Public Act 094-1076
Public Act 1076 94TH GENERAL ASSEMBLY
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Public Act 094-1076 |
SB2917 Enrolled |
LRB094 19125 LJB 54646 b |
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| AN ACT concerning insurance.
| Be it enacted by the People of the State of Illinois,
| represented in the General Assembly:
| Section 5. The Regulatory Sunset Act is amended by changing | Section 4.17 and by adding Section 4.27 as follows:
| (5 ILCS 80/4.17)
| Sec. 4.17. Acts repealed on January 1, 2007. The following | are repealed on
January 1, 2007:
| The Boiler and Pressure Vessel Repairer Regulation | Act.
| The Structural Pest Control Act.
| Articles II, III, IV, V, V 1/2, VI, VIIA, VIIB, VIIC, | XVII,
XXXI, XXXI 1/4, and XXXI 3/4 of the Illinois | Insurance Code.
| The Clinical Psychologist Licensing Act.
| The Illinois Optometric Practice Act of 1987.
| The Medical Practice Act of 1987.
| The Environmental Health Practitioner Licensing Act.
| (Source: P.A. 92-837, eff. 8-22-02.)
| (5 ILCS 80/4.27 new) | Sec. 4.27. Act repealed on January 1, 2017. The following | are repealed on January 1, 2017: | Articles II, III, IV, V, V 1/2, VI, VIIA, VIIB, VIIC, XVII,
| XXXI, XXXI 1/4, and XXXI 3/4 of the Illinois Insurance Code. | Section 10. The Illinois Insurance Code is amended by | changing Section 229.4a and by adding Section 356z.8 as | follows: | (215 ILCS 5/229.4a)
| (Section scheduled to be repealed on July 1, 2007) |
| Sec. 229.4a. Standard Non-forfeiture Law for Individual | Deferred
Annuities. | (1)
Title.
This Section shall be known as the Standard | Nonforfeiture Law for Individual Deferred Annuities. | (2) Applicability.
This Section shall not apply to any | reinsurance, group annuity purchased under a retirement plan or | plan of deferred compensation established or maintained by an | employer (including a partnership or sole proprietorship) or by | an employee organization, or by both, other than a plan | providing individual retirement accounts or individual | retirement annuities under Section 408 of the Internal Revenue | Code, as now or hereafter amended, premium deposit fund, | variable annuity, investment annuity, immediate annuity, any | deferred annuity contract after annuity payments have | commenced, or reversionary annuity, nor to any contract which | shall be delivered outside this State through an agent or other | representative of the company issuing the contract. | (3) Nonforfeiture Requirements. | (A) In the case of contracts issued on or after the | operative date of this Section
as defined in subsection | (13), no contract of annuity, except as stated in | subsection (2), shall be delivered or issued for delivery | in this State unless it contains in substance the following | provisions, or corresponding provisions which in the | opinion of the Director of Insurance are at least as | favorable to the contract holder, upon cessation of payment | of considerations under the contract: | (i) That upon cessation of payment of | considerations under a contract, or upon the written | request of the contract owner, the company shall grant | a paid-up annuity benefit on a plan stipulated in the | contract of such value as is specified in subsections | (5), (6), (7), (8) and (10); | (ii)
If a contract provides for a lump sum | settlement at maturity, or at any other time, that upon | surrender of the contract at or prior to the |
| commencement of any annuity payments, the company | shall pay in lieu of a paid-up annuity benefit a cash | surrender benefit of such amount as is
specified in | subsections (5), (6), (8) and (10). The company may | reserve the right to
defer the payment of the cash | surrender benefit for a period not to exceed 6 months | after demand therefor with surrender of the contract | after making written request and receiving written | approval of the Director. The request shall address the | necessity and equitability to all policyholders of the | deferral; | (iii) A statement of the mortality table, if any, | and interest rates used calculating any minimum | paid-up annuity, cash surrender, or death benefits | that are guaranteed under the contract, together with | sufficient information to determine the amounts of the | benefits; and | (iv)
A statement that any paid-up annuity, cash | surrender or death benefits that may be available under | the contract are not less than the minimum benefits | required by any statute of the state in which the | contract is delivered and an explanation of the manner | in which the benefits are altered by the existence of | any additional amounts credited by the company to the | contract, any indebtedness to the company on the | contract or any prior withdrawals from or partial | surrenders of the contract. | (B) Notwithstanding the requirements of this Section, | a deferred annuity contract may provide that if no | considerations have been received under a contract for a | period of 2 full years and the portion of the paid-up | annuity benefit at maturity on the plan stipulated in the | contract arising from prior considerations paid would be | less than $20 monthly, the company may at its option | terminate the contract by payment in cash of the then | present value of the portion of the paid-up annuity |
| benefit, calculated on the basis on the mortality table, if | any, and interest rate specified in the contract for | determining the paid-up annuity benefit, and by this | payment shall be relieved of any further obligation under | the contract. | (4) Minimum values. The minimum values as specified in | subsections (5), (6), (7), (8) and (10) of any paid-up annuity, | cash surrender or death benefits available under an annuity | contract shall be based upon minimum nonforfeiture amounts as | defined in this subsection.
