093_HB3661enr

 
HB3661 Enrolled                      LRB093 09245 JLS 09478 b

 1        AN ACT in relation to insurance.

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

 4        Section 3.  The State Employees Group  Insurance  Act  of
 5    1971 is amended by changing Section 6.2 as follows:

 6        (5 ILCS 375/6.2) (from Ch. 127, par. 526.2)
 7        Sec. 6.2.  When the Director, with the advice and consent
 8    of  the  Commission,  determines that it would be in the best
 9    interests of the State and  its  employees,  the  program  of
10    health  benefits  under this Act may be administered with the
11    State as a self-insurer in  whole  or  in  part.   The  State
12    assumes  the  risks of the program. The State may provide the
13    administrative services in connection with the self-insurance
14    health plan  or  purchase  administrative  services  from  an
15    administrative service organization. A plan of self-insurance
16    may  combine  forms  of  re-insurance  or stop-loss insurance
17    which limits the amount of State liability.
18        The  program  of  health   benefits   shall   provide   a
19    continuation and conversion privilege for persons whose State
20    employment  is  terminated  and  a continuation privilege for
21    members' spouses and dependent children who are covered under
22    the  provisions  of  the   program,   consistent   with   the
23    requirements of federal law and Sections 367.2, and 367e, and
24    367e.1 of the Illinois Insurance Code.
25    (Source: P.A. 85-848.)

26        Section  5.  The  Illinois  Insurance  Code is amended by
27    changing Sections 143.17a, 245.25, 367.2, 367e, and 404.1, by
28    resectioning Section 367e as Sections 367e and 367e.1, and by
29    adding Section 367.2-5 as follows:
 
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 1        (215 ILCS 5/143.17a) (from Ch. 73, par. 755.17a)
 2        Sec. 143.17a.  Notice of intention not to renew.
 3        a.  No  company  shall  fail  to  renew  any  policy   of
 4    insurance,  to which Section 143.11 applies, except for those
 5    defined in subsections (a), (b),  (c),  and  (h)  of  Section
 6    143.13,  unless it shall send by mail to the named insured at
 7    least 60 days advance notice of its intention not  to  renew.
 8    The company shall maintain proof of mailing of such notice on
 9    one  of  the  following forms:  a recognized U.S. Post Office
10    form or a form acceptable to the U.S. Post  Office  or  other
11    commercial  mail  delivery  service.   An exact and unaltered
12    copy of such notice shall  also  be  sent  to  the  insured's
13    broker, if known, or the agent of record and to the mortgagee
14    or  lien  holder  at  the  last  mailing address known by the
15    company. However, where cancellation  is  for  nonpayment  of
16    premium,  the  notice of cancellation must be mailed at least
17    10 days before the effective date of the cancellation.
18        b.  This Section  does  not  apply  if  the  company  has
19    manifested  its  willingness  to  renew directly to the named
20    insured. Provided, however, that no company may increase  the
21    renewal  premium  on any policy of insurance to which Section
22    143.11 applies, except for those defined in subsections  (a),
23    (b),  (c),  and  (h)  of  Section 143.13, by 30% or more, nor
24    impose changes in deductibles  or  coverage  that  materially
25    alter  the  policy,   unless the company shall have mailed or
26    delivered  to  the  named  insured  written  notice  of  such
27    increase or change in deductible or coverage at least 60 days
28    prior to the renewal or anniversary  date.  The  increase  in
29    premium  shall  be  the  renewal  premium  based on the known
30    exposure as of the date of  the  quotation  compared  to  the
31    premium as of the last day of coverage for the current year's
32    policy, annualized.  The premium on the renewal policy may be
33    subsequently  amended  to  reflect  any change in exposure or
34    reinsurance costs not considered in the quotation.  An  exact
 
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 1    and  unaltered  copy of such notice shall also be sent to the
 2    insured's broker, if known, or the agent of  record.   If  an
 3    insurer   fails  to  provide  the  notice  required  by  this
 4    subsection, then the company must extend the  current  policy
 5    under  the  same  terms,  conditions, and premium to allow 60
 6    days notice of renewal and provide the actual renewal premium
 7    quotation and any change in coverage  or  deductible  on  the
 8    policy.   Proof  of mailing or proof of receipt may be proven
 9    by a sworn affidavit by the  insurer  as  to  the  usual  and
10    customary  business  practices  of mailing notice pursuant to
11    this Section  or  may  be  proven  consistent  with  Illinois
12    Supreme  Court Rule 236.  The company shall maintain proof of
13    mailing or proof of receipt whichever is required.
14        c.  Should a company fail to comply with the  non-renewal
15    notice  requirements  of  subsection  a.,  this  Section, the
16    policy shall be extended for an additional  year  the  policy
17    shall  terminate  only as provided in this subsection. In the
18    event notice is provided at least 31 days, but less  than  60
19    days  prior  to expiration of the policy, the policy shall be
20    extended for a period of 60 days or until the effective  date
21    of  any  similar insurance procured by the insured, whichever
22    is less, on the same  terms  and  conditions  as  the  policy
23    sought  to  be  terminated.   In the event notice is provided
24    less than 31 days prior to the expiration of the policy,  the
25    policy  shall  be  extended for a period of one year or until
26    the effective date of any similar insurance procured  by  the
27    insured,  whichever is less, on the same terms and conditions
28    as the policy sought to be terminated, unless the insurer has
29    manifested its intention to renew at a different premium that
30    represents an increase not exceeding 30% unless  the  insurer
31    has  manifested  its  willingness to renew at a premium which
32    represents an increase not exceeding  30%.  The  premium  for
33    coverage  shall  be prorated in accordance with the amount of
34    the last year's premium, and the company shall be entitled to
 
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 1    this premium for the extension of coverage and such extension
 2    may be contingent upon the payment of such premium.
 3        d.  Renewal of a policy does not constitute a  waiver  or
 4    estoppel  with  respect  to  grounds  for  cancellation which
 5    existed before the effective date of such renewal.
 6        e.  In all notices of intention not to renew  any  policy
 7    of  insurance, as defined in Section 143.11 the company shall
 8    provide a specific explanation of the reasons for nonrenewal.
 9    (Source: P.A. 89-669, eff. 1-1-97.)

