215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/357.25)

Sec. 357.25. (Repealed).

(Source: Laws 1967, p. 1735. Repealed by P.A. 95-230, eff. 1-1-08.)

(215 ILCS 5/357.26) (from Ch. 73, par. 969.26)

Sec. 357.26. If any provision of the preceding sections is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy the company, with the approval of the Director, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy.

(Source: Laws 1967, p. 1735.)

(215 ILCS 5/357.27) (from Ch. 73, par. 969.27)

Sec. 357.27. The provisions which are the subject of Sections 357.2 through 357.25, or any corresponding provisions which are used in lieu thereof in accordance with such sections, shall be printed in the consecutive order of the provisions in such sections or, at the option of the company, any such provision may appear as a unit in any part of the policy, with other provisions to which it may be logically related, provided the resulting policy shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued.

(Source: Laws 1967, p. 1735.)

(215 ILCS 5/357.28) (from Ch. 73, par. 969.28)

Sec. 357.28. The word "insured", as used in this article, shall not be construed as preventing a person other than the insured with a proper insurable interest from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits and rights provided therein.

(Source: Laws 1967, p. 1735.)

(215 ILCS 5/357.29) (from Ch. 73, par. 969.29)

Sec. 357.29. Any policy of a foreign or alien company, when delivered or issued for delivery to any person in this State, may contain any provision which is not less favorable to the insured or the beneficiary than the provisions of this article and which is prescribed or required by the law of the state under which the company is organized.

Any policy of a domestic company may, when issued for delivery in any other state or country, contain any provision permitted or required by the laws of such other state or country.

(Source: Laws 1967, p. 1735.)

(215 ILCS 5/357.30) (from Ch. 73, par. 969.30)

Sec. 357.30. The Director may make such reasonable rules and regulations concerning the procedure for the filing or submission of policies subject to this article as are necessary, proper or advisable to the administration of this article. This provision shall not abridge any other authority granted the Director by law. The effective date of the new provisions added by this amendatory Act shall be January 1, 1968.

(Source: Laws 1967, p. 1735.)

(215 ILCS 5/357.31) (from Ch. 73, par. 969.31)

Sec. 357.31. In the event of the death of a policyholder of an individual accident and health insurance policy, the insurance company, upon receipt of notice of the policyholder's death and a request for a pro-rata refund, supported by a valid death certificate supplied by a party entitled to claim such refund, shall refund the unearned premium pro-rated to the month of the policyholder's death. In no event shall such refund of premium be computed by the use of a short-rate table. Refund of the premium and termination of the coverage shall be without prejudice to any claim originating prior to the date of the policyholder's death. Coverage of persons insured under the same policy other than the policyholder shall not be affected by the premium refund provided for in this Section nor shall the obligation of such other insureds to pay required premiums be diminished pursuant to this Section.

(Source: P.A. 86-665.)

(215 ILCS 5/358a) (from Ch. 73, par. 970a)

Sec. 358a. Conforming to statute.

(1) Other Policy Provisions

No policy provision which is not subject to section 357a of this act shall make a policy, or any portion thereof, less favorable in any respect to the insured or the beneficiary than the provisions thereof which are subject to this act.

(2) Policy Conflicting with this Article

A policy delivered or issued for delivery to any person in this state in violation of this article shall be held valid but shall be construed as provided in this article. When any provision in a policy subject to this article is in conflict with any provision of this article, the rights, duties and obligations of the insurer, the insured and the beneficiary shall be governed by the provisions of this article.

(3) Operating under Old Provisions

Subsection (3) of Section 356a of this Act is hereby incorporated into and made a part of this section by express reference.

(Source: Laws 1951, p. 611.)

(215 ILCS 5/359a) (from Ch. 73, par. 971a)

Sec. 359a. Application.

(1) No policy of insurance except an Industrial Accident and Health Policy provided for by this article shall be issued, except upon the signed application of the person or persons sought to be insured. Any information or statement of the applicant shall plainly appear upon such application in the form of interrogatories by the insurer and answers by the applicant. The insured shall not be bound by any statement made in an application for any policy, including an Industrial Accident and Health Policy, unless a copy of such application is attached to or endorsed on the policy when issued as a part thereof. If any such policy delivered or issued for delivery to any person in this state shall be reinstated or renewed, and the insured or the beneficiary or assignee of such policy shall make written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall within fifteen days after the receipt of such request at its home office or any branch office of the insurer, deliver or mail to the person making such request, a copy of such application. If such copy shall not be so delivered or mailed, the insurer shall be precluded from introducing such application as evidence in any action or proceeding based upon or involving such policy or its reinstatement or renewal.

