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91_HB2271
LRB9104872JSpc
1 AN ACT to amend the Illinois Health Insurance Portability
2 and Accountability Act by changing Section 5 and adding
3 Sections 26, 27, and 28.
4 Be it enacted by the People of the State of Illinois,
5 represented in the General Assembly:
6 Section 5. The Illinois Health Insurance Portability and
7 Accountability Act is amended by changing Section 5 and
8 adding Sections 26, 27, and 28 as follows:
9 (215 ILCS 97/5)
10 Sec. 5. Definitions.
11 "Actuarial certification" means a written statement by a
12 member of the American Academy of Actuaries or other
13 individual acceptable to the Director that a small employer
14 carrier is in compliance with the provisions of Section 30 of
15 this Act based upon an examination that includes a review of
16 the appropriate records and of the actuarial assumptions and
17 methods utilized by the small employer carrier in
18 establishing premium rates for the applicable group health
19 plans.
20 "Base premium rate" means, for each class of business as
21 to a rating period, the lowest premium rate charged or that
22 could be charged under a rating system for that class of
23 business by the small employer carrier to small employers
24 with similar case characteristics for group health plans with
25 the same or similar coverage.
26 "Beneficiary" has the meaning given such term under
27 Section 3(8) of the Employee Retirement Income Security Act
28 of 1974.
29 "Bona fide association" means, with respect to health
30 insurance coverage offered in a State, an association which:
31 (1) has been actively in existence for at least 5
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1 years;
2 (2) has been formed and maintained in good faith
3 for purposes other than obtaining insurance;
4 (3) does not condition membership in the
5 association on any health status-related factor relating
6 to an individual (including an employee of an employer or
7 a dependent of an employee);
8 (4) makes health insurance coverage offered through
9 the association available to all members regardless of
10 any health status-related factor relating to such members
11 (or individuals eligible for coverage through a member);
12 (5) does not make health insurance coverage offered
13 through the association available other than in
14 connection with a member of the association; and
15 (6) meets such additional requirements as may be
16 imposed under State law.
17 "Carrier" means any entity that provides health insurance
18 in this State. For the purposes of this Act, carrier
19 includes a licensed insurance company, a prepaid hospital or
20 medical service plan, a health maintenance organization, a
21 multiple-employer welfare arrangement, or any other entity
22 providing a plan of health insurance or health benefits
23 subject to state insurance regulation.
24 "Case characteristics" means demographic, geographic, or
25 other objective characteristics of a small employer that are
26 considered by the small employer carrier in the determination
27 of premium rates for the small employer. Claim experience,
28 health status, and duration of coverage shall not be
29 considered to be case characteristics.
30 "Class of business" means all or a separate grouping of
31 small employers established pursuant to Section 26.
32 "Church plan" has the meaning given that term under
33 Section 3(33) of the Employee Retirement Income Security Act
34 of 1974.
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1 "COBRA continuation provision" means any of the
2 following:
3 (1) Section 4980B of the Internal Revenue Code of
4 1986, other than subsection (f)(1) of that Section
5 insofar as it relates to pediatric vaccines.
6 (2) Part 6 of subtitle B of title I of the Employee
7 Retirement Income Security Act of 1974, other than
8 Section 609 of that Act.
9 (3) Title XXII of federal Public Health Service
10 Act.
11 "Department" means the Department of Insurance.
12 "Employee" has the meaning given that term under Section
13 3(6) of the Employee Retirement Income Security Act of 1974.
14 "Employer" has the meaning given that term under Section
15 3(5) of the Employee Retirement Income Security Act of 1974,
16 except that the term shall include only employers of 2 or
17 more employees.
18 "Enrollment date" means, with respect to an individual
19 covered under a group health plan or group health insurance
20 coverage, the date of enrollment of the individual in the
21 plan or coverage, or if earlier, the first day of the waiting
22 period for enrollment.
23 "Federal governmental plan" means a governmental plan
24 established or maintained for its employees by the government
25 of the United States or by any agency or instrumentality of
26 that government.
27 "Governmental plan" has the meaning given that term under
28 Section 3(32) of the Employee Retirement Income Security Act
29 of 1974 and any federal governmental plan.