10        (215 ILCS 5/245.25) (from Ch. 73, par. 857.25)
11        Sec. 245.25.   Except for subparagraphs (1) (a), (1) (f),
12    (1) (g) and (3) of Section  226  of  the  Illinois  Insurance
13    Code,  in  the  case  of  a  variable  annuity  contract  and
14    subparagraphs  (1)  (b),  (1) (f), (1) (g), (1) (h), (1) (i),
15    and (1) (k) of Section 224, subparagraph (1) (c)  of  Section
16    225,  and  subparagraph  (h)  of Section 231 in the case of a
17    variable life insurance policy, except  for  Sections  357.4,
18    357.5,  and 367e, and 367e.1 in the case of a variable health
19    insurance policy, and except as otherwise  provided  in  this
20    Article,  all  pertinent provisions of the Illinois Insurance
21    Code which  are  appropriate  to  those  contracts  apply  to
22    separate   accounts   and  contracts  relating  thereto.  Any
23    individual variable life  insurance  contract,  delivered  or
24    issued  for  delivery  in  this  State,  must  contain grace,
25    reinstatement and non-forfeiture  provisions  appropriate  to
26    such  a  contract.  Any individual variable annuity contract,
27    delivered or issued for delivery in this State, must  contain
28    grace  and  reinstatement  provisions  appropriate  to such a
29    contract.  Any  group  variable  life   insurance   contract,
30    delivered  or issued for delivery in this State, must contain
31    a grace provision appropriate to such  a  contract.  A  group
32    variable  health  insurance  contract delivered or issued for
33    delivery in this State must contain a continuation  of  group
 
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 1    coverage  provision appropriate to the contract.  The reserve
 2    liability for  variable  contracts  must  be  established  in
 3    accordance  with  actuarial  procedures  that  recognize  the
 4    variable  nature  of  the benefits provided and any mortality
 5    guarantees.
 6    (Source: P.A. 90-381, eff. 8-14-97.)

 7        (215 ILCS 5/367.2) (from Ch. 73, par. 979.2)
 8        Sec.  367.2.  Spousal   continuation   privilege;   group
 9    contracts.
10        A.   No policy of group accident or health insurance, nor
11    any  certificate thereunder shall be delivered or issued  for
12    delivery  in  this  State  after December 1, 1985, unless the
13    policy provides for a continuation of the existing  insurance
14    benefits  for an employee's spouse and dependent children who
15    are insured under the provisions  of  that  group  policy  or
16    certificate  thereunder, notwithstanding that the marriage is
17    dissolved by judgment or  terminated  by  the  death  of  the
18    employee   spouse  or,  after  the  effective  date  of  this
19    amendatory  Act  of   the   93rd   General   Assembly   1991,
20    notwithstanding   the   retirement  of  the  employee  spouse
21    provided that the employee's spouse is at least 55  years  of
22    age, in each case without any other eligibility requirements.
23    The  provisions  of  this  amendatory Act of the 93rd General
24    Assembly 1991 apply to every  group  policy  of  accident  or
25    health  insurance  and  every  certificate  issued thereunder
26    delivered or issued for delivery after the effective date  of
27    this amendatory Act of the 93rd General Assembly 1991.
28        B.  Within  30 days of the entry of judgment or the death
29    or retirement of  the  employee  spouse,  the  spouse  of  an
30    employee insured under the policy who seeks a continuation of
31    coverage  thereunder  shall  give  the  employer  or  and the
32    insurer written notice of the dissolution of the marriage  or
33    the   death  or  retirement  of  the  employee  spouse.   The
 
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 1    employer, within 15 days of receipt of the notice shall  give
 2    written  notice of the dissolution of the employee's marriage
 3    or the death or retirement of the employee  and  that  former
 4    spouse's  or  retired  employee's  spouse's residence, to the
 5    insurance company issuing the policy., of the dissolution  of
 6    the  employee's  marriage  or  the death or retirement of the
 7    employee spouse and the former or retired employee's spouse's
 8    residence.
 9        The employer shall immediately send a copy of the  notice
10    to  the  former  spouse  of the employee or the spouse of the
11    retired employee at the retired employee's spouse's residence
12    or at the former spouse's residence.  For  purposes  of  this
13    Act, the term "former spouse" includes "widow" or "widower".
14        C.  Within  30 days after the date of receipt of a notice
15    from the employer, retired employee's spouse or former spouse
16    or of the initiation of a new  group  policy,  the  insurance
17    company,  by  certified mail, return receipt requested, shall
18    notify the retired employee's spouse or former spouse at  his
19    or  her  residence that the policy may be continued for as to
20    that retired employee's spouse or former spouse  and  covered
21    dependents, and the notice shall include:
22             (i)  a  form  for election to continue the insurance
23        coverage;
24             (ii)  the amount of periodic premiums to be  charged
25        for  continuation  coverage  and  the method and place of
26        payment; and
27             (iii)  instructions for returning the election  form
28        by  certified  mail,  return receipt requested, within 30
29        days after the date it is received from  of  the  mailing
30        receipt of the instruction by the insurance company.
31        Failure of the retired employee's spouse or former spouse
32    to  exercise  the  election to continue insurance coverage by
33    notifying the insurance company in writing by certified mail,
34    return receipt requested, within such  30  day  period  shall
 
