State of Illinois
92nd General Assembly
Legislation

   [ Search ]   [ PDF text ]   [ Legislation ]   
[ Home ]   [ Back ]   [ Bottom ]



92_HB2081

 
                                               LRB9206834JSpc

 1        AN ACT concerning health benefits for dependents.

 2        Be  it  enacted  by  the People of the State of Illinois,
 3    represented in the General Assembly:

 4        Section 5.  The State Employees Group  Insurance  Act  of
 5    1971 is amended by changing Section 3 as follows:

 6        (5 ILCS 375/3) (from Ch. 127, par. 523)
 7        Sec.   3.  Definitions.   Unless  the  context  otherwise
 8    requires, the following words and phrases as used in this Act
 9    shall have the following meanings.  The Department may define
10    these and other words and phrases separately for the  purpose
11    of  implementing  specific  programs providing benefits under
12    this Act.
13        (a)  "Administrative  service  organization"  means   any
14    person,  firm  or  corporation experienced in the handling of
15    claims  which  is  fully  qualified,  financially  sound  and
16    capable of meeting the service requirements of a contract  of
17    administration executed with the Department.
18        (b)  "Annuitant"  means  (1)  an employee who retires, or
19    has retired, on or after January  1,  1966  on  an  immediate
20    annuity under the provisions of Articles 2, 14, 15 (including
21    an  employee  who  has  retired under the optional retirement
22    program established under Section 15-158.2), paragraphs  (2),
23    (3),  or (5) of Section 16-106, or Article 18 of the Illinois
24    Pension  Code;  (2)  any  person  who  was  receiving   group
25    insurance  coverage  under  this  Act as of March 31, 1978 by
26    reason of his status as an annuitant, even though the annuity
27    in  relation  to  which  such  coverage  was  provided  is  a
28    proportional annuity based on less than the minimum period of
29    service required for  a  retirement  annuity  in  the  system
30    involved;  (3)  any  person not otherwise covered by this Act
31    who has retired as a participating member under Article 2  of
 
                            -2-                LRB9206834JSpc
 1    the   Illinois   Pension  Code  but  is  ineligible  for  the
 2    retirement  annuity  under  Section  2-119  of  the  Illinois
 3    Pension Code; (4) the spouse of any person who is receiving a
 4    retirement annuity under Article 18 of the  Illinois  Pension
 5    Code  and  who  is  covered  under  a  group health insurance
 6    program sponsored by a governmental employer other  than  the
 7    State  of  Illinois  and who has irrevocably elected to waive
 8    his or her coverage under this Act and to  have  his  or  her
 9    spouse  considered  as the "annuitant" under this Act and not
10    as a "dependent"; or (5) an  employee  who  retires,  or  has
11    retired,  from  a qualified position, as determined according
12    to rules promulgated by the Director, under a qualified local
13    government  or  a  qualified  rehabilitation  facility  or  a
14    qualified  domestic  violence  shelter   or   service.   (For
15    definition of "retired employee", see (p) post).
16        (b-5)  "New  SERS  annuitant"  means  a person who, on or
17    after January 1, 1998, becomes an annuitant,  as  defined  in
18    subsection   (b),   by  virtue  of  beginning  to  receive  a
19    retirement annuity under Article 14 of the  Illinois  Pension
20    Code,  and is eligible to participate in the basic program of
21    group health benefits provided for annuitants under this Act.
22        (b-6)  "New SURS annuitant" means a person who (1) on  or
23    after  January  1,  1998, becomes an annuitant, as defined in
24    subsection  (b),  by  virtue  of  beginning  to   receive   a
25    retirement  annuity  under Article 15 of the Illinois Pension
26    Code, (2) has not made the election authorized under  Section
27    15-135.1 of the Illinois Pension Code, and (3) is eligible to
28    participate  in  the  basic  program of group health benefits
29    provided for annuitants under this Act.
30        (b-7)  "New TRS State annuitant" means a person  who,  on
31    or  after  July  1, 1998, becomes an annuitant, as defined in
32    subsection  (b),  by  virtue  of  beginning  to   receive   a
33    retirement  annuity  under Article 16 of the Illinois Pension
34    Code based on service as a teacher as  defined  in  paragraph
 