(2) No alteration of any written application for any such policy shall be made by any person other than the applicant without his written consent, except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant.

(3) The falsity of any statement in the application for any policy covered by this act may not bar the right to recovery thereunder unless such false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.

(Source: Laws 1951, p. 611.)

(215 ILCS 5/359b)

Sec. 359b. (Repealed).

(Source: P.A. 96-857, eff. 1-5-10. Repealed by P.A. 98-969, eff. 1-1-15.)

(215 ILCS 5/359c)

Sec. 359c. (Repealed).

(Source: P.A. 97-524, eff. 1-1-12. Repealed by P.A. 98-969, eff. 1-1-15.)

(215 ILCS 5/360a) (from Ch. 73, par. 972a)

Sec. 360a. Notice, waiver.

The acknowledgement by any insurer of the receipt of notice given under any policy covered by this article, or the furnishing of forms for filing proofs of loss, or the acceptance of such proofs, or the investigation of any claim thereunder shall not operate as a waiver of any of the rights of the insurer in defense of any claim arising under such policy.

(Source: Laws 1951, p. 611.)

(215 ILCS 5/361a) (from Ch. 73, par. 973a)

Sec. 361a. Age limit.

If any such policy contains a provision establishing, as an age limit or otherwise, a date after which the coverage provided by the policy will not be effective, and if such date falls within a period for which premium is accepted by the insurer or if the insurer accepts a premium after such date, the coverage provided by the policy will continue in force subject to any right of cancellation until the end of the period for which premium has been accepted. In the event the age of the insured has been misstated and if, according to the correct age of the insured, the coverage provided by the policy would not have become effective, or would have ceased prior to the acceptance of such premium or premiums, then the liability of the insurer shall be limited to the refund, upon request, of all premiums paid for the period not covered by the policy.

(Source: Laws 1951, p. 611.)

(215 ILCS 5/362a) (from Ch. 73, par. 974a)

Sec. 362a. Non-application to certain policies. The provisions of sections 356a to 359a, both inclusive, shall not apply to or affect (1) any policy of workers' compensation insurance or any policy of liability insurance with or without supplementary expense coverage therein; or (2) any policy or contract of reinsurance; or (3) any group policy of insurance (unless otherwise specifically provided); or (4) life insurance, endowment or annuity contracts, or contracts supplemental thereto which contain only such provisions relating to accident and sickness insurance as (a) provide additional benefits in case of death or dismemberment or loss of sight by accident, or as (b) operate to safeguard such contracts against lapse, or to give a special surrender value or special benefit or an annuity in the event that the insured or annuitant shall become a person with a total and permanent disability, as defined by the contract or supplemental contract.

(Source: P.A. 99-143, eff. 7-27-15.)

(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 reason.

(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 coverage.

(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 coverage;

(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 (a).

(7) 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 reductions.

(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 insurance.

(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 policies.

(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.

(8) If an individual is at least 65 years of age but no more than 75 years of age and has an existing Medicare supplement policy, the individual is entitled to an annual open enrollment period lasting 45 days, commencing with the individual's birthday, and the individual may purchase any Medicare supplement policy with the same issuer that offers benefits equal to or lesser than those provided by the previous coverage. During this open enrollment period, an issuer of a Medicare supplement policy shall not deny or condition the issuance or effectiveness of Medicare supplemental coverage, nor discriminate in the pricing of coverage, because of health status, claims experience, receipt of health care, or a medical condition of the individual. An issuer shall provide notice of this annual open enrollment period for eligible Medicare supplement policyholders at the time that the application is made for a Medicare supplement policy or certificate. The notice shall be in a form that may be prescribed by the Department.