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 1    terminate  the  continuation  of  benefits  and  the right to
 2    continuation.
 3        If the insurance company  fails  to  notify  the  retired
 4    employee's  spouse  or  former  spouse  as  provided  for  in
 5    subsection  C  hereof,  all premiums shall be waived from the
 6    date the notice was required until notice is  sent,  and  the
 7    benefits shall continue under the terms and provisions of the
 8    policy,  from  the  date  the  notice  was required until the
 9    notice is sent, notwithstanding any other  provision  hereof,
10    except  where  the  benefits  in  existence  at  the time the
11    company's notice was to be sent pursuant to subsection C  are
12    terminated as to all employees.
13        D.  With  respect to a former spouse who has not attained
14    the age of  55  at  the  time  continuation  coverage  begins
15    hereunder,  the  monthly  premium  for  continuation shall be
16    computed as follows:
17             (i)  an amount, if any, that  would  be  charged  an
18        employee  if the former spouse were a current employee of
19        the employer, plus;
20             (ii)  an amount, if any,  that  the  employer  would
21        contribute toward the premium if the former spouse were a
22        current employee.
23        Failure to pay the initial monthly premium within 30 days
24    after  the date of receipt of notice required in subsection C
25    of this Section terminates the continuation benefits and  the
26    right to continuation benefits.
27        The  continuation coverage for right granted hereunder to
28    former spouses who have not attained the age  of  55  at  the
29    time  coverage  begins  hereunder  shall  terminate  upon the
30    earliest to happen of the following:
31             (i)  The failure to pay premiums when due, including
32        any grace period allowed by the policy; or
33             (ii)  When coverage would terminate under the  terms
34        of  the existing policy if the employee and former spouse
 
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 1        were still married to each other; however,  the  existing
 2        coverage  shall  not be modified or terminated during the
 3        first 120 consecutive days  subsequent  to  the  employee
 4        spouse's death or to the entry of the judgment dissolving
 5        the marriage existing between the employee and the former
 6        spouse  unless the master policy in existence at the time
 7        is modified or terminated as to all employees; or
 8             (iii)  the date on which  the  former  spouse  first
 9        becomes,  after the date of election, an insured employee
10        under any other group health plan; or
11             (iv)  the date on which the former spouse remarries;
12        or
13             (v)  the  expiration  of  2  years  from  the   date
14        continuation coverage began hereunder.
15        Upon  the termination of continuation coverage hereunder,
16    the former spouse shall be entitled to convert  the  coverage
17    to an individual policy.
18        The  continuation  rights  granted  to former spouses who
19    have  not  attained  age  55  shall  also  include   eligible
20    dependents  insured  prior  to the dissolution of marriage or
21    the death of the employee.
22        E.  With respect to a retired employee's spouse or former
23    spouse  who  has  attained  the  age  of  55  at   the   time
24    continuation  coverage  begins hereunder, the monthly premium
25    for the continuation shall be computed as follows:
26             (i)  an amount, if any, that  would  be  charged  an
27        employee  if  the  retired  employee's  spouse  or former
28        spouse were a current employee of the employer, plus;
29             (ii)  an amount, if any,  that  the  employer  would
30        contribute  toward  the premium if the retired employee's
31        spouse or former spouse were a current employee.
32        Beginning  2  years  after  coverage  begins  under  this
33    paragraph, the monthly premium shall be computed as follows:
34             (i)  an amount, if any, that  would  be  charged  an
 
HB3661 Enrolled             -9-      LRB093 09245 JLS 09478 b
 1        employee  if  the  retired  employee's  spouse  or former
 2        spouse were a current employee of the employer, plus;
 3             (ii)  an amount, if any,  that  the  employer  would
 4        contribute  toward  the premium if the retired employee's
 5        spouse or former spouse were a current employee.
 6             (iii)  an additional amount, not to  exceed  20%  of
 7        (i) and (ii) above, for costs of administration.
 8        Failure to pay the initial monthly premium within 30 days
 9    after   the  date  of  receipt  of  the  notice  required  in
10    subsection C of  this  Section  terminates  the  continuation
11    benefits and the right to continuation benefits.
12        The  continuation  coverage  for right granted to retired
13    employees' spouses and former spouses who have  attained  the
14    age  of  55  at  the  time  coverage  begins  hereunder shall
15    terminate upon the earliest to happen of the following:
16             (i)  The failure to pay premiums when due, including
17        any grace period allowed by the policy; or
18             (ii)  When coverage would terminate, except  due  to
19        the  retirement  of  an  employee, under the terms of the
20        existing policy if the employee and  former  spouse  were
21        still  married  to  each  other;  however,  the  existing
22        coverage  shall  not be modified or terminated during the
23        first 120 consecutive days  subsequent  to  the  employee
24        spouse's death or retirement to the entry of the judgment
25        dissolving the marriage existing between the employee and
26        the  former  spouse unless the master policy in existence
27        at  the  time  is  modified  or  terminated  as  to   all
28        employees; or
29             (iii)  the  date  on  which  the  retired employee's
30        spouse or former spouse first becomes, after the date  of
31        election,  an  insured  employee  under  any  other group
32        health plan; or
33             (iv)  the date on which the former spouse remarries;
34        or
 
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 1             (v)  the date that person reaches the qualifying age
 2        or otherwise establishes eligibility under  the  Medicare
 3        Program  pursuant  to  Title  XVIII of the federal Social
 4        Security Act.
 5        Upon the termination of continuation coverage  hereunder,
 6    the  former  spouse shall be entitled to convert the coverage
 7    to an individual policy.
 8        The continuation rights granted  to  former  spouses  who
 9    have  attained  age 55 shall also include eligible dependents
10    insured prior to the dissolution of marriage,  the  death  of
11    the employee, or the retirement of the employee.
12        F.  The  renewal,  amendment,  or  extension of any group
13    policy affected  by  this  Section  shall  be  deemed  to  be
14    delivery or issuance for delivery of a new policy or contract
15    of insurance in this State.
16        G.  If  (i)  the  policy  is canceled cancelled, and (ii)
17    another insurance company contracts to provide  group  health
18    and   accident   insurance   to   the   employer,  and  (iii)
19    continuation coverage is in effect for the retired employee's
20    spouse or former spouse at the time of cancellation and  (iv)
21    the  employee  is  or  would have been included under the new
22    group  policy,  then  the  new  insurer   must   also   offer
23    continuation coverage to the retired employee's spouse and to
24    an   employee's  former  spouse  under  the  same  terms  and
25    conditions as contained in this Section.
26        H.  This Section shall not limit the right of the retired
27    employee's spouse  or  any  former  spouse  to  exercise  the
28    privilege  to convert to an individual policy as contained in
29    this Code.
30        I.  No person who obtains  coverage  under  this  Section
31    shall  be required to pay a rate greater than that applicable
32    to any employee or member covered under that group except  as
33    provided   in   clause  (iii)  of  the  second  paragraph  of
34    subsection E.
 