30 "Group health insurance coverage" means, in connection
31 with a group health plan, health insurance coverage offered
32 in connection with the plan.
33 "Group health plan" means an employee welfare benefit
34 plan (as defined in Section 3(1) of the Employee Retirement
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1 Income Security Act of 1974) to the extent that the plan
2 provides medical care (as defined in paragraph (2) of that
3 Section and including items and services paid for as medical
4 care) to employees or their dependents (as defined under the
5 terms of the plan) directly or through insurance,
6 reimbursement, or otherwise.
7 "Health insurance coverage" means benefits consisting of
8 medical care (provided directly, through insurance or
9 reimbursement, or otherwise and including items and services
10 paid for as medical care) under any hospital or medical
11 service policy or certificate, hospital or medical service
12 plan contract, or health maintenance organization contract
13 offered by a health insurance issuer.
14 "Health insurance issuer" means an insurance company,
15 insurance service, or insurance organization (including a
16 health maintenance organization, as defined herein) which is
17 licensed to engage in the business of insurance in a state
18 and which is subject to Illinois law which regulates
19 insurance (within the meaning of Section 514(b)(2) of the
20 Employee Retirement Income Security Act of 1974). The term
21 does not include a group health plan.
22 "Health maintenance organization (HMO)" means:
23 (1) a Federally qualified health maintenance
24 organization (as defined in Section 1301(a) of the Public
25 Health Service Act.);
26 (2) an organization recognized under State law as a
27 health maintenance organization; or
28 (3) a similar organization regulated under State
29 law for solvency in the same manner and to the same
30 extent as such a health maintenance organization.
31 "Index rate" means, for each class of business as to a
32 rating period for small employers with similar case
33 characteristics, the arithmetic average of the applicable
34 base premium rate and the corresponding highest premium rate.
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1
2 "Individual health insurance coverage" means health
3 insurance coverage offered to individuals in the individual
4 market, but does not include short-term limited duration
5 insurance.
6 "Individual market" means the market for health insurance
7 coverage offered to individuals other than in connection with
8 a group health plan.
9 "Large employer" means, in connection with a group health
10 plan with respect to a calendar year and a plan year, an
11 employer who employed an average of at least 51 employees on
12 business days during the preceding calendar year and who
13 employs at least 2 employees on the first day of the plan
14 year.
15 (1) Application of aggregation rule for large
16 employers. All persons treated as a single employer
17 under subsection (b), (c), (m), or (o) of Section 414 of
18 the Internal Revenue Code of 1986 shall be treated as one
19 employer.
20 (2) Employers not in existence in preceding year.
21 In the case of an employer which was not in existence
22 throughout the preceding calendar year, the determination
23 of whether the employer is a large employer shall be
24 based on the average number of employees that it is
25 reasonably expected the employer will employ on business
26 days in the current calendar year.
27 (3) Predecessors. Any reference in this Act to an
28 employer shall include a reference to any predecessor of
29 such employer.
30 "Large group market" means the health insurance market
31 under which individuals obtain health insurance coverage
32 (directly or through any arrangement) on behalf of themselves
33 (and their dependents) through a group health plan maintained
34 by a large employer.
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1 "Late enrollee" means with respect to coverage under a
2 group health plan, a participant or beneficiary who enrolls
3 under the plan other than during:
4 (1) the first period in which the individual is
5 eligible to enroll under the plan; or
6 (2) a special enrollment period under subsection
7 (F) of Section 20.
8 "Medical care" means amounts paid for:
9 (1) the diagnosis, cure, mitigation, treatment, or
10 prevention of disease, or amounts paid for the purpose of
11 affecting any structure or function of the body;
12 (2) amounts paid for transportation primarily for
13 and essential to medical care referred to in item (1);
14 and
15 (3) amounts paid for insurance covering medical
16 care referred to in items (1) and (2).
17 "Nonfederal governmental plan" means a governmental plan
18 that is not a federal governmental plan.
19 "Network plan" means health insurance coverage of a
20 health insurance issuer under which the financing and
21 delivery of medical care (including items and services paid
22 for as medical care) are provided, in whole or in part,
23 through a defined set of providers under contract with the
24 issuer.
