Public Act 094-0502
 
HB2375 Enrolled LRB094 09103 LJB 39332 b

    AN ACT concerning insurance.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Health Insurance Portability and
Accountability Act is amended by changing Sections 5 and 50 and
by adding Section 60 as follows:
 
    (215 ILCS 97/5)
    Sec. 5. Definitions.
    "Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, is controlled by,
or is under common control with the person specified.
    "Beneficiary" has the meaning given such term under Section
3(8) of the Employee Retirement Income Security Act of 1974.
    "Bona fide association" means, with respect to health
insurance coverage offered in a State, an association which:
        (1) has been actively in existence for at least 5
    years;
        (2) has been formed and maintained in good faith for
    purposes other than obtaining insurance;
        (3) does not condition membership in the association on
    any health status-related factor relating to an individual
    (including an employee of an employer or a dependent of an
    employee);
        (4) makes health insurance coverage offered through
    the association available to all members regardless of any
    health status-related factor relating to such members (or
    individuals eligible for coverage through a member);
        (5) does not make health insurance coverage offered
    through the association available other than in connection
    with a member of the association; and
        (6) meets such additional requirements as may be
    imposed under State law.
    "Church plan" has the meaning given that term under Section
3(33) of the Employee Retirement Income Security Act of 1974.
    "COBRA continuation provision" means any of the following:
        (1) Section 4980B of the Internal Revenue Code of 1986,
    other than subsection (f)(1) of that Section insofar as it
    relates to pediatric vaccines.
        (2) Part 6 of subtitle B of title I of the Employee
    Retirement Income Security Act of 1974, other than Section
    609 of that Act.
        (3) Title XXII of federal Public Health Service Act.
    "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, the holding of policyholders' proxies by contract
other than a commercial contract for goods or non-management
services, or otherwise, unless the power is solely the result
of an official position with or corporate office held by the
person. Control is presumed to exist if any person, directly or
indirectly, owns, controls, holds with the power to vote, or
holds shareholders' proxies representing 10% or more of the
voting securities of any other person or holds or controls
sufficient policyholders' proxies to elect the majority of the
board of directors of the domestic company. This presumption
may be rebutted by a showing made in a manner as the Secretary
may provide by rule. The Secretary may determine, after
furnishing all persons in interest notice and opportunity to be
heard and making specific findings of fact to support such
determination, that control exists in fact, notwithstanding
the absence of a presumption to that effect.
    "Department" means the Department of Insurance.
    "Employee" has the meaning given that term under Section
3(6) of the Employee Retirement Income Security Act of 1974.
    "Employer" has the meaning given that term under Section
3(5) of the Employee Retirement Income Security Act of 1974,
except that the term shall include only employers of 2 or more
employees.
    "Enrollment date" means, with respect to an individual
covered under a group health plan or group health insurance
coverage, the date of enrollment of the individual in the plan
or coverage, or if earlier, the first day of the waiting period
for enrollment.
    "Federal governmental plan" means a governmental plan
established or maintained for its employees by the government
of the United States or by any agency or instrumentality of
that government.
    "Governmental plan" has the meaning given that term under
Section 3(32) of the Employee Retirement Income Security Act of
1974 and any federal governmental plan.
    "Group health insurance coverage" means, in connection
with a group health plan, health insurance coverage offered in
connection with the plan.
    "Group health plan" means an employee welfare benefit plan
(as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974) to the extent that the plan provides
medical care (as defined in paragraph (2) of that Section and
including items and services paid for as medical care) to
employees or their dependents (as defined under the terms of
the plan) directly or through insurance, reimbursement, or
otherwise.
    "Health insurance coverage" means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise and including items and services
paid for as medical care) under any hospital or medical service
policy or certificate, hospital or medical service plan
contract, or health maintenance organization contract offered
by a health insurance issuer.