(9) Without limiting an individual's eligibility under Department rules implementing 42 U.S.C. 1395ss(s)(2)(A), for at least 63 days after the later of the applicant's loss of benefits or the notice of termination of benefits, including a notice of claim denial due to termination of benefits, under the State's medical assistance program under Article V of the Illinois Public Aid Code, an issuer shall not deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate that is offered and is available for issuance to new enrollees by the issuer; shall not discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition; and shall not include a policy provision that imposes an exclusion of benefits based on a preexisting condition under such a Medicare supplement policy if the individual:

(a) is enrolled for Medicare Part B;

(b) was enrolled in the State's medical assistance program during the COVID-19 Public Health Emergency described in Section 5-1.5 of the Illinois Public Aid Code;

(c) was terminated or disenrolled from the State's medical assistance program after the COVID-19 Public Health Emergency and the later of the date of termination of benefits or the date of the notice of termination, including a notice of a claim denial due to termination, occurred on, after, or no more than 63 days before the end of either, as applicable:

(A) the individual's Medicare supplement open enrollment period described in Department rules implementing 42 U.S.C. 1395ss(s)(2)(A); or

(B) the 6-month period described in Section 363(6)(a)(i) of this Code; and

(d) submits evidence of the date of termination of benefits or notice of termination under the State's medical assistance program with the application for a Medicare supplement policy or certificate.

(10) Each Medicare supplement policy and certificate available from an insurer on and after the effective date of this amendatory Act of the 103rd General Assembly shall be made available to all applicants who qualify under subparagraph (i) of paragraph (a) of subsection (6) or Department rules implementing 42 U.S.C. 1395ss(s)(2)(A) without regard to age or applicability of a Medicare Part B late enrollment penalty.

(Source: P.A. 102-142, eff. 1-1-22; 103-102, eff. 6-16-23.)

(215 ILCS 5/363a) (from Ch. 73, par. 975a)

Sec. 363a. Medicare supplement policies; disclosure, advertising, loss ratio standards.

(1) Scope. This Section pertains to disclosure requirements of companies and agents and mandatory and prohibited practices of agents when selling a policy to supplement the Medicare program or any other health insurance policy sold to individuals eligible for Medicare. No policy shall be referred to or labeled as a Medicare supplement policy if it does not comply with the minimum standards required by regulation pursuant to Section 363 of this Code. Except as otherwise specifically provided in paragraph (d) of subsection (6), this Section shall not apply to accident only or specified disease type of policies or hospital confinement indemnity or other type policies clearly unrelated to Medicare.

(2) Advertising. An advertisement that describes or offers to provide information concerning the federal Medicare program shall comply with all of the following:

(a) It may not include any reference to that program on the envelope, the reply envelope, or the address side of the reply postal card, if any, nor use any language to imply that failure to respond to the advertisement might result in loss of Medicare benefits.

(b) It must include a prominent statement to the effect that in providing supplemental coverage the insurer and agent involved in the solicitation are not in any manner connected with that program.

(c) It must prominently disclose that it is an advertisement for insurance or is intended to obtain insurance prospects.

(d) It must prominently identify and set forth the actual address of the insurer or insurers that issue the coverage.

(e) It must prominently state that any material or information offered will be delivered in person by a representative of the insurer, if that is the case.

The Director may issue reasonable rules and regulations for the purpose of establishing criteria and guidelines for the advertising of Medicare supplement insurance.

(3) Mandatory agent practices. For the purpose of this Act, "home solicitation sale by an agent" means a sale or attempted sale of an insurance policy at the purchaser's residence, agent's transient quarters, or away from the agent's home office when the initial contact is personally solicited by the agent or insurer. Any agent involved in any home solicitation sale of a Medicare supplement policy or other policy of accident and health insurance, subject to subsection (1) of this Section, sold to individuals eligible for Medicare shall promptly do the following:

(a) Identify himself as an insurance agent.

(b) Identify the insurer or insurers for which he is a licensed agent.

(c) Provide the purchaser with a clearly printed or typed identification of his name, address, telephone number, and the name of the insurer in which the insurance is to be written.

(d) Determine what, if any, policy is appropriate, suitable, and nonduplicative for the purchaser considering existing coverage and be able to provide proof to the company that such a determination has been made.

(e) Fully and completely disclose the purchaser's medical history on the application if required for issue.

(f) Complete a Policy Check List in duplicate as follows:

POLICY CHECK LIST Applicant's Name:

Policy Number:

Name of Existing Insurer:

Expiration Date of Existing Insurance:

Service

Hospital

Skilled

Nursing

Home Care

Prescription

Drugs

This policy does/does not (circle one) comply with the minimum standards for Medicare supplements set forth in Section 363 of the Illinois Insurance Code.

Signature of Applicant

Signature of Agent

This Policy Check List is to be completed in the presence of the purchaser at the point of sale, and copies of it, completed and duly signed, are to be provided to the purchaser and to the company.

