of the payment, if any, shall be
3 deposited in a protest account pursuant to the provisions of
4 the aforesaid Act, as now or hereafter amended.
5 (5) The failure of a company to make the annual payment
6 or to make the quarterly payments, if required, of equal to
7 at least one-fourth of either (i) the total tax paid during
8 the preceding calendar year or (ii) 80% of the actual tax for
9 the current calendar year, whichever is greater, shall
10 subject it to the penalty provisions set forth in Section 412
11 of this Code.
12 (Source: P.A. 82-767.)
13 (215 ILCS 5/531.13) (from Ch. 73, par. 1065.80-13)
14 Sec. 531.13. Tax offset. In the event the aggregate
15 Class A, B and C assessments for all member insurers do not
16 exceed $3,000,000 in any one calendar year, no member insurer
17 shall receive a tax offset. However, for in any one calendar
18 year before 1998 in which the total of such assessments
19 exceeds $3,000,000, the amount in excess of $3,000,000 shall
20 be subject to a tax offset to the extent of 20% of the amount
21 of such assessment for each of the 5 five calendar years
22 following the year in which such assessment was paid and each
23 member insurer may offset the proportionate amount of such
24 excess paid by the insurer against its liabilities for the
25 tax imposed by subsections (a) and (b) of Section 201 of the
26 "Illinois Income Tax Act. The provisions of this Section
27 shall expire and be given no effect for any tax period
28 commencing on and after January 1, 2003", for the tax imposed
29 by Section 409 of the "Illinois Insurance Code", and for the
30 fees imposed by Section 408.1 of the "Illinois Insurance
31 Code".
32 (Source: P.A. 84-221.)
SB659 Enrolled -26- LRB9000419JSgcA
1 Section 10. The Illinois Insurance Code is amended by
2 changing Section 408.1 as follows:
3 (215 ILCS 5/408.1) (from Ch. 73, par. 1020.1)
4 Sec. 408.1. Fee for valuation of life insurance
5 policies. Upon the effective date of this amendatory Act of
6 1998, all actions to collect life insurance policy valuation
7 fees or to transfer such fees to the General Revenue Fund
8 from any protest account established under the State Officers
9 and Employees Money Disposition Act shall cease and any such
10 protested life insurance policy valuation fee payments shall
11 be returned to the taxpayer who initiated the protest.) The
12 Director shall charge and collect an annual fee from every
13 domestic company for the valuation of life insurance policies
14 except group contracts awarded under the State Employee Group
15 Insurance Act of 1971, as now or hereafter amended. The fee
16 shall be 3¢ for each $1,000 of direct life insurance policies
17 in force as of December 31, each year, but not less than
18 $100. Each domestic company shall pay the fee under this
19 Section not later than 60 days after the date on which such
20 company is required to file its annual statement for the
21 preceding calendar year, under this Code. Failure of a
22 company to make payment as required shall subject it to the
23 penalty provisions set forth in Section 412 of this Act.
24 (Source: P.A. 81-603.)
25 Section 15. The Dental Service Plan Act is amended by
26 changing Section 43 as follows:
27 (215 ILCS 110/43) (from Ch. 32, par. 690.43)
28 Sec. 43. Every dental service plan corporation organized
29 hereunder shall be operated and conducted not-for-profit and
30 shall be deemed a charitable and benevolent corporation, and
31 all of its funds and property shall be exempt from every
SB659 Enrolled -27- LRB9000419JSgcA
1 State, county, district, municipal and school tax or
2 assessment, and all other taxes and license fees, from the
3 payment of which charitable and benevolent corporations or
4 institutions are now or may hereafter be exempt. This
5 exemption shall not prevail against fees and charges imposed
6 by Sections 408, and 408.2, 409, 444, and 444.1 of the
7 Illinois Insurance Code. The laws of this state applicable to
8 the merger, dissolution and liquidation of domestic
9 not-for-profit corporations and in respect to the rights,
10 classification and meetings of members, the selection,
11 change, duties and powers of corporate officers, and the
12 filing of annual reports by domestic not-for-profit
13 corporations shall be applicable to corporations organized
14 under this act to the extent the same are not inconsistent
15 with the provisions of this act. Wherever in any such laws
16 reference is made to "Directors" of such not-for-profit
17 corporations, such statutory provisions shall be deemed to
18 apply to the trustees of corporations organized under this
19 act, and wherever the office of the Secretary of State is
20 mentioned in such an act, such provisions shall be deemed to
21 refer to and designate the Director of Insurance when applied
22 to corporations organized hereunder.
23 (Source: P.A. 84-989.)