| (A)(i) The minimum nonforfeiture amount at any time at | or prior to the commencement of any annuity payments shall | be equal to an accumulation up to such time at rates of | interest as indicated in subdivision (4)(B) of the net | considerations (as hereinafter defined) paid prior to such | time, decreased by the sum of paragraphs (a) through (d) | below: | (a) Any prior withdrawals from or partial | surrenders of the contract accumulated at rates of | interest as indicated in subdivision (4)(B);
| (b) An annual contract charge of $50, | accumulated at rates of interest as indicated in | subdivision (4)(B);
| (c) Any premium tax paid by the company for the | contract, accumulated at rates of interest as | indicated in subdivision (4)(B); and
| (d) The amount of any indebtedness to the | company on the contract, including
interest due and | accrued. | (ii) The net considerations for a given contract year | used to define the minimum nonforfeiture amount shall be an | amount
equal to 87.5% of the gross considerations,
credited | to the contract during that contract year. | (B) The interest rate used in determining minimum | nonforfeiture amounts shall be an
annual rate of interest | determined as the lesser of 3% per annum
and the following, |
| which shall be specified in the contract if the interest | rate will be reset: | (i) The five-year Constant Maturity Treasury Rate | reported by the Federal Reserve as of a date, or | average over a period, rounded to the nearest 1/20th of | one percent, specified in the contract no longer than | 15 months prior to the contract issue date or | redetermination date under subdivision (4)(B)(iv); | (ii) Reduced by 125 basis points; | (iii) Where the resulting interest rate is not less | than l%; and | (iv) The interest rate shall apply for an initial | period and may be redetermined for additional periods. | The redetermination date, basis and period, if any, | shall be stated in the contract. The basis is the date | or average over a specified period that produces the | value of the 5-year Constant Maturity Treasury Rate to | be used at each redetermination date. | (C) During the period or term that a contract provides | substantive participation in an equity indexed benefit, it | may increase the reduction described in subdivision | (4)(B)(ii)
above by up to an additional 100 basis points to | reflect the value of the equity
index benefit. The present | value at the contract issue date, and at each
| redetermination date thereafter, of the additional | reduction shall not exceed market value of the benefit. The | Director may require a demonstration that the present value | of the additional reduction does not exceed the market | value of the benefit. Lacking such a demonstration that is | acceptable to the Director, the Director may disallow or | limit the additional reduction. | (D) The Director may adopt rules to implement the | provisions of subdivision (4)(C) and to provide for further | adjustments to the calculation of minimum nonforfeiture | amounts for contracts that provide substantive | participation in an equity index benefit and for other |
| contracts that the Director determines adjustments are | justified. | (5) Computation of Present Value.
Any paid-up annuity | benefit available under a contract shall be such that its | present value on the date annuity payments are to commence is | at least equal to the minimum nonforfeiture amount on that | date. Present value shall be computed using the mortality | table, if any, and the interest rates specified in the contract | for determining the minimum paid-up annuity benefits | guaranteed in the contract. | (6) Calculation of Cash Surrender Value.