    "Health insurance issuer" means an insurance company,
insurance service, or insurance organization (including a
health maintenance organization, as defined herein) which is
licensed to engage in the business of insurance in a state and
which is subject to Illinois law which regulates insurance
(within the meaning of Section 514(b)(2) of the Employee
Retirement Income Security Act of 1974). The term does not
include a group health plan.
    "Health maintenance organization (HMO)" means:
        (1) a Federally qualified health maintenance
    organization (as defined in Section 1301(a) of the Public
    Health Service Act.);
        (2) an organization recognized under State law as a
    health maintenance organization; or
        (3) a similar organization regulated under State law
    for solvency in the same manner and to the same extent as
    such a health maintenance organization.
    "Individual health insurance coverage" means health
insurance coverage offered to individuals in the individual
market, but does not include short-term limited duration
insurance.
    "Individual market" means the market for health insurance
coverage offered to individuals other than in connection with a
group health plan.
    "Large employer" means, in connection with a group health
plan with respect to a calendar year and a plan year, an
employer who employed an average of at least 51 employees on
business days during the preceding calendar year and who
employs at least 2 employees on the first day of the plan year.
        (1) Application of aggregation rule for large
    employers. All persons treated as a single employer under
    subsection (b), (c), (m), or (o) of Section 414 of the
    Internal Revenue Code of 1986 shall be treated as one
    employer.
        (2) Employers not in existence in preceding year. In
    the case of an employer which was not in existence
    throughout the preceding calendar year, the determination
    of whether the employer is a large employer shall be based
    on the average number of employees that it is reasonably
    expected the employer will employ on business days in the
    current calendar year.
        (3) Predecessors. Any reference in this Act to an
    employer shall include a reference to any predecessor of
    such employer.
    "Large group market" means the health insurance market
under which individuals obtain health insurance coverage
(directly or through any arrangement) on behalf of themselves
(and their dependents) through a group health plan maintained
by a large employer.
    "Late enrollee" means with respect to coverage under a
group health plan, a participant or beneficiary who enrolls
under the plan other than during:
        (1) the first period in which the individual is
    eligible to enroll under the plan; or
        (2) a special enrollment period under subsection (F) of
    Section 20.
    "Medical care" means amounts paid for:
        (1) the diagnosis, cure, mitigation, treatment, or
    prevention of disease, or amounts paid for the purpose of
    affecting any structure or function of the body;
        (2) amounts paid for transportation primarily for and
    essential to medical care referred to in item (1); and
        (3) amounts paid for insurance covering medical care
    referred to in items (1) and (2).
    "Nonfederal governmental plan" means a governmental plan
that is not a federal governmental plan.
    "Network plan" means health insurance coverage of a health
insurance issuer under which the financing and delivery of
medical care (including items and services paid for as medical
care) are provided, in whole or in part, through a defined set
of providers under contract with the issuer.
    "Participant" has the meaning given that term under Section
3(7) of the Employee Retirement Income Security Act of 1974.
    "Person" means an individual, a corporation, a
partnership, an association, a joint stock company, a trust, an
unincorporated organization, any similar entity, or any
combination of the foregoing acting in concert, but does not
include any securities broker performing no more than the usual
and customary broker's function or joint venture partnership
exclusively engaged in owning, managing, leasing, or
developing real or tangible personal property other than
capital stock.
    "Placement" or being "placed" for adoption, in connection
with any placement for adoption of a child with any person,
means the assumption and retention by the person of a legal
obligation for total or partial support of the child in
anticipation of adoption of the child. The child's placement
with the person terminates upon the termination of the legal
obligation.
    "Plan sponsor" has the meaning given that term under
Section 3(16)(B) of the Employee Retirement Income Security Act
of 1974.
    "Preexisting condition exclusion" means, with respect to
coverage, a limitation or exclusion of benefits relating to a
condition based on the fact that the condition was present
before the date of enrollment for such coverage, whether or not
any medical advice, diagnosis, care, or treatment was
recommended or received before such date.