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 1    (Source: P.A. 87-615.)

 2        (215 ILCS 5/367.2-5 new)
 3        Sec. 367.2-5.  Dependent  child  continuation  privilege;
 4    group contracts.
 5        (a)  No policy of group accident or health insurance, nor
 6    any   certificate   thereunder  shall  be  amended,  renewed,
 7    delivered, or issued for delivery in this State after July 1,
 8    2004, unless the policy provides for a  continuation  of  the
 9    existing insurance benefits for an employee's dependent child
10    who  is  insured under the provisions of that group policy or
11    certificate in the event of the death of the employee and the
12    child is not eligible for coverage as a dependent  under  the
13    provisions  of  Section  367.2  or  the  dependent  child has
14    attained the limiting age under the policy.
15        (b)  In the event  of  the  death  of  the  employee,  if
16    continuation  coverage  is  desired, the dependent child or a
17    responsible adult acting on behalf  of  the  dependent  child
18    shall  give the employer or the insurer written notice of the
19    death of employee within 30 days of  the  date  the  coverage
20    terminates.  The  employer,  within 15 days of receipt of the
21    notice, shall give written notice to  the  insurance  company
22    issuing  the  policy  of  the  death  of the employee and the
23    dependent child's residence. The employer  shall  immediately
24    send  a  copy  of  the  notice  to  the  dependent  child  or
25    responsible adult at the dependent child's residence.
26        (c)  In  the  event  of the dependent child attaining the
27    limiting age under the policy, if  continuation  coverage  is
28    desired,  the  dependent child shall give the employer or the
29    insurer written notice of the attainment of the limiting  age
30    within  30  days  of  the  date  the coverage terminates. The
31    employer, within 15 days of receipt of the notice, shall give
32    written notice to the insurance company issuing the policy of
33    the attainment of the limiting age by the dependent child and
 
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 1    of the dependent child's residence.
 2        (d)  Within 30 days after the date of receipt of a notice
 3    from the employer,  dependent  child,  or  responsible  adult
 4    acting on behalf of the dependent child, or of the initiation
 5    of  a  new  group policy, the insurance company, by certified
 6    mail, return receipt requested, shall  notify  the  dependent
 7    child or responsible adult at the dependent child's residence
 8    that  the  policy  may  be continued for the dependent child.
 9    The notice shall include:
10             (1)  a form for election to continue  the  insurance
11        coverage;
12             (2)  the  amount  of periodic premiums to be charged
13        for continuation coverage and the  method  and  place  of
14        payment; and
15             (3)  instructions  for  returning  the election form
16        within 30 days after the date it  is  received  from  the
17        insurance company.
18        Failure  of  the dependent child or the responsible adult
19    acting on behalf of  the  dependent  child  to  exercise  the
20    election  to  continue  insurance  coverage  by notifying the
21    insurance company in writing within such 30 day period  shall
22    terminate  the  continuation  of  benefits  and  the right to
23    continuation.
24        If the insurance company fails to  notify  the  dependent
25    child  or responsible adult acting on behalf of the dependent
26    child as provided for in this subsection  (d),  all  premiums
27    shall  be  waived from the date the notice was required until
28    notice was sent, and the benefits shall  continue  under  the
29    terms  and provisions of the policy, from the date the notice
30    was required until the notice was sent,  notwithstanding  any
31    other   provision   hereof,  except  where  the  benefits  in
32    existence at the time the company's notice  was  to  be  sent
33    pursuant  to  this  subsection  (d)  are terminated as to all
34    employees.
 
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 1        (e)  The  monthly  premium  for  continuation  shall   be
 2    computed as follows:
 3             (1)  an  amount,  if  any,  that would be charged an
 4        employee if the dependent child were a  current  employee
 5        of the employer, plus;
 6             (2)  an  amount,  if  any,  that  the employer would
 7        contribute toward the premium if the dependent child were
 8        a current employee.
 9        Failure to pay the initial monthly premium within 30 days
10    after the date of receipt of notice  required  in  subsection
11    (d)  of this Section terminates the continuation benefits and
12    the right to continuation benefits.
13        Continuation  coverage  provided  under  this  Act  shall
14    terminate upon the earliest to happen of the following:
15             (1)  the failure to pay premiums when due, including
16        any grace period allowed by the policy;
17             (2)  when coverage would terminate under  the  terms
18        of  the  existing policy if the dependent child was still
19        an eligible dependent of the employee;
20             (3)  the date on which  the  dependent  child  first
21        becomes,  after the date of election, an insured employee
22        under any other group health plan; or
23             (4)  the  expiration  of  2  years  from  the   date
24        continuation coverage began.
25        Upon   the  termination  of  continuation  coverage,  the
26    dependent child shall be entitled to convert the coverage  to
27    an individual policy.
28        (f)  The  renewal,  amendment,  or extension of any group
29    policy affected  by  this  Section  shall  be  deemed  to  be
30    delivery or issuance for delivery of a new policy or contract
31    of insurance in this State.
32        (g)  If  (1)  the  policy  is  cancelled, and (2) another
33    insurance company  contracts  to  provide  group  health  and
34    accident  insurance  to  the  employer,  and (3) continuation
 
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 1    coverage is in effect for the dependent child at the time  of
 2    cancellation,  and  (4)  the  employee  is or would have been
 3    included under the new group policy,  then  the  new  insurer
 4    must  also offer continuation coverage to the dependent child
 5    under the same terms and  conditions  as  contained  in  this
 6    Section.
 7        (h)  This  Section  shall  not  limit  the  right  of any
 8    dependent child to exercise the privilege to  convert  to  an
 9    individual policy as contained in this Code.
10        (i)  No  person  who  obtains coverage under this Section
11    shall be required to pay a rate greater than that  applicable
12    to any employee or member covered under that group.