(g) Except in the case of refunds of premium made pursuant to subsection (5) of Section 363 of this Code, send by mail to an insured or an applicant for insurance, when the insurer follows a practice of having agents return premium refund drafts issued by the insurer, a premium refund draft within 2 weeks of its receipt by the agent from the insurer making such refund.

(h) Deliver to the purchaser, along with every policy issued pursuant to Section 363 of this Code, an Outline of Coverage as described in paragraph (b) of subsection (6) of this Section.

(4) Prohibited agent practices.

(a) No insurance agent engaged in a home solicitation sale of a Medicare supplement policy or other policy of accident and health insurance, subject to subsection (1) of this Section, sold to individuals eligible for Medicare shall use any false, deceptive, or misleading representation to induce a sale, or use any plan, scheme, or ruse, that misrepresents the true status or mission of the person making the call, or represent directly or by implication that the agent:

(i) Is offering insurance that is approved or recommended by the State or federal government to supplement Medicare.

(ii) Is in any way representing, working for, or compensated by a local, State, or federal government agency.

(iii) Is engaged in an advisory business in which his compensation is unrelated to the sale of insurance by the use of terms such as Medicare consultant, Medicare advisor, Medicare Bureau, disability insurance consultant, or similar expression in a letter, envelope, reply card, or other.

(iv) Will provide a continuing service to the purchaser of the policy unless he does provide services to the purchaser beyond the sale and renewal of policies.

(b) No agent engaged in a home solicitation sale of a Medicare supplement policy or other policy of accident and health insurance sold to individuals eligible for Medicare shall misrepresent, directly or by implication, any of the following:

(i) The identity of the insurance company or companies he represents.

(ii) That the assistance programs of the State or county or the federal Medicare programs for medical insurance are to be discontinued or are increasing in cost to the prospective buyer or are in any way endangered.

(iii) That an insurance company in which the prospective purchaser is insured is financially unstable, cancelling its outstanding policies, merging, or withdrawing from the State.

(iv) The coverage of the policy being sold.

(v) The effective date of coverage under the policy.

(vi) That any pre-existing health condition of the purchaser is irrelevant.

(vii) The right of the purchaser to cancel the policy within 30 days after receiving it.

(5) Mandatory company practices. Any company involved in the sale of Medicare supplement policies or any policies of accident and health insurance (subject to subsection (1) of this Section) sold to individuals eligible for Medicare shall do the following:

(a) Be able to readily determine the number of accident and health policies in force with the company on each insured eligible for Medicare.

(b) Make certain that policies of Medicare supplement insurance are not issued, and any premium collected for those policies is refunded, when they are deemed duplicative, inappropriate, or not suitable considering existing coverage with the company.

(c) Maintain copies of the Policy Check List as completed by the agent at the point of sale of a Medicare supplement policy or any policy of accident and health insurance (subject to subsection (1) of this Section) sold to individuals eligible for Medicare on file at the company's regional or other administrative office.

(6) Disclosures. In order to provide for full and fair disclosure in the sale of Medicare supplement policies, there must be compliance with the following:

(a) No Medicare supplement policy or certificate shall be delivered in this State unless an outline of coverage is delivered to the applicant at the time application is made and, except for direct response policies, an acknowledgement from the applicant of receipt of the outline is obtained.

(b) Outline of coverage requirements for Medicare supplement policies.

(i) Insurers issuing Medicare supplement policies or certificates for delivery in this State shall provide an outline of coverage to all applicants at the time application is made and, except for direct response policies, shall obtain an acknowledgement of receipt of the outline from the applicant.

(ii) If an outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis that would require revision of the outline, a substitute outline of coverage properly describing the policy or certificate must accompany the policy or certificate when it is delivered and shall contain immediately above the company name, in no less than 12 point type, the following statement:

"NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued.".

(iii) The outline of coverage provided to applicants shall be in the form prescribed by rule by the Department.

(c) Insurers issuing policies that provide hospital or medical expense coverage on an expense incurred or indemnity basis, other than incidentally, to a person or persons eligible for Medicare shall provide to the policyholder a buyer's guide approved by the Director. Delivery of the buyer's guide shall be made whether or not the policy qualifies as a "Medicare Supplement Coverage" in accordance with Section 363 of this Code. Except in the case of direct response insurers, delivery of the buyer's guide shall be made at the time of application, and acknowledgement of receipt of certification of delivery of the buyer's guide shall be provided to the insurer. Direct response insurers shall deliver the buyer's guide upon request, but not later than at the time the policy is delivered.