                            -3-                LRB9206834JSpc
 1    (2),  (3),  or  (5)  of  Section  16-106 of that Code, and is
 2    eligible to participate in the basic program of group  health
 3    benefits provided for annuitants under this Act.
 4        (c)  "Carrier"   means   (1)   an  insurance  company,  a
 5    corporation  organized  under  the  Limited  Health   Service
 6    Organization Act or the Voluntary Health Services Plan Act, a
 7    partnership,  or other nongovernmental organization, which is
 8    authorized  to  do  group  life  or  group  health  insurance
 9    business in Illinois, or (2)  the  State  of  Illinois  as  a
10    self-insurer.
11        (d)  "Compensation"  means  salary  or wages payable on a
12    regular payroll by the State Treasurer on a  warrant  of  the
13    State Comptroller out of any State, trust or federal fund, or
14    by  the Governor of the State through a disbursing officer of
15    the State out of a trust or out of federal funds, or  by  any
16    Department  out  of State, trust, federal or other funds held
17    by the State Treasurer or the Department, to any  person  for
18    personal   services  currently  performed,  and  ordinary  or
19    accidental disability  benefits  under  Articles  2,  14,  15
20    (including  ordinary  or accidental disability benefits under
21    the optional retirement  program  established  under  Section
22    15-158.2),  paragraphs (2), (3), or (5) of Section 16-106, or
23    Article 18 of  the  Illinois  Pension  Code,  for  disability
24    incurred after January 1, 1966, or benefits payable under the
25    Workers'   Compensation   or  Occupational  Diseases  Act  or
26    benefits  payable  under  a  sick  pay  plan  established  in
27    accordance  with  Section  36  of  the  State  Finance   Act.
28    "Compensation" also means salary or wages paid to an employee
29    of any qualified local government or qualified rehabilitation
30    facility or a qualified domestic violence shelter or service.
31        (e)  "Commission"   means   the   State  Employees  Group
32    Insurance  Advisory  Commission  authorized  by   this   Act.
33    Commencing  July  1,  1984,  "Commission" as used in this Act
34    means  the  Illinois  Economic  and  Fiscal   Commission   as
 
                            -4-                LRB9206834JSpc
 1    established  by the Legislative Commission Reorganization Act
 2    of 1984.
 3        (f)  "Contributory", when  referred  to  as  contributory
 4    coverage,  shall  mean optional coverages or benefits elected
 5    by the member toward the cost  of  which  such  member  makes
 6    contribution, or which are funded in whole or in part through
 7    the acceptance of a reduction in earnings or the foregoing of
 8    an increase in earnings by an employee, as distinguished from
 9    noncontributory  coverage or benefits which are paid entirely
10    by the State of Illinois without reduction  of  the  member's
11    salary.
12        (g)  "Department"   means  any  department,  institution,
13    board, commission, officer, court or any agency of the  State
14    government  receiving  appropriations  and  having  power  to
15    certify  payrolls  to the Comptroller authorizing payments of
16    salary and wages against such appropriations as are  made  by
17    the  General  Assembly  from any State fund, or against trust
18    funds held by the State  Treasurer  and  includes  boards  of
19    trustees of the retirement systems created by Articles 2, 14,
20    15,  16  and  18  of the Illinois Pension Code.  "Department"
21    also includes the  Illinois  Comprehensive  Health  Insurance
22    Board,  the Board of Examiners established under the Illinois
23    Public Accounting Act, and the Illinois Rural Bond Bank.
24        (h)  "Dependent", when the term is used in the context of
25    the health and life plan, means a  member's  spouse  and  any
26    unmarried child (1) from birth to age 19 including an adopted
27    child, a child who lives with the member from the time of the
28    filing  of a petition for adoption until entry of an order of
29    adoption, a stepchild or recognized child who lives with  the
30    member  in  a parent-child relationship, or a child who lives
31    with the member if such member is a court appointed  guardian
32    of  the  child,  or  (2) age 19 to 23 enrolled as a full-time
33    student in any accredited school, financially dependent  upon
34    the  member,  and  eligible  to be claimed as a dependent for
 