25 "Participant" has the meaning given that term under
26 Section 3(7) of the Employee Retirement Income Security Act
27 of 1974.
28 "Placement" or being "placed" for adoption, in connection
29 with any placement for adoption of a child with any person,
30 means the assumption and retention by the person of a legal
31 obligation for total or partial support of the child in
32 anticipation of adoption of the child. The child's placement
33 with the person terminates upon the termination of the legal
34 obligation.
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1 "Plan sponsor" has the meaning given that term under
2 Section 3(16)(B) of the Employee Retirement Income Security
3 Act of 1974.
4 "Preexisting condition exclusion" means, with respect to
5 coverage, a limitation or exclusion of benefits relating to a
6 condition based on the fact that the condition was present
7 before the date of enrollment for such coverage, whether or
8 not any medical advice, diagnosis, care, or treatment was
9 recommended or received before such date.
10 "Premium" means all moneys paid by a small employer and
11 eligible employees as a condition of receiving coverage from
12 a small employer carrier, including any fees or other
13 contributions associated with the group health plan.
14 "Rating period" means the calendar period for which
15 premium rates established by a small employer carrier are
16 assumed to be in effect.
17 "Small employer" means, in connection with a group health
18 plan with respect to a calendar year and a plan year, an
19 employer who employed an average of at least 2 but not more
20 than 50 employees on business days during the preceding
21 calendar year and who employs at least 2 employees on the
22 first day of the plan year.
23 (1) Application of aggregation rule for small
24 employers. All persons treated as a single employer
25 under subsection (b), (c), (m), or (o) of Section 414 of
26 the Internal Revenue Code of 1986 shall be treated as one
27 employer.
28 (2) Employers not in existence in preceding year.
29 In the case of an employer which was not in existence
30 throughout the preceding calendar year, the determination
31 of whether the employer is a small employer shall be
32 based on the average number of employees that it is
33 reasonably expected the employer will employ on business
34 days in the current calendar year.
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1 (3) Predecessors. Any reference in this Act to a
2 small employer shall include a reference to any
3 predecessor of that employer.
4 "Small group market" means the health insurance market
5 under which individuals obtain health insurance coverage
6 (directly or through any arrangement) on behalf of themselves
7 (and their dependents) through a group health plan maintained
8 by a small employer.
9 "State" means each of the several States, the District of
10 Columbia, Puerto Rico, the Virgin Islands, Guam, American
11 Samoa, and the Northern Mariana Islands.
12 "Waiting period" means with respect to a group health
13 plan and an individual who is a potential participant or
14 beneficiary in the plan, the period of time that must pass
15 with respect to the individual before the individual is
16 eligible to be covered for benefits under the terms of the
17 plan.
18 (Source: P.A. 90-30, eff. 7-1-97.)
19 (215 ILCS 97/26 new)
20 Sec. 26. Establishment of class of business.
21 (a) A small employer carrier may establish a separate
22 class of business only to reflect substantial differences in
23 expected claims experience or administrative costs related to
24 the following reasons:
25 (1) the small employer carrier uses more than one
26 type of system for the marketing and sale of group health
27 plans to small employers;
28 (2) the small employer carrier has acquired a class
29 of business from another small employer carrier; or
30 (3) the small employer carrier provides coverage to
31 one or more association groups.
32 (b) A small employer carrier may establish up to 3
33 separate classes of business under subsection (a).
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1 (c) The Director may establish regulations to provide
2 for a period of transition in order for a small employer
3 carrier to come into compliance with subsection (b) in the
4 instance of acquisition of an additional class of business
5 from another small employer carrier.
6 (d) The Director may approve the establishment of
7 additional classes of business upon application to the
8 Director and a finding by the Director that such action would
9 enhance the efficiency and fairness of the small employer
10 marketplace.
11 (215 ILCS 97/27 new)
12 Sec. 27. Premium Rates.
13 (a) Premium rates for group health plans subject to this
14 Act shall be subject to the following provisions:
15 (1) The index rate for a rating period for any
16 class of business shall not exceed the index rate for any
17 other class of business by more than 20%.
