Illinois General Assembly - Full Text of Public Act 095-0436
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Public Act 095-0436




Public Act 095-0436
SB0873 Enrolled LRB095 05626 KBJ 25716 b

    AN ACT concerning regulation.
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
    Section 5. The Illinois Insurance Code is amended by
changing Section 363 as follows:
    (215 ILCS 5/363)  (from Ch. 73, par. 975)
    Sec. 363. Medicare supplement policies; minimum standards.
    (1) Except as otherwise specifically provided therein,
this Section and Section 363a of this Code shall apply to:
        (a) all Medicare supplement policies and subscriber
    contracts delivered or issued for delivery in this State on
    and after January 1, 1989; and
        (b) all certificates issued under group Medicare
    supplement policies or subscriber contracts, which
    certificates are issued or issued for delivery in this
    State on and after January 1, 1989.
    This Section shall not apply to "Accident Only" or
"Specified Disease" types of policies. The provisions of this
Section are not intended to prohibit or apply to policies or
health care benefit plans, including group conversion
policies, provided to Medicare eligible persons, which
policies or plans are not marketed or purported or held to be
Medicare supplement policies or benefit plans.
    (2) For the purposes of this Section and Section 363a, the
following terms have the following meanings:
        (a) "Applicant" means:
            (i) in the case of individual Medicare supplement
        policy, the person who seeks to contract for insurance
        benefits, and
            (ii) in the case of a group Medicare policy or
        subscriber contract, the proposed certificate holder.
        (b) "Certificate" means any certificate delivered or
    issued for delivery in this State under a group Medicare
    supplement policy.
        (c) "Medicare supplement policy" means an individual
    policy of accident and health insurance, as defined in
    paragraph (a) of subsection (2) of Section 355a of this
    Code, or a group policy or certificate delivered or issued
    for delivery in this State by an insurer, fraternal benefit
    society, voluntary health service plan, or health
    maintenance organization, other than a policy issued
    pursuant to a contract under Section 1876 of the federal
    Social Security Act (42 U.S.C. Section 1395 et seq.) or a
    policy issued under a demonstration project specified in 42
    U.S.C. Section 1395ss(g)(1), or any similar organization,
    that is advertised, marketed, or designed primarily as a
    supplement to reimbursements under Medicare for the
    hospital, medical, or surgical expenses of persons
    eligible for Medicare.
        (d) "Issuer" includes insurance companies, fraternal
    benefit societies, voluntary health service plans, health
    maintenance organizations, or any other entity providing
    Medicare supplement insurance, unless the context clearly
    indicates otherwise.
        (e) "Medicare" means the Health Insurance for the Aged
    Act, Title XVIII of the Social Security Amendments of 1965.
    (3) No Medicare supplement insurance policy, contract, or
certificate, that provides benefits that duplicate benefits
provided by Medicare, shall be issued or issued for delivery in
this State after December 31, 1988. No such policy, contract,
or certificate shall provide lesser benefits than those
required under this Section or the existing Medicare Supplement
Minimum Standards Regulation, except where duplication of
Medicare benefits would result.
    (4) Medicare supplement policies or certificates shall
have a notice prominently printed on the first page of the
policy or attached thereto stating in substance that the
policyholder or certificate holder shall have the right to
return the policy or certificate within 30 days of its delivery
and to have the premium refunded directly to him or her in a
timely manner if, after examination of the policy or
certificate, the insured person is not satisfied for any
    (5) A Medicare supplement policy or certificate may not
deny a claim for losses incurred more than 6 months from the
effective date of coverage for a preexisting condition. The
policy may not define a preexisting condition more
restrictively than a condition for which medical advice was
given or treatment was recommended by or received from a
physician within 6 months before the effective date of
    (6) An issuer of a Medicare supplement policy shall:
        (a) not deny coverage to an applicant under 65 years of
    age who meets any of the following criteria:
            (i) becomes eligible for Medicare by reason of
        disability if the person makes application for a
        Medicare supplement policy within 6 months of the first
        day on which the person enrolls for benefits under
        Medicare Part B; for a person who is retroactively
        enrolled in Medicare Part B due to a retroactive
        eligibility decision made by the Social Security
        Administration, the application must be submitted
        within a 6-month period beginning with the month in
        which the person received notice of retroactive
        eligibility to enroll;
            (ii) has Medicare and an employer group health plan
        (either primary or secondary to Medicare) that
        terminates or ceases to provide all such supplemental
        health benefits;
            (iii) is insured by a Medicare Advantage plan that
        includes a Health Maintenance Organization, a
        Preferred Provider Organization, and a Private
        Fee-For-Service or Medicare Select plan and the
        applicant moves out of the plan's service area; the
        insurer goes out of business, withdraws from the
        market, or has its Medicare contract terminated; or the
        plan violates its contract provisions or is
        misrepresented in its marketing; or
            (iv) is insured by a Medicare supplement policy and
        the insurer goes out of business, withdraws from the
        market, or the insurance company or agents
        misrepresent the plan and the applicant is without
        (b) make available to persons eligible for Medicare by
    reason of disability each type of Medicare supplement
    policy the issuer makes available to persons eligible for
    Medicare by reason of age;
        (c) not charge individuals who become eligible for
    Medicare by reason of disability and who are under the age
    of 65 premium rates for any medical supplemental insurance
    benefit plan offered by the issuer that exceed the issuer's
    highest rate on the current rate schedule filed with the
    Division of Insurance for that plan to individuals who are
    age 65 or older; and
        (d) provide the rights granted by items (a) through
    (d), for 6 months after the effective date of this
    amendatory Act of the 95th General Assembly, to any person
    who had enrolled for benefits under Medicare Part B prior
    to this amendatory Act of the 95th General Assembly who
    otherwise would have been eligible for coverage under item
    (7) (6) The Director shall issue reasonable rules and
regulations for the following purposes:
        (a) To establish specific standards for policy
    provisions of Medicare policies and certificates. The
    standards shall be in accordance with the requirements of
    this Code. No requirement of this Code relating to minimum
    required policy benefits, other than the minimum standards
    contained in this Section and Section 363a, shall apply to
    medicare supplement policies and certificates. The
    standards may cover, but are not limited to the following:
            (A) Terms of renewability.
            (B) Initial and subsequent terms of eligibility.
            (C) Non-duplication of coverage.
            (D) Probationary and elimination periods.
            (E) Benefit limitations, exceptions and
            (F) Requirements for replacement.
            (G) Recurrent conditions.
            (H) Definition of terms.
            (I) Requirements for issuing rebates or credits to
        policyholders if the policy's loss ratio does not
        comply with subsection (7) of Section 363a.
            (J) Uniform methodology for the calculating and
        reporting of loss ratio information.
            (K) Assuring public access to loss ratio
        information of an issuer of Medicare supplement
            (L) Establishing a process for approving or
        disapproving proposed premium increases.
            (M) Establishing a policy for holding public
        hearings prior to approval of premium increases.
            (N) Establishing standards for Medicare Select
            (O) Prohibited policy provisions not otherwise
        specifically authorized by statute that, in the
        opinion of the Director, are unjust, unfair, or
        unfairly discriminatory to any person insured or
        proposed for coverage under a medicare supplement
        policy or certificate.
        (b) To establish minimum standards for benefits and
    claims payments, marketing practices, compensation
    arrangements, and reporting practices for Medicare
    supplement policies.
        (c) To implement transitional requirements of Medicare
    supplement insurance benefits and premiums of Medicare
    supplement policies and certificates to conform to
    Medicare program revisions.
(Source: P.A. 88-313; 89-484, eff. 6-21-96.)

Effective Date: 6/1/2008