24 Section 20. The Farm Mutual Insurance Company Act of
25 1986 is amended by changing Section 15 as follows:
26 (215 ILCS 120/15) (from Ch. 73, par. 1265)
27 Sec. 15. Application of law. Companies subject to this
28 Act shall be subject to the provisions of Article X (Merger)
29 and Article XXV of the Illinois Insurance Code but shall not
30 be subject to any other provisions of the Illinois Insurance
31 Code unless specifically enumerated therein.
32 (Source: P.A. 84-1431.)
SB659 Enrolled -28- LRB9000419JSgcA
1 Section 25. The Health Maintenance Organization Act is
2 amended by changing Section 5-3 as follows:
3 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
4 (Text of Section before amendment by P.A. 90-372)
5 Sec. 5-3. Insurance Code provisions.
6 (a) Health Maintenance Organizations shall be subject to
7 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
8 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
9 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356t, 367i,
10 401, 401.1, 402, 403, 403A, 408, 408.2, 409, and 412, 444,
11 and 444.1, paragraph (c) of subsection (2) of Section 367,
12 and Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
13 XXVI of the Illinois Insurance Code.
14 (b) For purposes of the Illinois Insurance Code, except
15 for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
16 Health Maintenance Organizations in the following categories
17 are deemed to be "domestic companies":
18 (1) a corporation authorized under the Medical
19 Service Plan Act, the Dental Service Plan Act, the
20 Pharmaceutical Service Plan Act, or the Voluntary Health
21 Services Plans Plan Act, or the Nonprofit Health Care
22 Service Plan Act;
23 (2) a corporation organized under the laws of this
24 State; or
25 (3) a corporation organized under the laws of
26 another state, 30% or more of the enrollees of which are
27 residents of this State, except a corporation subject to
28 substantially the same requirements in its state of
29 organization as is a "domestic company" under Article
30 VIII 1/2 of the Illinois Insurance Code.
31 (c) In considering the merger, consolidation, or other
32 acquisition of control of a Health Maintenance Organization
33 pursuant to Article VIII 1/2 of the Illinois Insurance Code,
SB659 Enrolled -29- LRB9000419JSgcA
1 (1) the Director shall give primary consideration
2 to the continuation of benefits to enrollees and the
3 financial conditions of the acquired Health Maintenance
4 Organization after the merger, consolidation, or other
5 acquisition of control takes effect;
6 (2)(i) the criteria specified in subsection (1)(b)
7 of Section 131.8 of the Illinois Insurance Code shall not
8 apply and (ii) the Director, in making his determination
9 with respect to the merger, consolidation, or other
10 acquisition of control, need not take into account the
11 effect on competition of the merger, consolidation, or
12 other acquisition of control;
13 (3) the Director shall have the power to require
14 the following information:
15 (A) certification by an independent actuary of
16 the adequacy of the reserves of the Health
17 Maintenance Organization sought to be acquired;
18 (B) pro forma financial statements reflecting
19 the combined balance sheets of the acquiring company
20 and the Health Maintenance Organization sought to be
21 acquired as of the end of the preceding year and as
22 of a date 90 days prior to the acquisition, as well
23 as pro forma financial statements reflecting
24 projected combined operation for a period of 2
25 years;
26 (C) a pro forma business plan detailing an
27 acquiring party's plans with respect to the
28 operation of the Health Maintenance Organization
29 sought to be acquired for a period of not less than
30 3 years; and
31 (D) such other information as the Director
32 shall require.
33 (d) The provisions of Article VIII 1/2 of the Illinois
34 Insurance Code and this Section 5-3 shall apply to the sale
SB659 Enrolled -30- LRB9000419JSgcA
1 by any health maintenance organization of greater than 10% of
2 its enrollee population (including without limitation the
3 health maintenance organization's right, title, and interest
4 in and to its health care certificates).
5 (e) In considering any management contract or service
6 agreement subject to Section 141.1 of the Illinois Insurance
7 Code, the Director (i) shall, in addition to the criteria
8 specified in Section 141.2 of the Illinois Insurance Code,
9 take into account the effect of the management contract or
10 service agreement on the continuation of benefits to
11 enrollees and the financial condition of the health
12 maintenance organization to be managed or serviced, and (ii)
13 need not take into account the effect of the management
14 contract or service agreement on competition.