13        (215 ILCS 5/367e) (from Ch. 73, par. 979e)
14        Sec.  367e.  Continuation of Group Hospital, Surgical and
15    Major Medical Coverage After  Termination  of  Employment  or
16    Membership.
17        A group policy delivered, issued for delivery, renewed or
18    amended  in this state which insures employees or members for
19    hospital, surgical or major medical insurance on  an  expense
20    incurred  or  service basis, other than for specific diseases
21    or for accidental injuries only, shall provide that employees
22    or members whose  insurance  under  the  group  policy  would
23    otherwise  terminate  because of termination of employment or
24    membership or because of  a  reduction  in  hours  below  the
25    minimum  required  by  the  group  plan  shall be entitled to
26    continue their hospital, surgical and major medical insurance
27    under that group policy, for themselves  and  their  eligible
28    dependents,  subject  to  all of the group policy's terms and
29    conditions applicable to those forms of insurance and to  the
30    following conditions:
31        1.   Continuation  shall only be available to an employee
32    or member who has been continuously insured under  the  group
33    policy (and for similar benefits under any group policy which
 
HB3661 Enrolled             -15-     LRB093 09245 JLS 09478 b
 1    it  replaced)  during  the entire 3 months period ending with
 2    such termination or reduction  in  hours  below  the  minimum
 3    required by the group plan.
 4        2.  Continuation  shall  not  be available for any person
 5    who is covered by Medicare, except for those individuals  who
 6    have  been  covered under a group Medicare supplement policy.
 7    Neither shall continuation be available for any person who is
 8    covered by any other insured or uninsured plan which provides
 9    hospital, surgical or medical coverage for individuals  in  a
10    group  and under which the person was not covered immediately
11    prior to such termination or reduction  in  hours  below  the
12    minimum  required  by  the  group  plan  or who exercises his
13    conversion privilege under the group policy.
14        3.  Continuation need not include  dental,  vision  care,
15    prescription  drug  benefits,  disability  income,  specified
16    disease, or similar supplementary benefits which are provided
17    under  the group policy in addition to its hospital, surgical
18    or major medical benefits.
19        4.  Upon termination or  reduction  in  hours  below  the
20    minimum   required  by  the  group  plan  written  notice  of
21    continuation shall be presented to the employee or member  by
22    the  employer  or  mailed  by  the employer to the last known
23    address of the employee.  An employee or  member  who  wishes
24    continuation  of  coverage  must request such continuation in
25    writing within the ten-day period following the later of: (i)
26    the date of such termination or reduction in hours below  the
27    minimum  required  by  the  group  plan, or (ii) the date the
28    employee is given written notice of the right of continuation
29    by either the employer or  the  group  policyholder.   In  no
30    event, however, may the employee or member elect continuation
31    more  than  60  days  after  the  date of such termination or
32    reduction in hours below the minimum required  by  the  group
33    plan.   Written  notice  of  continuation  presented  to  the
34    employee or member by the  policyholder,  or  mailed  by  the
 
HB3661 Enrolled             -16-     LRB093 09245 JLS 09478 b
 1    policyholder to the last known address of the employee, shall
 2    constitute  the  giving  of  notice  for  the purpose of this
 3    provision.
 4        5.  An employee or member electing continuation must  pay
 5    to the group policyholder or his employer, on a monthly basis
 6    in  advance,  the  total  amount  of  premium required by the
 7    insurer, including that portion of the premium contributed by
 8    the policyholder or employer, if any, but not more  than  the
 9    group rate for the insurance being continued with appropriate
10    reduction  in  premium  for  any supplementary benefits which
11    have been discontinued under paragraph (3) of  this  Section.
12    The  premium  rate  required  by  the  insurer  shall  be the
13    applicable premium required on the due date of each payment.
14        6.  Continuation of insurance under the group policy  for
15    any  person  shall  terminate  when  he  becomes eligible for
16    Medicare or is covered by any other insured or uninsured plan
17    which provides hospital, surgical  or  medical  coverage  for
18    individuals  in  a  group  and under which the person was not
19    covered immediately prior to such termination or reduction in
20    hours below  the  minimum  required  by  the  group  plan  as
21    provided in condition 2 above or, if earlier, at the first to
22    occur of the following:
23             (a)  The date 9 months after the date the employee's
24        or  member's  insurance  under the policy would otherwise
25        have terminated because of termination of  employment  or
26        membership  or  reduction  in  hours  below  the  minimum
27        required by the group plan.
28             (b)  If  the employee or member fails to make timely
29        payment of a required contribution, the end of the period
30        for which contributions were made.
31             (c)  The  date  on  which  the   group   policy   is
32        terminated  or,  in the case of an employee, the date his
33        employer terminates participation under the group policy.
34        However, if this (c) applies and the coverage ceasing  by
 
HB3661 Enrolled             -17-     LRB093 09245 JLS 09478 b
 1        reason   of  such  termination  is  replaced  by  similar
 2        coverage under another group policy, the following  shall
 3        apply:
 4                  (i)  The  employee  or  member  shall  have the
 5             right to  become  covered  under  that  other  group
 6             policy,  for the balance of the period that he would
 7             have remained covered under the prior  group  policy
 8             in  accordance  with  condition  6 had a termination
 9             described in this (c) not occurred.
10                  (ii)  The prior group policy shall continue  to
11             provide  benefits  to  the  extent  of  its  accrued
12             liabilities  and  extensions  of  benefits as if the
13             replacement had not occurred.
14        7.  A notification of the continuation privilege shall be
15    included in each certificate of coverage.
16        8.  Continuation shall not be available for any  employee
17    who  was  discharged because of the commission of a felony in
18    connection with his work, or because of theft  in  connection
19    with  his  work,  for  which  the  employer  was  in  no  way
20    responsible; provided the employee admitted his commission of
21    the  felony or theft or such act has resulted in a conviction
22    or order of supervision by a court of competent jurisdiction.
23        The requirements of this amendatory  Act  of  1983  shall
24    apply  to  any  group  policy  as  defined  in  this Section,
25    delivered or  issued  for  delivery  on  or  after  180  days
26    following the effective date of this amendatory Act of 1983.
27        The  requirements  of  this  amendatory Act of 1985 shall
28    apply to  any  group  policy  as  defined  in  this  Section,
29    delivered,  issued  for  delivery,  renewed  or amended on or
30    after  180  days  following  the  effective  date   of   this
31    amendatory Act of 1985.
32    (Source: P.A. 85-210; 86-1475.)