(d) Outlines of coverage delivered in connection with policies defined in subsection (4) of Section 355a of this Code as Hospital confinement Indemnity (Section 4c), Accident Only Coverage (Section 4f), Specified Disease (Section 4g) or Limited Benefit Health Insurance Coverage to persons eligible for Medicare shall contain, in addition to other requirements for those outlines, the following language that shall be printed on or attached to the first page of the outline of coverage:

"This policy, certificate or subscriber contract IS NOT A MEDICARE SUPPLEMENT policy or certificate. It does not fully supplement your federal Medicare health insurance. If you are eligible for Medicare, review the Guide to Health Insurance for People with Medicare available from the company.".

(e) In the case wherein a policy, as defined in paragraph (a) of subsection (2) of Section 355a of this Code, being sold to a person eligible for Medicare provides one or more but not all of the minimum standards for Medicare supplements set forth in Section 363 of this Code, disclosure must be provided that the policy is not a Medicare supplement and does not meet the minimum benefit standards set for those policies in this State.

(7) Loss ratio standards.

(a) Every issuer of Medicare supplement policies or certificates in this State, as defined in Section 363 of this Code, shall file annually its rates, rating schedule, and supporting documentation demonstrating that it is in compliance with the applicable loss ratio standards of this State. All filings of rates and rating schedules shall demonstrate that the actual and anticipated losses in relation to premiums comply with the requirements of this Code.

(b) Medicare supplement policies shall, for the entire period for which rates are computed to provide coverage, on the basis of incurred claims experience and earned premiums for the period and in accordance with accepted actuarial principles and practices, return to policyholders in the form of aggregate benefits the following:

(i) In the case of group policies, at least 75% of the aggregate amount of premiums earned.

(ii) In the case of individual policies, at least 60% of the aggregate amount of premiums earned; and beginning November 5, 1991, at least 65% of the aggregate amount of premiums earned.

(iii) In the case of sponsored group policies in which coverage is marketed on an individual basis by direct response to eligible individuals in that group only, at least 65% of the aggregate amount of premiums earned.

(c) For the purposes of this Section, the insurer shall be deemed to comply with the loss ratio standards if: (i) for the most recent year, the ratio of the incurred losses to earned premiums for policies or certificates that have been in force for 3 years or more is greater than or equal to the applicable percentages contained in this Section; and (ii) the anticipated losses in relation to premiums over the entire period for which the policy is rated comply with the requirements of this Section. An anticipated third-year loss ratio that is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than 3 years.

(8) Applicability. This Section shall apply to those companies writing the kind or kinds of business enumerated in Classes 1(b) and 2(a) of Section 4 of this Code and to those entities organized and operating under the Voluntary Health Services Plans Act and the Health Maintenance Organization Act.

(9) Penalties.

(a) Any company or agent who is found to have violated any of the provisions of this Section may be required by order of the Director of Insurance to forfeit by civil penalty not less than $500 nor more than $5,000 for each offense. Written notice will be issued and an opportunity for a hearing will be granted pursuant to subsection (2) of Section 403A of this Code.

(b) In addition to any other applicable penalties for violations of this Code, the Director may require insurers violating any provision of this Code or regulations promulgated pursuant to this Code to cease marketing in this State any Medicare supplement policy or certificate that is related directly or indirectly to a violation and may require the insurer to take actions as are necessary to comply with the provisions of Sections 363 and 363a of this Code.

(c) After June 30, 1991, no person may advertise, solicit for the sale or purchase of, offer for sale, or deliver a Medicare supplement policy that has not been approved by the Director. A person who knowingly violates, directly or through an agent, the provisions of this paragraph commits a Class 3 felony. Any person who violates the provisions of this paragraph may be subjected to a civil penalty not to exceed $10,000. The civil penalty authorized in this paragraph shall be enforced in the manner provided in Section 403A of this Code.

(10) Replacement. Application forms shall include a question designed to elicit information as to whether a Medicare supplement policy or certificate is intended to replace any similar accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant containing the question may be used. Upon determining that a sale of Medicare supplement coverage will involve replacement, an insurer, other than a direct response insurer, or its agent, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage. One copy of the notice shall be provided to the applicant, and an additional copy signed by the applicant shall be retained by the insurer. A direct response insurer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of Medicare supplement coverage.

(Source: P.A. 93-32, eff. 7-1-03.)