15 (f) Except for small employer groups as defined in the
16 Small Employer Rating, Renewability and Portability Health
17 Insurance Act and except for medicare supplement policies as
18 defined in Section 363 of the Illinois Insurance Code, a
19 Health Maintenance Organization may by contract agree with a
20 group or other enrollment unit to effect refunds or charge
21 additional premiums under the following terms and conditions:
22 (i) the amount of, and other terms and conditions
23 with respect to, the refund or additional premium are set
24 forth in the group or enrollment unit contract agreed in
25 advance of the period for which a refund is to be paid or
26 additional premium is to be charged (which period shall
27 not be less than one year); and
28 (ii) the amount of the refund or additional premium
29 shall not exceed 20% of the Health Maintenance
30 Organization's profitable or unprofitable experience with
31 respect to the group or other enrollment unit for the
32 period (and, for purposes of a refund or additional
33 premium, the profitable or unprofitable experience shall
34 be calculated taking into account a pro rata share of the
SB659 Enrolled -31- LRB9000419JSgcA
1 Health Maintenance Organization's administrative and
2 marketing expenses, but shall not include any refund to
3 be made or additional premium to be paid pursuant to this
4 subsection (f)). The Health Maintenance Organization and
5 the group or enrollment unit may agree that the
6 profitable or unprofitable experience may be calculated
7 taking into account the refund period and the immediately
8 preceding 2 plan years.
9 The Health Maintenance Organization shall include a
10 statement in the evidence of coverage issued to each enrollee
11 describing the possibility of a refund or additional premium,
12 and upon request of any group or enrollment unit, provide to
13 the group or enrollment unit a description of the method used
14 to calculate (1) the Health Maintenance Organization's
15 profitable experience with respect to the group or enrollment
16 unit and the resulting refund to the group or enrollment unit
17 or (2) the Health Maintenance Organization's unprofitable
18 experience with respect to the group or enrollment unit and
19 the resulting additional premium to be paid by the group or
20 enrollment unit.
21 In no event shall the Illinois Health Maintenance
22 Organization Guaranty Association be liable to pay any
23 contractual obligation of an insolvent organization to pay
24 any refund authorized under this Section.
25 (Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
26 90-177, eff. 7-23-97; revised 11-21-97.)
27 (Text of Section after amendment by P.A. 90-372)
28 Sec. 5-3. Insurance Code provisions.
29 (a) Health Maintenance Organizations shall be subject to
30 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
31 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
32 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356t, 367i,
33 401, 401.1, 402, 403, 403A, 408, 408.2, 409, and 412, 444,
34 and 444.1, paragraph (c) of subsection (2) of Section 367,
SB659 Enrolled -32- LRB9000419JSgcA
1 and Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
2 XXVI of the Illinois Insurance Code.
3 (b) For purposes of the Illinois Insurance Code, except
4 for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
5 Health Maintenance Organizations in the following categories
6 are deemed to be "domestic companies":
7 (1) a corporation authorized under the Medical
8 Service Plan Act, the Dental Service Plan Act or, the
9 Voluntary Health Services Plans Plan Act, or the
10 Nonprofit Health Care Service Plan Act;
11 (2) a corporation organized under the laws of this
12 State; or
13 (3) a corporation organized under the laws of
14 another state, 30% or more of the enrollees of which are
15 residents of this State, except a corporation subject to
16 substantially the same requirements in its state of
17 organization as is a "domestic company" under Article
18 VIII 1/2 of the Illinois Insurance Code.
19 (c) In considering the merger, consolidation, or other
20 acquisition of control of a Health Maintenance Organization
21 pursuant to Article VIII 1/2 of the Illinois Insurance Code,
22 (1) the Director shall give primary consideration
23 to the continuation of benefits to enrollees and the
24 financial conditions of the acquired Health Maintenance
25 Organization after the merger, consolidation, or other
26 acquisition of control takes effect;
27 (2)(i) the criteria specified in subsection (1)(b)
28 of Section 131.8 of the Illinois Insurance Code shall not
29 apply and (ii) the Director, in making his determination
30 with respect to the merger, consolidation, or other
31 acquisition of control, need not take into account the
32 effect on competition of the merger, consolidation, or
33 other acquisition of control;
34 (3) the Director shall have the power to require
SB659 Enrolled -33- LRB9000419JSgcA
1 the following information:
2 (A) certification by an independent actuary of
3 the adequacy of the reserves of the Health
4 Maintenance Organization sought to be acquired;
5 (B) pro forma financial statements reflecting
6 the combined balance sheets of the acquiring company
7 and the Health Maintenance Organization sought to be
8 acquired as of the end of the preceding year and as
9 of a date 90 days prior to the acquisition, as well
10 as pro forma financial statements reflecting
11 projected combined operation for a period of 2
12 years;
13 (C) a pro forma business plan detailing an
14 acquiring party's plans with respect to the
15 operation of the Health Maintenance Organization
16 sought to be acquired for a period of not less than
17 3 years; and
18 (D) such other information as the Director
19 shall require.