33        (215 ILCS 5/367e.1 new)
 
HB3661 Enrolled             -18-     LRB093 09245 JLS 09478 b
 1        Sec.   367e.1.  Group   Accident   and  Health  Insurance
 2    Conversion Privilege.
 3        (A)  A group policy which provides hospital, medical,  or
 4    major  medical expense insurance, or any combination of these
 5    coverages, on an expense-incurred basis, but not including  a
 6    policy  which  provides benefits for specific diseases or for
 7    accidental injuries only, shall provide that an  employee  or
 8    member  (i)  whose  insurance under the group policy has been
 9    terminated for any reason other than  discontinuance  of  the
10    group  policy  in  its  entirety  where there is a succeeding
11    carrier, or failure of the employee  or  member  to  pay  any
12    required  contribution;  and  (ii)  who has been continuously
13    insured under the group policy (and under  any  group  policy
14    providing  similar  benefits  which it replaces) for at least
15    three months  immediately  prior  to  termination,  shall  be
16    entitled  to  have  issued  to him by the insurer a policy of
17    health insurance (hereafter  referred  to  as  the  converted
18    policy), subject to the following conditions:
19             (1)  Written  application  for  the converted policy
20        shall be made and the first premium paid to  the  insurer
21        not  later  than  the latter of (i) thirty-one days after
22        such termination or (ii) 15 days after  the  employee  or
23        member  has been given written notice of the existence of
24        the conversion privilege, but in no event later  than  60
25        days after such termination.
26          Written  notice  presented to the employee or member by
27        the policyholder, or mailed by the  policyholder  to  the
28        last  known  address  of  the  employee  or member, shall
29        constitute the giving of notice for the purpose  of  this
30        provision.
31             (2)  The  converted  policy  shall be issued without
32        evidence of insurability.
33             (3)  The initial premium for  the  converted  policy
34        shall  be  determined  in  accordance  with the insurer's
 
HB3661 Enrolled             -19-     LRB093 09245 JLS 09478 b
 1        table of premium rates applicable to the age and class of
 2        risk of each person to be  covered  under  the  converted
 3        policy  and  to  the  type  and  amount  of the insurance
 4        provided. Conditions pertaining to health shall not be an
 5        acceptable basis of classification for  the  purposes  of
 6        this  subsection.  The frequency of premium payment shall
 7        be the frequency customarily required by the insurer  for
 8        the  policy  form  and  plan  selected, provided that the
 9        insurer  shall  not   require   premium   payments   less
10        frequently  than  quarterly  without  the  consent of the
11        insured.
12             (4)  The effective  date  of  the  converted  policy
13        shall  be  the day following the termination of insurance
14        under the group policy.
15             (5)  The converted policy shall cover  the  employee
16        or  member  and  his  dependents  who were covered by the
17        group policy on the date of termination of insurance.  At
18        the option of the insurer, a  separate  converted  policy
19        may be issued to cover any dependent.
20             (6)  The  insurer  shall  not be required to issue a
21        converted policy covering any person if such person is or
22        could be covered by Medicare (Title XVIII of  the  United
23        States  Social  Security  Act  as  added  by  the  Social
24        Security  Amendments  of  1965  or  as  later  amended or
25        superseded).  Furthermore,  the  insurer  shall  not   be
26        required  to issue a converted policy covering any person
27        if (i) such person is covered  for  similar  benefits  by
28        another  hospital,  surgical,  medical,  or major medical
29        expense insurance policy or hospital or  medical  service
30        subscriber   contract   or   medical  practice  or  other
31        prepayment plan or by any other plan or program; or  (ii)
32        such  person is eligible for similar benefits (whether or
33        not covered therefor) under any arrangement  of  coverage
34        for  individuals  in  a  group,  whether on an insured or
 
HB3661 Enrolled             -20-     LRB093 09245 JLS 09478 b
 1        uninsured basis; or (iii) similar benefits  are  provided
 2        for  or  available  to  such  person,  pursuant  to or in
 3        accordance with the requirements of any statute, and  the
 4        benefits provided or available under the sources referred
 5        to  in  (i),  (ii),  (iii) above for such person together
 6        with the converted policy would result  in  overinsurance
 7        according to the insurer's standards.
 8             (7)  In  the  event that coverage would be continued
 9        under the group  policy  on  an  employee  following  his
10        retirement prior to the time he is or could be covered by
11        Medicare,  he  may elect, in lieu of such continuation of
12        such group insurance, to have the same conversion  rights
13        as would apply had his insurance terminated at retirement
14        by reason of termination of employment or membership.
15             (8)  Subject  to the conditions set forth above, the
16        conversion privilege shall also be available (i)  to  the
17        surviving spouse, if any, at the death of the employee or
18        member,  with  respect  to  the  spouse and such children
19        whose coverage  under  the  group  policy  terminates  by
20        reason  of  such death, otherwise to each surviving child
21        whose coverage  under  the  group  policy  terminates  by
22        reason  of  such  death, or, if the group policy provides
23        for continuation of dependents'  coverage  following  the
24        employee's   or  member's  death,  at  the  end  of  such
25        continuation; (ii) to  the  spouse  of  the  employee  or
26        member  upon termination of coverage of the spouse, while
27        the employee or member remains insured  under  the  group
28        policy,  by  reason  of  ceasing to be a qualified family
29        member under the group policy, with respect to the spouse
30        and such children whose coverage under the  group  policy
31        terminates  at  the same time; or (iii) to a child solely
32        with respect to himself upon termination of his  coverage
33        by  reason  of  ceasing  to  be a qualified family member
34        under the group policy, if a conversion privilege is  not
 