                            -5-                LRB9206834JSpc
 1    income tax purposes, or (3) age 19 or over who is mentally or
 2    physically handicapped. For the health plan  only,  the  term
 3    "dependent"  also  includes  any person enrolled prior to the
 4    effective date of this Section  who  is  dependent  upon  the
 5    member to the extent that the member may claim such person as
 6    a  dependent for income tax deduction purposes; no other such
 7    person may be enrolled.  For the health plan only,  the  term
 8    "dependent"  also  includes  a  parent  of the member who has
 9    lived with the member for at least one year  before  coverage
10    is  sought  and  who is financially dependent upon the member
11    and eligible to be claimed as  a  dependent  for  income  tax
12    purposes.
13        (i)  "Director"   means  the  Director  of  the  Illinois
14    Department of Central Management Services.
15        (j)  "Eligibility period" means  the  period  of  time  a
16    member  has  to  elect  enrollment  in  programs or to select
17    benefits without regard to age, sex or health.
18        (k)  "Employee"  means  and  includes  each  officer   or
19    employee  in the service of a department who (1) receives his
20    compensation for service rendered  to  the  department  on  a
21    warrant   issued   pursuant  to  a  payroll  certified  by  a
22    department or on a warrant or check issued  and  drawn  by  a
23    department  upon  a  trust,  federal  or  other  fund or on a
24    warrant issued pursuant to a payroll certified by an  elected
25    or  duly  appointed  officer  of  the  State  or who receives
26    payment of the performance of personal services on a  warrant
27    issued  pursuant  to  a payroll certified by a Department and
28    drawn by the Comptroller upon  the  State  Treasurer  against
29    appropriations  made by the General Assembly from any fund or
30    against trust funds held by the State Treasurer, and  (2)  is
31    employed  full-time  or  part-time  in  a  position  normally
32    requiring actual performance of duty during not less than 1/2
33    of  a  normal  work period, as established by the Director in
34    cooperation with each department, except that persons elected
 
                            -6-                LRB9206834JSpc
 1    by popular vote  will  be  considered  employees  during  the
 2    entire  term  for  which they are elected regardless of hours
 3    devoted to the service of the  State,  and  (3)  except  that
 4    "employee" does not include any person who is not eligible by
 5    reason  of  such person's employment to participate in one of
 6    the State retirement systems under Articles 2, 14, 15 (either
 7    the regular Article 15  system  or  the  optional  retirement
 8    program  established  under Section 15-158.2) or 18, or under
 9    paragraph (2), (3), or (5) of Section 16-106, of the Illinois
10    Pension Code, but such term  does  include  persons  who  are
11    employed  during  the 6 month qualifying period under Article
12    14 of the Illinois Pension Code.  Such term also includes any
13    person who (1) after January 1, 1966, is  receiving  ordinary
14    or  accidental  disability  benefits under Articles 2, 14, 15
15    (including ordinary or accidental disability  benefits  under
16    the  optional  retirement  program  established under Section
17    15-158.2), paragraphs (2), (3), or (5) of Section 16-106,  or
18    Article  18  of  the  Illinois  Pension  Code, for disability
19    incurred after January 1, 1966, (2) receives total  permanent
20    or total temporary disability under the Workers' Compensation
21    Act  or  Occupational  Disease  Act  as  a result of injuries
22    sustained or illness contracted in the course  of  employment
23    with  the  State of Illinois, or (3) is not otherwise covered
24    under this Act and has  retired  as  a  participating  member
25    under   Article  2  of  the  Illinois  Pension  Code  but  is
26    ineligible for the retirement annuity under Section 2-119  of
27    the  Illinois  Pension Code.  However, a person who satisfies
28    the criteria of the foregoing definition of "employee" except
29    that such person is made ineligible  to  participate  in  the
30    State   Universities  Retirement  System  by  clause  (4)  of
31    subsection (a) of Section 15-107 of the Illinois Pension Code
32    is  also  an  "employee"  for  the  purposes  of  this   Act.
33    "Employee" also includes any person receiving or eligible for
34    benefits under a sick pay plan established in accordance with
 