20 (d) The provisions of Article VIII 1/2 of the Illinois
21 Insurance Code and this Section 5-3 shall apply to the sale
22 by any health maintenance organization of greater than 10% of
23 its enrollee population (including without limitation the
24 health maintenance organization's right, title, and interest
25 in and to its health care certificates).
26 (e) In considering any management contract or service
27 agreement subject to Section 141.1 of the Illinois Insurance
28 Code, the Director (i) shall, in addition to the criteria
29 specified in Section 141.2 of the Illinois Insurance Code,
30 take into account the effect of the management contract or
31 service agreement on the continuation of benefits to
32 enrollees and the financial condition of the health
33 maintenance organization to be managed or serviced, and (ii)
34 need not take into account the effect of the management
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1 contract or service agreement on competition.
2 (f) Except for small employer groups as defined in the
3 Small Employer Rating, Renewability and Portability Health
4 Insurance Act and except for medicare supplement policies as
5 defined in Section 363 of the Illinois Insurance Code, a
6 Health Maintenance Organization may by contract agree with a
7 group or other enrollment unit to effect refunds or charge
8 additional premiums under the following terms and conditions:
9 (i) the amount of, and other terms and conditions
10 with respect to, the refund or additional premium are set
11 forth in the group or enrollment unit contract agreed in
12 advance of the period for which a refund is to be paid or
13 additional premium is to be charged (which period shall
14 not be less than one year); and
15 (ii) the amount of the refund or additional premium
16 shall not exceed 20% of the Health Maintenance
17 Organization's profitable or unprofitable experience with
18 respect to the group or other enrollment unit for the
19 period (and, for purposes of a refund or additional
20 premium, the profitable or unprofitable experience shall
21 be calculated taking into account a pro rata share of the
22 Health Maintenance Organization's administrative and
23 marketing expenses, but shall not include any refund to
24 be made or additional premium to be paid pursuant to this
25 subsection (f)). The Health Maintenance Organization and
26 the group or enrollment unit may agree that the
27 profitable or unprofitable experience may be calculated
28 taking into account the refund period and the immediately
29 preceding 2 plan years.
30 The Health Maintenance Organization shall include a
31 statement in the evidence of coverage issued to each enrollee
32 describing the possibility of a refund or additional premium,
33 and upon request of any group or enrollment unit, provide to
34 the group or enrollment unit a description of the method used
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1 to calculate (1) the Health Maintenance Organization's
2 profitable experience with respect to the group or enrollment
3 unit and the resulting refund to the group or enrollment unit
4 or (2) the Health Maintenance Organization's unprofitable
5 experience with respect to the group or enrollment unit and
6 the resulting additional premium to be paid by the group or
7 enrollment unit.
8 In no event shall the Illinois Health Maintenance
9 Organization Guaranty Association be liable to pay any
10 contractual obligation of an insolvent organization to pay
11 any refund authorized under this Section.
12 (Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
13 90-177, eff. 7-23-97; 90-372, eff. 7-1-98; revised 11-21-97.)
14 Section 30. The Limited Health Service Organization Act
15 is amended by changing Section 4003 as follows:
16 (215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
17 Sec. 4003. Illinois Insurance Code provisions. Limited
18 health service organizations shall be subject to the
19 provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
20 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
21 154.6, 154.7, 154.8, 155.04, 355.2, 356v, 356t, 401, 401.1,
22 402, 403, 403A, 408, 408.2, 409, and 412, 444, and 444.1 and
23 Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
24 XXVI of the Illinois Insurance Code. For purposes of the
25 Illinois Insurance Code, except for Sections 444 and 444.1
26 and Articles XIII and XIII 1/2, limited health service
27 organizations in the following categories are deemed to be
28 domestic companies:
29 (1) a corporation under the laws of this State; or
30 (2) a corporation organized under the laws of
31 another state, 30% of more of the enrollees of which are
32 residents of this State, except a corporation subject to
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1 substantially the same requirements in its state of
2 organization as is a domestic company under Article VIII
3 1/2 of the Illinois Insurance Code.
4 (Source: P.A. 90-25, eff. 1-1-98; revised 10-14-97.)
5 Section 95. No acceleration or delay. Where this Act
6 makes changes in a statute that is represented in this Act by
7 text that is not yet or no longer in effect (for example, a
8 Section represented by multiple versions), the use of that
9 text does not accelerate or delay the taking effect of (i)
10 the changes made by this Act or (ii) provisions derived from
11 any other Public Act.
12 Section 99. Effective date. This Act takes effect upon
13 becoming law.