18 (2) For a class of business, the premium rates
19 charged during a rating period to small employers with
20 similar case characteristics for the same or similar
21 coverage, or the rates that could be charged to such
22 employers under the rating system for that class of
23 business shall not vary from the index rate by more than
24 10% of the index rate for the first rating period
25 following January 1, 2000; 5% for the second rating
26 period following January 1, 2000; and 0% for subsequent
27 rating periods.
28 (3) The percentage increase in the premium rate
29 charged to a small employer for a new rating period shall
30 not exceed the sum of all of the following, however in no
31 case shall the resulting percentage exceed rates
32 permitted in item (2):
33 (A) The percentage change in the new business
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1 premium rate measured from the first day of the
2 prior rating period to the first day of the new
3 rating period. In the case of a group health plan
4 into which the small employer carrier is no longer
5 enrolling new small employers, the small employer
6 carrier shall use the percentage change in the base
7 premium rate.
8 (B) An adjustment, not to exceed 15% annually
9 and adjusted pro rata for rating periods of less
10 than one year, due to claim experience, health
11 status, or duration of coverage of the employees or
12 dependents of the small employer as determined from
13 the small employer carrier's rate manual for the
14 class of business.
15 (C) Any adjustment due to change in coverage
16 or change in the case characteristics of the small
17 employer as determined from the small employer
18 carrier's rate manual for the class of business.
19 (4) Adjustments in rates for a new rating period
20 due to claim experience, health status, and duration of
21 coverage shall not be charged to individual employees or
22 dependents. Any such adjustment shall be applied
23 uniformly to the rates charged for all employees and
24 dependents of the small employer.
25 (5) Small employer carriers shall apply rating
26 factors, including case characteristics, consistently
27 with respect to all small employers in a class of
28 business. A small employer carrier shall treat all group
29 health plans issued or renewed in the same calendar
30 month as having the same rating period.
31 (6) For the purposes of this subsection, a group
32 health plan that contains a restricted network provision
33 shall not be considered similar coverage to a group
34 health plan that does not contain such a provision,
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1 provided that the restriction of benefits to network
2 providers results in substantial differences in claim
3 costs.
4 (b) A small employer carrier may not transfer a small
5 employer involuntarily into or out of a class of business. A
6 small employer carrier shall not offer to transfer a small
7 employer into or out of a class of business unless such offer
8 is made to transfer all small employers in the class of
9 business without regard to case characteristics, claim
10 experience, health status, or duration of coverage since
11 issue.
12 (c) The Director may suspend for a specified period all
13 or any part of this Section as to the premium rates
14 applicable to one or more small employers for one or more
15 rating periods upon a filing by the small employer carrier
16 and a finding by the Director that either the suspension is
17 reasonable in light of the financial condition of the small
18 employer carrier or the suspension would enhance the
19 efficiency and fairness of the marketplace for small employer
20 health insurance.
21 (215 ILCS 97/28 new)
22 Sec. 28. Rating and underwriting records.
23 (a) A small employer carrier shall maintain at its
24 principal place of business a complete and detailed
25 description of its rating practices and renewal underwriting
26 practices, including information and documentation that
27 demonstrates that its rating methods and practices are based
28 upon commonly accepted actuarial assumptions and are in
29 accordance with sound actuarial principles.
30 (b) A small employer carrier shall file with the
31 Director annually on or before March 15, an actuarial
32 certification certifying that the carrier is in compliance
33 with this Act and that the rating methods of the small
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1 employer carrier are actuarially sound. The certification
2 shall be in a form and manner, and shall contain such
3 information, as specified by the Director. A copy of the
4 certification shall be retained by the small employer carrier
5 at its principal place of business.
6 (c) A small employer carrier shall make the information
7 and documentation described in subsection (a) available to
8 the Director upon request. Except in cases of violations of
9 this Act, the information shall be considered proprietary and
10 trade secret information and shall not be subject to
11 disclosure by the Director to persons outside of the
12 Department except as agreed to by the small employer carrier
13 or as ordered by a court of competent jurisdiction.