                            -7-                LRB9206834JSpc
 1    Section 36 of the State Finance Act. "Employee" also includes
 2    each  officer or employee in the service of a qualified local
 3    government,  including  persons  appointed  as  trustees   of
 4    sanitary districts regardless of hours devoted to the service
 5    of the sanitary district, and each employee in the service of
 6    a   qualified  rehabilitation  facility  and  each  full-time
 7    employee in the service  of  a  qualified  domestic  violence
 8    shelter   or   service,  as  determined  according  to  rules
 9    promulgated by the Director.
10        (l)  "Member"  means  an  employee,  annuitant,   retired
11    employee or survivor.
12        (m)  "Optional   coverages   or   benefits"  means  those
13    coverages or benefits available to the member on his  or  her
14    voluntary election, and at his or her own expense.
15        (n)  "Program"  means  the  group  life insurance, health
16    benefits and other employee benefits designed and  contracted
17    for by the Director under this Act.
18        (o)  "Health   plan"  means  a  health  benefits  program
19    offered by the State of Illinois for persons eligible for the
20    plan.
21        (p)  "Retired employee" means any person who would be  an
22    annuitant  as  that  term  is defined herein but for the fact
23    that such person retired prior to January 1, 1966.  Such term
24    also includes any person formerly employed by the  University
25    of Illinois in the Cooperative Extension Service who would be
26    an  annuitant  but  for  the  fact  that such person was made
27    ineligible  to  participate   in   the   State   Universities
28    Retirement  System by clause (4) of subsection (a) of Section
29    15-107 of the Illinois Pension Code.
30        (q)  "Survivor" means a person receiving an annuity as  a
31    survivor  of an employee or of an annuitant.  "Survivor" also
32    includes:  (1)  the  surviving  dependent  of  a  person  who
33    satisfies the  definition  of  "employee"  except  that  such
34    person  is  made  ineligible  to  participate  in  the  State
 
                            -8-                LRB9206834JSpc
 1    Universities  Retirement  System  by clause (4) of subsection
 2    (a) of Section 15-107 of the Illinois Pension Code;  and  (2)
 3    the  surviving  dependent  of any person formerly employed by
 4    the University  of  Illinois  in  the  Cooperative  Extension
 5    Service  who  would  be an annuitant except for the fact that
 6    such person was made ineligible to participate in  the  State
 7    Universities  Retirement  System  by clause (4) of subsection
 8    (a) of Section 15-107 of the Illinois Pension Code.
 9        (q-5)  "New SERS survivor" means a survivor,  as  defined
10    in  subsection (q), whose annuity is paid under Article 14 of
11    the Illinois Pension Code and is based on the death of (i) an
12    employee whose death occurs on or after January 1,  1998,  or
13    (ii) a new SERS annuitant as defined in subsection (b-5).
14        (q-6)  "New  SURS  survivor" means a survivor, as defined
15    in subsection (q), whose annuity is paid under Article 15  of
16    the Illinois Pension Code and is based on the death of (i) an
17    employee  whose  death occurs on or after January 1, 1998, or
18    (ii) a new SURS annuitant as defined in subsection (b-6).
19        (q-7)  "New TRS State  survivor"  means  a  survivor,  as
20    defined  in  subsection  (q),  whose  annuity  is  paid under
21    Article 16 of the Illinois Pension Code and is based  on  the
22    death  of  (i)  an  employee  who  is a teacher as defined in
23    paragraph (2), (3), or (5) of Section 16-106 of that Code and
24    whose death occurs on or after July 1, 1998, or  (ii)  a  new
25    TRS State annuitant as defined in subsection (b-7).
26        (r)  "Medical   services"  means  the  services  provided
27    within the scope of their licenses by  practitioners  in  all
28    categories licensed under the Medical Practice Act of 1987.
29        (s)  "Unit   of   local  government"  means  any  county,
30    municipality, township, school district, special district  or
31    other  unit, designated as a unit of local government by law,
32    which exercises limited  governmental  powers  or  powers  in
33    respect  to limited governmental subjects, any not-for-profit
34    association  with  a  membership  that   primarily   includes
 