    "Small employer" means, in connection with a group health
plan with respect to a calendar year and a plan year, an
employer who employed an average of at least 2 but not more
than 50 employees on business days during the preceding
calendar year and who employs at least 2 employees on the first
day of the plan year.
        (1) Application of aggregation rule for small
    employers. All persons treated as a single employer under
    subsection (b), (c), (m), or (o) of Section 414 of the
    Internal Revenue Code of 1986 shall be treated as one
    employer.
        (2) Employers not in existence in preceding year. In
    the case of an employer which was not in existence
    throughout the preceding calendar year, the determination
    of whether the employer is a small employer shall be based
    on the average number of employees that it is reasonably
    expected the employer will employ on business days in the
    current calendar year.
        (3) Predecessors. Any reference in this Act to a small
    employer shall include a reference to any predecessor of
    that employer.
    "Small group market" means the health insurance market
under which individuals obtain health insurance coverage
(directly or through any arrangement) on behalf of themselves
(and their dependents) through a group health plan maintained
by a small employer.
    "State" means each of the several States, the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Northern Mariana Islands.
    "Waiting period" means with respect to a group health plan
and an individual who is a potential participant or beneficiary
in the plan, the period of time that must pass with respect to
the individual before the individual is eligible to be covered
for benefits under the terms of the plan.
(Source: P.A. 90-30, eff. 7-1-97.)
 
    (215 ILCS 97/50)
    Sec. 50. Guaranteed renewability of individual health
insurance coverage.
    (A) In general. Except as provided in this Section, a
health insurance issuer that provides individual health
insurance coverage to an individual shall renew or continue in
force such coverage at the option of the individual.
    (B) General exceptions. A health insurance issuer may
nonrenew or discontinue health insurance coverage of an
individual in the individual market based only on one or more
of the following:
        (1) Nonpayment of premiums. The individual has failed
    to pay premiums or contributions in accordance with the
    terms of the health insurance coverage or the issuer has
    not received timely premium payments.
        (2)  Fraud. The individual has performed an act or
    practice that constitutes fraud or made an intentional
    misrepresentation of material fact under the terms of the
    coverage.
        (3) Termination of plan. The issuer is ceasing to offer
    coverage in the individual market in accordance with
    subsection (C) of this Section and applicable Illinois law.
        (4) Movement outside the service area. In the case of a
    health insurance issuer that offers health insurance
    coverage in the market through a network plan, the
    individual no longer resides, lives, or works in the
    service area (or in an area for which the issuer is
    authorized to do business), but only if such coverage is
    terminated under this paragraph uniformly without regard
    to any health status-related factor of covered
    individuals.
        (5) Association membership ceases. In the case of
    health insurance coverage that is made available in the
    individual market only through one or more bona fide
    associations, the membership of the individual in the
    association (on the basis of which the coverage is
    provided) ceases, but only if such coverage is terminated
    under this paragraph uniformly without regard to any health
    status-related factor of covered individuals.
    (C) Requirements for uniform termination of coverage.
        (1) Particular type of coverage not offered. In any
    case in which an issuer decides to discontinue offering a
    particular type of health insurance coverage offered in the
    individual market, coverage of such type may be
    discontinued by the issuer only if:
            (a) the issuer provides notice to each covered
        individual provided coverage of this type in such
        market of such discontinuation at least 90 days prior
        to the date of the discontinuation of such coverage;
            (b) the issuer offers, to each individual in the
        individual market provided coverage of this type, the
        option to purchase any other individual health
        insurance coverage currently being offered by the
        issuer for individuals in such market; and
            (c) in exercising the option to discontinue
        coverage of that type and in offering the option of
        coverage under subparagraph (b), the issuer acts
        uniformly without regard to any health status-related
        factor of enrolled individuals or individuals who may
        become eligible for such coverage.
        (2) Discontinuance of all coverage.