HB3661 Enrolled             -21-     LRB093 09245 JLS 09478 b
 1        otherwise   provided   above   with   respect   to   such
 2        termination.
 3             (9)  A  notification  of  the  conversion  privilege
 4        shall be included in each certificate.
 5             (10)  The   insurer   may  elect  to  provide  group
 6        insurance coverage in lieu of the issuance of a converted
 7        policy.
 8        (B)  A converted policy issued upon the exercise  of  the
 9    conversion  privilege  required  by  subsection  (A)  of this
10    Section shall conform to the following minimum standards:
11             (1)  If  the   group   policy   provided   hospital,
12        surgical,  or medical expense insurance, or a combination
13        thereof, the converted policy shall provide  benefits  on
14        an  expense-incurred basis equal to the lesser of (i) the
15        hospital room and board, miscellaneous hospital, surgical
16        and medical benefits provided under the group policy; and
17        (ii) the corresponding benefits described below:
18                  (a)  Hospital room and  board  benefits  in  an
19             amount  per  day  elected by the group policyholder,
20             but in no event less than 60% of  the  then  average
21             semi-private  hospital  room and board charge in the
22             State, such benefits to be payable for a maximum  of
23             not  less  than  70  days for any period of hospital
24             confinement, as defined in the converted policy.
25                  (b)  Miscellaneous hospital  benefits  for  any
26             one  period  of hospital confinement in an amount up
27             to twenty times the hospital room  and  board  daily
28             benefit provided under the converted policy.
29                  (c)  Surgical  benefits according to a surgical
30             schedule providing a benefit amount elected  by  the
31             group  policy  holder, but in no event less than 60%
32             of the then average surgical charge in the State and
33             with a  maximum  amount  appropriate  thereto.   The
34             maximum  surgical benefit shall be applicable to all
 
HB3661 Enrolled             -22-     LRB093 09245 JLS 09478 b
 1             surgical operations of an individual resulting  from
 2             or contributed to by the same and all related causes
 3             occurring  in one period of disability.  Two or more
 4             surgical procedures performed in  the  course  of  a
 5             single  operation  through  the same incision, or in
 6             the same natural body orifice, may be treated as one
 7             surgical procedure with the  payment  determined  by
 8             the   scheduled   benefit  for  the  most  expensive
 9             procedure performed.  The surgical schedule shall be
10             consistent   with   the   schedule   of   operations
11             customarily offered by the insurer  under  group  or
12             individual health insurance policies.
13                  (d)  Non-surgical  medical  attendance benefits
14             for in-hospital services in an amount elected by the
15             group policyholder, but in no event less than 60% of
16             the  then  average  in-hospital  physician's   visit
17             charge in the State, such benefits may be limited to
18             one  visit  per day of hospitalization and a maximum
19             number of visits numbering not less than seventy for
20             any period of hospital confinement as defined in the
21             converted policy.
22             (2)  If the  group  policy  provided  major  medical
23        insurance,  the insurer may offer the insurance described
24        in (1) above only, major medical  insurance  only,  or  a
25        combination  of  the insurance described in (1) above and
26        major  medical  insurance.   If  the  insurer  elects  to
27        provide major medical  insurance,  the  converted  policy
28        shall provide:
29                  (a)  A maximum benefit at least equal to (i) or
30             (ii) below:
31                       (i)  A   maximum  payment  of  twenty-five
32                  thousand  dollars  for  all   covered   medical
33                  expenses  incurred  during the covered person's
34                  lifetime with  an  annual  restoration  of  the
 
HB3661 Enrolled             -23-     LRB093 09245 JLS 09478 b
 1                  lesser  of,  while  coverage  is  in force, one
 2                  thousand dollars and the amount counted against
 3                  the maximum benefit which  was  not  previously
 4                  restored; or
 5                       (ii)  A  maximum  payment  of  twenty-five
 6                  thousand  dollars  for each unrelated injury or
 7                  illness.
 8                  (b)  Payment of benefits  for  covered  medical
 9             expenses, in excess of the deductible, at a rate not
10             less than 80% except as otherwise permitted below.
11                  (c)  A   deductible  for  each  benefit  period
12             which, at the option of the insurer,  shall  be  (i)
13             the  greater  of  $500  and the benefits deductible;
14             (ii) the sum of the benefits deductible and $100; or
15             (iii) the  corresponding  deductible  in  the  group
16             policy.   The term "benefit period," as used herein,
17             means, when the maximum payment is determined by (a)
18             (i) above, either a calendar year  or  a  period  of
19             twelve  consecutive  months;  and,  when the maximum
20             payment is determined by (a) (ii) above, a period of
21             twenty-four consecutive months.  The term  "benefits
22             deductible,"  as used herein, means the value of any
23             benefits provided on an expense-incurred basis which
24             are  provided  with  respect  to   covered   medical
25             expenses by any other hospital, surgical, or medical
26             insurance  policy  or  hospital  or  medical service
27             subscriber contract of  medical  practice  or  other
28             prepayment  plan,  or  any  other  plans  or program
29             whether on an insured or uninsured basis, or of  any
30             similar   benefits   which   are  provided  or  made
31             available pursuant to  or  in  accordance  with  the
32             requirements of any statute and, if, pursuant to the
33             provisions  of this subsection, the converted policy
34             provides both the coverage described  in  (1)  above
 