                            -9-                LRB9206834JSpc
 1    townships  and  township  officials,  that  has  duties  that
 2    include  provision  of  research  service,  dissemination  of
 3    information,  and  other  acts  for  the purpose of improving
 4    township government, and that is funded wholly or  partly  in
 5    accordance  with  Section  85-15  of  the  Township Code; any
 6    not-for-profit corporation or association, with a  membership
 7    consisting primarily of municipalities, that operates its own
 8    utility    system,    and    provides   research,   training,
 9    dissemination  of  information,  or  other  acts  to  promote
10    cooperation between and  among  municipalities  that  provide
11    utility  services  and  for  the advancement of the goals and
12    purposes of its membership; the Southern Illinois  Collegiate
13    Common  Market,  which  is  a  consortium of higher education
14    institutions  in  Southern   Illinois;   and   the   Illinois
15    Association  of Park Districts.  "Qualified local government"
16    means a unit of local government approved by the Director and
17    participating in a program created under  subsection  (i)  of
18    Section 10 of this Act.
19        (t)  "Qualified   rehabilitation   facility"   means  any
20    not-for-profit  organization  that  is  accredited   by   the
21    Commission  on  Accreditation of Rehabilitation Facilities or
22    certified by the Department of Human Services  (as  successor
23    to   the   Department  of  Mental  Health  and  Developmental
24    Disabilities)   to   provide   services   to   persons   with
25    disabilities and which  receives  funds  from  the  State  of
26    Illinois  for  providing  those  services,  approved  by  the
27    Director   and  participating  in  a  program  created  under
28    subsection (j) of Section 10 of this Act.
29        (u)  "Qualified domestic  violence  shelter  or  service"
30    means  any  Illinois domestic violence shelter or service and
31    its administrative offices funded by the Department of  Human
32    Services  (as  successor to the Illinois Department of Public
33    Aid), approved by the Director and participating in a program
34    created under subsection (k) of Section 10.
 
                            -10-               LRB9206834JSpc
 1        (v)  "TRS benefit recipient" means a person who:
 2             (1)  is not a "member" as defined in  this  Section;
 3        and
 4             (2)  is  receiving  a  monthly benefit or retirement
 5        annuity under Article 16 of the  Illinois  Pension  Code;
 6        and
 7             (3)  either  (i)  has at least 8 years of creditable
 8        service under Article 16 of the Illinois Pension Code, or
 9        (ii) was enrolled in the health insurance program offered
10        under that Article on January 1, 1996, or  (iii)  is  the
11        survivor  of a benefit recipient who had at least 8 years
12        of creditable service under Article 16  of  the  Illinois
13        Pension  Code  or  was  enrolled  in the health insurance
14        program offered under that Article on the effective  date
15        of this amendatory Act of 1995, or (iv) is a recipient or
16        survivor  of  a  recipient  of a disability benefit under
17        Article 16 of the Illinois Pension Code.
18        (w)  "TRS dependent beneficiary" means a person who:
19             (1)  is not a "member" or "dependent" as defined  in
20        this Section; and
21             (2)  is  a  TRS benefit recipient's: (A) spouse, (B)
22        dependent parent who is receiving at least half of his or
23        her support  from  the  TRS  benefit  recipient,  or  (C)
24        unmarried  natural  or adopted child who is (i) under age
25        19, or  (ii)  enrolled  as  a  full-time  student  in  an
26        accredited  school,  financially  dependent  upon the TRS
27        benefit recipient, eligible to be claimed as a  dependent
28        for  income  tax  purposes, and either is under age 24 or
29        was, on January 1, 1996,  participating  as  a  dependent
30        beneficiary in the health insurance program offered under
31        Article  16 of the Illinois Pension Code, or (iii) age 19
32        or over who is mentally or physically handicapped.
33        (x)  "Military leave with pay  and  benefits"  refers  to
34    individuals  in basic training for reserves, special/advanced
 
                            -11-               LRB9206834JSpc
 1    training, annual training, emergency call up,  or  activation
 2    by  the  President of the United States with approved pay and
 3    benefits.
 4        (y)  "Military leave without pay and benefits" refers  to
 5    individuals who enlist for active duty in a regular component
 6    of  the  U.S.  Armed  Forces  or  other duty not specified or
 7    authorized under military leave with pay and benefits.
 8        (z)  "Community college benefit recipient" means a person
 9    who:
10             (1)  is not a "member" as defined in  this  Section;
11        and
12             (2)  is  receiving  a  monthly survivor's annuity or
13        retirement annuity  under  Article  15  of  the  Illinois
14        Pension Code; and
15             (3)  either  (i)  was  a  full-time  employee  of  a
16        community college district or an association of community
17        college boards created under the Public Community College
18        Act  (other  than  an  employee whose last employer under
19        Article 15 of the Illinois Pension Code was  a  community
20        college  district  subject  to  Article VII of the Public
21        Community College Act) and was eligible to participate in
22        a group health benefit plan as  an  employee  during  the
23        time  of  employment  with  a  community college district
24        (other than  a  community  college  district  subject  to
25        Article  VII  of  the Public Community College Act) or an
26        association of community college boards, or (ii)  is  the
27        survivor of a person described in item (i).
28        (aa)  "Community  college  dependent beneficiary" means a
29    person who:
30             (1)  is not a "member" or "dependent" as defined  in
31        this Section; and
32             (2)  is a community college benefit recipient's: (A)
33        spouse,  (B)  dependent  parent who is receiving at least
34        half of his or her support  from  the  community  college
 