            (a) In general. Subject to subparagraph (c), in any
        case in which a health insurance issuer elects to
        discontinue offering all health insurance coverage in
        the individual market in Illinois, health insurance
        coverage may be discontinued by the issuer only if:
                (i) the issuer provides notice to the Director
            and to each individual of the discontinuation at
            least 180 days prior to the date of the expiration
            of such coverage; and
                (ii) all health insurance issued or delivered
            for issuance in Illinois in such market is
            discontinued and coverage under such health
            insurance coverage in such market is not renewed;
            and .
                (iii) in the case where the issuer has
            affiliates in the individual market, the issuer
            gives notice to each affected individual at least
            180 days prior to the date of the expiration of the
            coverage of the individual's option to purchase
            all other individual health benefit plans
            currently offered by any affiliate of the carrier.
            (b) Prohibition on market reentry. In the case of a
        discontinuation under subparagraph (a) in the
        individual market, the issuer may not provide for the
        issuance of any health insurance coverage in Illinois
        involved during the 5-year period beginning on the date
        of the discontinuation of the last health insurance
        coverage not so renewed.
            (c) If an issuer elects to discontinue offering all
        health insurance coverage in the individual market
        under subparagraph (a), its affiliates that offer
        health insurance coverage in the individual market in
        Illinois shall offer individual health insurance
        coverage to all individuals who were covered by the
        discontinued health insurance coverage on the date of
        the notice provided to affected individuals under
        subdivision (iii) of subparagraph (a) of this item (2)
        if the individual applies for coverage no later than 63
        days after the discontinuation of coverage.
            (d) Subject to subparagraph (e) of this item (2),
        an affiliate that issues coverage under subparagraph
        (c) shall waive the preexisting condition exclusion
        period to the extent that the individual has satisfied
        the preexisting condition exclusion period under the
        individual's prior contract or policy.
            (e) An affiliate that issues coverage under
        subparagraph (c) may require the individual to satisfy
        the remaining part of the preexisting condition
        exclusion period, if any, under the individual's prior
        contract or policy that has not been satisfied, unless
        the coverage has a shorter preexisting condition
        exclusion period, and may include in any coverage
        issued under subparagraph (c) any waivers or
        limitations of coverage that were included in the
        individual's prior contract or policy.
    (D) Exception for uniform modification of coverage. At the
time of coverage renewal, a health insurance issuer may modify
the health insurance coverage for a policy form offered to
individuals in the individual market so long as the
modification is consistent with Illinois law and effective on a
uniform basis among all individuals with that policy form.
    (E) Application to coverage offered only through
associations. In applying this Section in the case of health
insurance coverage that is made available by a health insurance
issuer in the individual market to individuals only through one
or more associations, a reference to an "individual" is deemed
to include a reference to such an association (of which the
individual is a member).
    The changes to this Section made by this amendatory Act of
the 94th General Assembly apply only to discontinuances of
coverage occurring on or after the effective date of this
amendatory Act of the 94th General Assembly.
(Source: P.A. 90-567, eff. 1-23-98.)
 
    (215 ILCS 97/60 new)
    Sec. 60. Notice requirement. In any case where a health
insurance issuer elects to uniformly modify coverage,
uniformly terminate coverage, or discontinue coverage in a
marketplace in accordance with Sections 30 and 50 of this Act,
the issuer shall provide notice to the Department prior to
notifying the plan sponsors, participants, beneficiaries, and
covered individuals. The notice shall be sent by certified mail
to the Department 90 days in advance of any notification of the
company's actions sent to plan sponsors, participants,
beneficiaries, and covered individuals. The notice shall
include: (i) a complete description of the action to be taken,
(ii) a specific description of the type of coverage affected,
(iii) the total number of covered lives affected, (iv) a sample
draft of all letters being sent to the plan sponsors,
participants, beneficiaries, or covered individuals, (v) time
frames for the actions being taken, (vi) options the plans
sponsors, participants, beneficiaries, or covered individuals
may have available to them under this Act, and (vii) any other
information as required by the Department.
    This Section applies only to discontinuances of coverage
occurring on or after the effective date of this amendatory Act
of the 94th General Assembly.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.