For contracts that | provide cash surrender benefits, the cash surrender benefits | available prior to maturity shall not be less than the present | value as of the date of surrender of that portion of the | maturity value of the paid-up annuity benefit that would be | provided under the contract at maturity arising from | considerations paid prior to the time of cash surrender reduced | by the amount appropriate to reflect any prior withdrawals from | or partial surrenders of the contract, such present value being | calculated on the basis of an interest rate not more than 1% | higher than the interest rate specified in the contract for | accumulating the net considerations to determine maturity | value, decreased by the amount of any indebtedness to the | company on the contract, including interest due and accrued, | and increased by any existing additional amounts credited by | the company to the contract. In no event shall any cash | surrender benefit be less than the minimum nonforfeiture amount | at that time. The death benefit under such contracts shall be | at least equal to the cash surrender benefit. | (7) Calculation of Paid-up Annuity Benefits.
For contracts | that do not provide cash surrender benefits, the present value | of any paid-up annuity benefit available as a nonforfeiture | option at any time prior to maturity shall not be less than the | present value of that portion of the maturity value of the | paid-up annuity benefit provided under the contract arising | from considerations paid prior to the time the contract is
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| surrendered in exchange for, or changed to, a deferred paid-up | annuity, such present value being calculated for the period | prior to the maturity date on the basis of the interest rate | specified in the contract for accumulating the net | considerations to determine maturity value, and increased by | any additional amounts credited by the company to the contract. | For contracts that do not provide any death benefits prior to | the commencement of any annuity payments, present values shall | be calculated on the basis of such interest rate and the | mortality table specified in the contract for determining the | maturity value of the paid-up annuity benefit. However, in no | event shall the present value of a paid-up annuity benefit be | less than the minimum nonforfeiture amount at that time. | (8) Maturity Date.
For the purpose of determining the | benefits calculated under subsections (6) and (7), in the case | of annuity contracts under which an election may be made to | have annuity payments commence at optional maturity dates, the | maturity date shall be deemed to be the latest date for which | election shall be permitted by the contract, but shall not be | deemed to be later than the anniversary of the contract next | following the annuitant's seventieth birthday or the tenth | anniversary of the contract, whichever is later. | (9) Disclosure of Limited Death Benefits.
A contract that | does not provide cash surrender benefits or does not provide | death benefits at least equal to the minimum nonforfeiture | amount prior to the commencement of any annuity payments shall | include a statement in a prominent place in the contract that | such benefits are not
provided. | (10) Inclusion of Lapse of Time Considerations.
Any paid-up | annuity, cash surrender or death benefits available at any | time, other than on the contract anniversary under any contract | with fixed scheduled considerations, shall be calculated with | allowance for the lapse of time and the payment of any | scheduled considerations beyond the beginning of the contract | year in which cessation of payment of considerations under the | contract occurs. |
| (11) Proration of Values; Additional Benefits.
For a | contract which provides, within the same contract by rider or | supplemental contract provision, both annuity benefits and | life insurance benefits that are in excess of the greater of | cash surrender benefits or a return of the gross considerations | with interest, the minimum nonforfeiture benefits shall be | equal to the sum of the minimum nonforfeiture benefits for the | annuity portion and the minimum nonforfeiture benefits, if any, | for the life insurance portion computed as if each portion were | a separate contract. Notwithstanding the provisions of | subsections (5), (6), (7), (8) and (10), additional benefits | payable in the event of total and permanent disability, as | reversionary annuity or deferred reversionary annuity | benefits, or as other policy benefits additional to life | insurance, endowment and annuity benefits, and considerations | for all such additional benefits, shall be disregarded in | ascertaining the minimum nonforfeiture amounts,
paid-up | annuity, cash surrender and death benefits that may be required | under this Section. The inclusion of such benefits shall not be | required in any paid-up benefits, unless the additional | benefits separately would require minimum nonforfeiture | amounts, paid-up annuity, cash surrender and death benefits. | (12) Rules. The Director may adopt rules to implement the | provisions of this Section. | (13) Effective Date. After the effective date of this | amendatory Act of the 93rd General Assembly, a company may | elect to apply its provisions to annuity
contracts on a | contract form-by-contract form basis before July 1, 2006. In | all other instances, this Section shall become operative with | respect to annuity contracts issued by the company on or after | July 1, 2006.