                            -12-               LRB9206834JSpc
 1        benefit  recipient,  or  (C) unmarried natural or adopted
 2        child who is (i) under age 19,  or  (ii)  enrolled  as  a
 3        full-time  student  in  an accredited school, financially
 4        dependent upon the community college  benefit  recipient,
 5        eligible  to  be  claimed  as  a dependent for income tax
 6        purposes and under age 23, or (iii) age 19  or  over  and
 7        mentally or physically handicapped.
 8    (Source: P.A. 90-14, eff. 7-1-97; 90-65, eff. 7-7-97; 90-448,
 9    eff.  8-16-97;  90-497,  eff.  8-18-97; 90-511, eff. 8-22-97;
10    90-582, eff. 5-27-98;  90-655,  eff.  7-30-98;  91-390,  eff.
11    7-30-99;  91-395, eff. 7-30-99; 91-617, eff, 8-19-99; revised
12    10-19-99.)

13        Section 10.  The Illinois Insurance Code  is  amended  by
14    changing Section 356a as follows:

15        (215 ILCS 5/356a) (from Ch. 73, par. 968a)
16        Sec. 356a. Form of policy.
17        (1)  No  policy of accident and health insurance shall be
18    delivered or issued for delivery to any person in this  state
19    unless:
20        (a)  the  entire  money and other considerations therefor
21    are expressed therein; and
22        (b)  the time at which the  insurance  takes  effect  and
23    terminates is expressed therein; and
24        (c)  it purports to insure only one person, except that a
25    policy  may  insure,  originally  or by subsequent amendment,
26    upon the application of an adult member of a family who shall
27    be deemed the policyholder, any two or more eligible  members
28    of  that  family, including husband, wife, dependent children
29    or any children under a specified age which shall not  exceed
30    19   years,   and   any   other  person  dependent  upon  the
31    policyholder including a parent of the policyholder  who  has
32    lived  with  the  policyholder  for  at least one year before
 
                            -13-               LRB9206834JSpc
 1    coverage is sought; and
 2        (d)  the style, arrangement and  over-all  appearance  of
 3    the  policy  give  no  undue prominence to any portion of the
 4    text, and unless every printed portion of  the  text  of  the
 5    policy  and of any endorsements or attached papers is plainly
 6    printed in light-faced type of a style in  general  use,  the
 7    size  of  which  shall be uniform and not less than ten-point
 8    with a lower-case unspaced alphabet length not less than  one
 9    hundred  and  twenty-point  (the  "text"  shall  include  all
10    printed  matter  except  the name and address of the insurer,
11    name or title of the policy, the brief  description  if  any,
12    and captions and subcaptions); and
13        (e)  the  exceptions  and reductions of indemnity are set
14    forth in the policy and, except those which are set forth  in
15    Sections  357.1  through  357.30 of this act, are printed, at
16    the  insurer's  option,  either  included  with  the  benefit
17    provision to  which  they  apply,  or  under  an  appropriate
18    caption such as "EXCEPTIONS", or "EXCEPTIONS AND REDUCTIONS",
19    provided  that  if  an  exception  or  reduction specifically
20    applies only  to  a  particular  benefit  of  the  policy,  a
21    statement  of  such  exception or reduction shall be included
22    with the benefit provision to which it applies; and
23        (f)  each such form, including riders  and  endorsements,
24    shall  be  identified by a form number in the lower left-hand
25    corner of the first page thereof; and
26        (g)  it contains no  provision  purporting  to  make  any
27    portion  of  the  charter, rules, constitution, or by-laws of
28    the insurer a part of the policy unless such portion  is  set
29    forth  in  full  in  the  policy,  except  in the case of the
30    incorporation of, or reference to, a statement  of  rates  or
31    classification  of  risks, or short-rate table filed with the
32    Director.
33        (2)  If any policy is issued by an insurer  domiciled  in
34    this  state  for  delivery  to  a  person residing in another
 
                            -14-               LRB9206834JSpc
 1    state, and if the  official  having  responsibility  for  the
 2    administration  of  the  insurance  laws  of such other state
 3    shall have advised the Director that any such policy  is  not
 4    subject  to  approval  or  disapproval  by such official, the
 5    Director may by ruling require  that  such  policy  meet  the
 6    standards  set forth in subsection (1) of this section and in
 7    Sections 357.1 through 357.30.
 8    (Source: P.A. 76-860.)

 9        Section 15.  The Health Maintenance Organization  Act  is
10    amended by changing Section 5-3 as follows:

11        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
12        Sec. 5-3.  Insurance Code provisions.
13        (a)  Health Maintenance Organizations shall be subject to
14    the  provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
15    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
16    154.6,  154.7,  154.8, 155.04, 355.2, 356a, 356m, 356v, 356w,
17    356x, 356y, 367i, 368a, 401,  401.1,  402,  403,  403A,  408,
18    408.2,  409, 412, 444, and 444.1, paragraph (c) of subsection
19    (2) of Section 367, and Articles IIA, VIII 1/2, XII, XII 1/2,
20    XIII, XIII 1/2, XXV, and XXVI of the Illinois Insurance Code.
21        (b)  For purposes of the Illinois Insurance Code,  except
22    for  Sections  444  and 444.1 and Articles XIII and XIII 1/2,
23    Health Maintenance Organizations in the following  categories
24    are deemed to be "domestic companies":
25             (1)  a   corporation  authorized  under  the  Dental
26        Service Plan Act or the Voluntary Health  Services  Plans
27        Act;
28             (2)  a  corporation organized under the laws of this
29        State; or
30             (3)  a  corporation  organized  under  the  laws  of
31        another state, 30% or more of the enrollees of which  are
32        residents  of this State, except a corporation subject to
 
                            -15-               LRB9206834JSpc
 1        substantially the  same  requirements  in  its  state  of
 2        organization  as  is  a  "domestic company" under Article
 3        VIII 1/2 of the Illinois Insurance Code.
 4        (c)  In considering the merger, consolidation,  or  other
 5    acquisition  of  control of a Health Maintenance Organization
 6    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
 7             (1)  the Director shall give  primary  consideration
 8        to  the  continuation  of  benefits  to enrollees and the
 9        financial conditions of the acquired  Health  Maintenance
10        Organization  after  the  merger, consolidation, or other
11        acquisition of control takes effect;
12             (2)(i)  the criteria specified in subsection  (1)(b)
13        of Section 131.8 of the Illinois Insurance Code shall not
14        apply  and (ii) the Director, in making his determination
15        with respect  to  the  merger,  consolidation,  or  other
16        acquisition  of  control,  need not take into account the
17        effect on competition of the  merger,  consolidation,  or
18        other acquisition of control;
19             (3)  the  Director  shall  have the power to require
20        the following information:
21                  (A)  certification by an independent actuary of
22             the  adequacy  of  the  reserves   of   the   Health
23             Maintenance Organization sought to be acquired;
24                  (B)  pro  forma financial statements reflecting
25             the combined balance sheets of the acquiring company
26             and the Health Maintenance Organization sought to be
27             acquired as of the end of the preceding year and  as
28             of  a date 90 days prior to the acquisition, as well
29             as  pro  forma   financial   statements   reflecting
30             projected  combined  operation  for  a  period  of 2
31             years;
32                  (C)  a pro forma  business  plan  detailing  an
33             acquiring   party's   plans   with  respect  to  the
34             operation of  the  Health  Maintenance  Organization
 