| (14) (Blank)
This Section is repealed on July 1, 2007 .
| (Source: P.A. 93-873, eff. 8-6-04.) | (215 ILCS 5/356z.8 new)
| Sec. 356z.8. Multiple sclerosis preventative physical |
| therapy. A group or individual policy of accident and health | insurance or managed care plan amended, delivered, issued, or | renewed after the effective date of this amendatory Act of the | 94th General Assembly must provide coverage for medically | necessary preventative physical therapy for insureds diagnosed | with multiple sclerosis. For the purposes of this Section, | "preventative physical therapy" means physical therapy that is | prescribed by a physician licensed to practice medicine in all | of its branches for the purpose of treating parts of the body | affected by multiple sclerosis, but only where the physical | therapy includes reasonably defined goals, including, but not | limited to, sustaining the level of function the person has | achieved, with periodic evaluation of the efficacy of the | physical therapy against those goals. The coverage required | under this Section shall be subject to the same deductible, | coinsurance, waiting period, cost sharing limitation, | treatment limitation, calendar year maximum, or other | limitations as provided for
other physical or rehabilitative | therapy benefits covered by the policy. | Section 15. The Health Maintenance Organization Act is | amended by changing Section 5-3 as follows:
| (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
| Sec. 5-3. Insurance Code provisions.
| (a) Health Maintenance Organizations
shall be subject to | the provisions of Sections 133, 134, 137, 140, 141.1,
141.2, | 141.3, 143, 143c, 147, 148, 149, 151,
152, 153, 154, 154.5, | 154.6,
154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x, | 356y,
356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 364.01, 367.2, | 367.2-5, 367i, 368a, 368b, 368c, 368d, 368e,
401, 401.1, 402, | 403, 403A,
408, 408.2, 409, 412, 444,
and
444.1,
paragraph (c) | of subsection (2) of Section 367, and Articles IIA, VIII 1/2,
| XII,
XII 1/2, XIII, XIII 1/2, XXV, and XXVI of the Illinois | Insurance Code.
| (b) For purposes of the Illinois Insurance Code, except for |
| Sections 444
and 444.1 and Articles XIII and XIII 1/2, Health | Maintenance Organizations in
the following categories are | deemed to be "domestic companies":
| (1) a corporation authorized under the
Dental Service | Plan Act or the Voluntary Health Services Plans Act;
| (2) a corporation organized under the laws of this | State; or
| (3) a corporation organized under the laws of another | state, 30% or more
of the enrollees of which are residents | of this State, except a
corporation subject to | substantially the same requirements in its state of
| organization as is a "domestic company" under Article VIII | 1/2 of the
Illinois Insurance Code.
| (c) In considering the merger, consolidation, or other | acquisition of
control of a Health Maintenance Organization | pursuant to Article VIII 1/2
of the Illinois Insurance Code,
| (1) the Director shall give primary consideration to | the continuation of
benefits to enrollees and the financial | conditions of the acquired Health
Maintenance Organization | after the merger, consolidation, or other
acquisition of | control takes effect;
| (2)(i) the criteria specified in subsection (1)(b) of | Section 131.8 of
the Illinois Insurance Code shall not | apply and (ii) the Director, in making
his determination | with respect to the merger, consolidation, or other
| acquisition of control, need not take into account the | effect on
competition of the merger, consolidation, or | other acquisition of control;
| (3) the Director shall have the power to require the | following
information:
| (A) certification by an independent actuary of the | adequacy
of the reserves of the Health Maintenance | Organization sought to be acquired;
| (B) pro forma financial statements reflecting the | combined balance
sheets of the acquiring company and | the Health Maintenance Organization sought
to be |
| acquired as of the end of the preceding year and as of | a date 90 days
prior to the acquisition, as well as pro | forma financial statements
reflecting projected | combined operation for a period of 2 years;
| (C) a pro forma business plan detailing an | acquiring party's plans with
respect to the operation | of the Health Maintenance Organization sought to
be | acquired for a period of not less than 3 years; and
| (D) such other information as the Director shall | require.