                            -16-               LRB9206834JSpc
 1             sought  to be acquired for a period of not less than
 2             3 years; and
 3                  (D)  such other  information  as  the  Director
 4             shall require.
 5        (d)  The  provisions  of Article VIII 1/2 of the Illinois
 6    Insurance Code and this Section 5-3 shall apply to  the  sale
 7    by any health maintenance organization of greater than 10% of
 8    its  enrollee  population  (including  without limitation the
 9    health maintenance organization's right, title, and  interest
10    in and to its health care certificates).
11        (e)  In  considering  any  management contract or service
12    agreement subject to Section 141.1 of the Illinois  Insurance
13    Code,  the  Director  (i)  shall, in addition to the criteria
14    specified in Section 141.2 of the  Illinois  Insurance  Code,
15    take  into  account  the effect of the management contract or
16    service  agreement  on  the  continuation  of   benefits   to
17    enrollees   and   the   financial  condition  of  the  health
18    maintenance organization to be managed or serviced, and  (ii)
19    need  not  take  into  account  the  effect of the management
20    contract or service agreement on competition.
21        (f)  Except for small employer groups as defined  in  the
22    Small  Employer  Rating,  Renewability and Portability Health
23    Insurance Act and except for medicare supplement policies  as
24    defined  in  Section  363  of  the Illinois Insurance Code, a
25    Health Maintenance Organization may by contract agree with  a
26    group  or  other  enrollment unit to effect refunds or charge
27    additional premiums under the following terms and conditions:
28             (i)  the amount of, and other terms  and  conditions
29        with respect to, the refund or additional premium are set
30        forth  in the group or enrollment unit contract agreed in
31        advance of the period for which a refund is to be paid or
32        additional premium is to be charged (which  period  shall
33        not be less than one year); and
34             (ii)  the amount of the refund or additional premium
 
                            -17-               LRB9206834JSpc
 1        shall   not   exceed   20%   of  the  Health  Maintenance
 2        Organization's profitable or unprofitable experience with
 3        respect to the group or other  enrollment  unit  for  the
 4        period  (and,  for  purposes  of  a  refund or additional
 5        premium, the profitable or unprofitable experience  shall
 6        be calculated taking into account a pro rata share of the
 7        Health   Maintenance  Organization's  administrative  and
 8        marketing expenses, but shall not include any  refund  to
 9        be made or additional premium to be paid pursuant to this
10        subsection (f)).  The Health Maintenance Organization and
11        the   group   or  enrollment  unit  may  agree  that  the
12        profitable or unprofitable experience may  be  calculated
13        taking into account the refund period and the immediately
14        preceding 2 plan years.
15        The  Health  Maintenance  Organization  shall  include  a
16    statement in the evidence of coverage issued to each enrollee
17    describing the possibility of a refund or additional premium,
18    and  upon request of any group or enrollment unit, provide to
19    the group or enrollment unit a description of the method used
20    to  calculate  (1)  the  Health  Maintenance   Organization's
21    profitable experience with respect to the group or enrollment
22    unit and the resulting refund to the group or enrollment unit
23    or  (2)  the  Health  Maintenance Organization's unprofitable
24    experience with respect to the group or enrollment  unit  and
25    the  resulting  additional premium to be paid by the group or
26    enrollment unit.
27        In  no  event  shall  the  Illinois  Health   Maintenance
28    Organization  Guaranty  Association  be  liable  to  pay  any
29    contractual  obligation  of  an insolvent organization to pay
30    any refund authorized under this Section.
31    (Source: P.A.  90-25,  eff.  1-1-98;  90-177,  eff.  7-23-97;
32    90-372, eff.  7-1-98;  90-583,  eff.  5-29-98;  90-655,  eff.
33    7-30-98;  90-741,  eff. 1-1-99; 91-357, eff. 7-29-99; 91-406,
34    eff. 1-1-00; 91-549, eff.  8-14-99;  91-605,  eff.  12-14-99;
 
                            -18-               LRB9206834JSpc
 1    91-788, eff. 6-9-00.)

 2        Section  20.  The  Voluntary Health Services Plans Act is
 3    amended by changing Section 10 as follows:

 4        (215 ILCS 165/10) (from Ch. 32, par. 604)
 5        Sec.  10.  Application  of  Insurance  Code   provisions.
 6    Health  services plan corporations and all persons interested
 7    therein  or  dealing  therewith  shall  be  subject  to   the
 8    provisions of Articles IIA and XII 1/2 and Sections 3.1, 133,
 9    140,  143,  143c,  149,  354,  355.2, 356a, 356r, 356t, 356u,
10    356v, 356w, 356x, 356y, 367.2, 368a, 401,  401.1,  402,  403,
11    403A,  408,  408.2,  and  412, and paragraphs (7) and (15) of
12    Section 367 of the Illinois Insurance Code.
13    (Source: P.A. 90-7, eff. 6-10-97; 90-25, eff. 1-1-98; 90-655,
14    eff. 7-30-98;  90-741,  eff.  1-1-99;  91-406,  eff.  1-1-00;
15    91-549,  eff.  8-14-99;  91-605,  eff. 12-14-99; 91-788, eff.
16    6-9-00.)

[ Top ]