| (d) The provisions of Article VIII 1/2 of the Illinois | Insurance Code
and this Section 5-3 shall apply to the sale by | any health maintenance
organization of greater than 10% of its
| enrollee population (including without limitation the health | maintenance
organization's right, title, and interest in and to | its health care
certificates).
| (e) In considering any management contract or service | agreement subject
to Section 141.1 of the Illinois Insurance | Code, the Director (i) shall, in
addition to the criteria | specified in Section 141.2 of the Illinois
Insurance Code, take | into account the effect of the management contract or
service | agreement on the continuation of benefits to enrollees and the
| financial condition of the health maintenance organization to | be managed or
serviced, and (ii) need not take into account the | effect of the management
contract or service agreement on | competition.
| (f) Except for small employer groups as defined in the | Small Employer
Rating, Renewability and Portability Health | Insurance Act and except for
medicare supplement policies as | defined in Section 363 of the Illinois
Insurance Code, a Health | Maintenance Organization may by contract agree with a
group or | other enrollment unit to effect refunds or charge additional | premiums
under the following terms and conditions:
| (i) the amount of, and other terms and conditions with | respect to, the
refund or additional premium are set forth | in the group or enrollment unit
contract agreed in advance |
| of the period for which a refund is to be paid or
| additional premium is to be charged (which period shall not | be less than one
year); and
| (ii) the amount of the refund or additional premium | shall not exceed 20%
of the Health Maintenance | Organization's profitable or unprofitable experience
with | respect to the group or other enrollment unit for the | period (and, for
purposes of a refund or additional | premium, the profitable or unprofitable
experience shall | be calculated taking into account a pro rata share of the
| Health Maintenance Organization's administrative and | marketing expenses, but
shall not include any refund to be | made or additional premium to be paid
pursuant to this | subsection (f)). The Health Maintenance Organization and | the
group or enrollment unit may agree that the profitable | or unprofitable
experience may be calculated taking into | account the refund period and the
immediately preceding 2 | plan years.
| The Health Maintenance Organization shall include a | statement in the
evidence of coverage issued to each enrollee | describing the possibility of a
refund or additional premium, | and upon request of any group or enrollment unit,
provide to | the group or enrollment unit a description of the method used | to
calculate (1) the Health Maintenance Organization's | profitable experience with
respect to the group or enrollment | unit and the resulting refund to the group
or enrollment unit | or (2) the Health Maintenance Organization's unprofitable
| experience with respect to the group or enrollment unit and the | resulting
additional premium to be paid by the group or | enrollment unit.
| In no event shall the Illinois Health Maintenance | Organization
Guaranty Association be liable to pay any | contractual obligation of an
insolvent organization to pay any | refund authorized under this Section.
| (Source: P.A. 92-764, eff. 1-1-03; 93-102, eff. 1-1-04; 93-261, | eff. 1-1-04; 93-477, eff. 8-8-03; 93-529, eff. 8-14-03; 93-853, |
| eff. 1-1-05; 93-1000, eff. 1-1-05; revised 10-14-04.)
| Section 20. The Voluntary Health Services Plans Act is | amended by changing Section 10 as follows:
| (215 ILCS 165/10) (from Ch. 32, par. 604)
| Sec. 10. Application of Insurance Code provisions. Health | services
plan corporations and all persons interested therein | or dealing therewith
shall be subject to the provisions of | Articles IIA and XII 1/2 and Sections
3.1, 133, 140, 143, 143c, | 149, 155.37, 354, 355.2, 356r, 356t, 356u, 356v,
356w, 356x, | 356y, 356z.1, 356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 364.01, | 367.2, 368a, 401, 401.1,
402,
403, 403A, 408,
408.2, and 412, | and paragraphs (7) and (15) of Section 367 of the Illinois
| Insurance Code.
| (Source: P.A. 92-130, eff. 7-20-01; 92-440, eff. 8-17-01; | 92-651, eff. 7-11-02; 92-764, eff. 1-1-03; 93-102, eff. 1-1-04; | 93-529, eff. 8-14-03; 93-853, eff. 1-1-05; 93-1000, eff. | 1-1-05; revised 10-14-04.)
| Section 99. Effective date. This Act takes effect upon | becoming law.
|
Effective Date: 12/29/2006
|