HB3661 Enrolled             -24-     LRB093 09245 JLS 09478 b
 1             and  major  medical  insurance,  the  value  of  the
 2             coverage  described  in  (1) above.  The insurer may
 3             require that the deductible be  satisfied  during  a
 4             period of not less than three months. If the maximum
 5             payment  is  determined  by (a) (i) above, and if no
 6             benefits become payable during the preceding benefit
 7             period  due  to  the  cash  deductible   not   being
 8             satisfied;  credit shall be given, in the succeeding
 9             benefit period, to any expense  applied  toward  the
10             cash  deductible of the preceding benefit period and
11             incurred  during  the  last  three  months  of  such
12             preceding benefit period, subject to any requirement
13             that the deductible be satisfied during a  specified
14             period of time.
15                  (d)  The  term  "covered  medical expenses," as
16             used above, may  be  limited  (i)  in  the  case  of
17             hospital  room  and board benefits, maximum surgical
18             schedule,  and   non-surgical   medical   attendance
19             benefits  to  amounts  not  less  than  the  amounts
20             provided  in (1) (a), (1) (c) and (1) (d) above; and
21             (ii) in the case of  mental  and  nervous  condition
22             treatments  while  the  patient  is  not  a hospital
23             in-patient,  to  co-insurance  of  50%,  a   maximum
24             benefit   of   $500  per  calendar  year  or  twelve
25             consecutive month periods subject to  the  inclusion
26             by the insurer of reasonable limits on the number of
27             visits  and  the  maximum  permissible  expense  per
28             visit.
29             (3)  The converted policy may contain any exclusion,
30        reduction,  or  limitation  contained in the group policy
31        and any exclusion, reduction, or  limitation  customarily
32        used in individual accident and health policies delivered
33        or issued for delivery in this state.  It is not required
34        that  the  converted  policy  contain  all of the covered
 
HB3661 Enrolled             -25-     LRB093 09245 JLS 09478 b
 1        medical  expenses  or  the  same  level  of  benefits  as
 2        provided in the group policy.
 3             (4)  The insurer may,  at  its  option,  also  offer
 4        alternative   plans   for   group   accident  and  health
 5        conversion.
 6             (5)  The  converted  policy  may  only   exclude   a
 7        pre-existing  condition  excluded  by  the  group policy.
 8        Any hospital, surgical, medical or major medical benefits
 9        payable under the converted policy may be reduced by  the
10        amount  of  any  such  benefits  payable  under the group
11        policy  after  the  termination   of   the   individual's
12        insurance thereunder and, during the first policy year of
13        such  converted  policy,  the  benefits payable under the
14        converted policy may be so reduced so that they  are  not
15        in  excess  of  the benefits that would have been payable
16        had the individual's insurance  under  the  group  policy
17        remained in force and effect.
18             (6)  The   converted  policy  may  provide  for  the
19        termination of coverage thereunder of any person when  he
20        is  or  could  be covered by Medicare (Title XVIII of the
21        United States Social Security Act as added by the  Social
22        Security  Amendments  of  1965  or  as  later  amended or
23        superseded).
24             (7)  The  converted  policy  may  provide  that  the
25        insurer  may  request  information  from  the   converted
26        policyholder,  in  advance of any premium due date of the
27        converted policy, to determine whether any person covered
28        thereunder (i) is covered for similar benefits by another
29        hospital, surgical, medical,  or  major  medical  expense
30        insurance   policy   or   hospital   or  medical  service
31        subscriber  contract  or  medical   practice   or   other
32        prepayment  plan or by any other plan or program; or (ii)
33        is eligible for similar benefits (whether or not  covered
34        therefor)   under   any   arrangement   of  coverage  for
 
HB3661 Enrolled             -26-     LRB093 09245 JLS 09478 b
 1        individuals  in  a  group,  whether  on  an  insured   or
 2        uninsured  basis;  or (iii) has similar benefits provided
 3        for or available  to  such  person,  pursuant  to  or  in
 4        accordance  with  the  requirements  of any statute.  The
 5        converted policy may also provide that the  insurer  need
 6        not  renew  the  converted  policy or the coverage of any
 7        person insured thereunder if either the benefits provided
 8        or available under the sources referred to in (i),  (ii),
 9        (iii)  above for such person, together with the converted
10        policy, would result in overinsurance  according  to  the
11        insurer's  standards,  or  if  the converted policyholder
12        refuses to provide the requested information.
13             (8)  The converted  policy  shall  not  contain  any
14        provision  allowing  the  insurer  to  non-renew due to a
15        change in the health of an insured.
16             (9)  The converted policy may contain any provisions
17        permitted  herein  and  may  also   include   any   other
18        provisions   not   expressly   prohibited   by  law.  Any
19        provisions required or permitted herein  may  be  made  a
20        part  of  the converted policy by means of an endorsement
21        or rider.
22             (10)  In the conversion of group health insurance in
23        accordance with the provisions of subsection  (A)  above,
24        the insurer may, at its option, accomplish the conversion
25        by issuing one or more converted policies.
26             (11)  With  respect to any person who was covered by
27        the group policy, the period specified in the Time  Limit
28        on  Certain  Defenses  provisions of the converted policy
29        shall commence  with  the  date  the  person's  insurance
30        became effective under the group policy.
31             (12)  If   the   insurer  elects  to  provide  group
32        insurance coverage in lieu of  a  converted  policy,  the
33        benefit  levels  required  for a converted policy must be
34        applicable to such group insurance coverage.
 
HB3661 Enrolled             -27-     LRB093 09245 JLS 09478 b
 1        (C)  The requirements of this Section shall apply to  any
 2    group  policy  of  accident  and  health insurance delivered,
 3    issued for delivery, renewed or amended on or after 180  days
 4    following the effective date of this Section.
 5    (Source: P.A. 85-210; 86-1475.)

 6        (215 ILCS 5/404.1) (from Ch. 73, par. 1016.1)
 7        Sec.  404.1.   Safekeeping of deposits.  The Director may
 8    maintain with a corporation qualified to administer trusts in
 9    this State under the  Corporate  Fiduciary  Act  "An  Act  to
10    provide  for  and  regulate  the  administration of trusts by
11    trust companies", approved June 15, 1887, as amended, for the
12    securities deposited with the  Director,  a  limited  agency,
13    custodial,  or  depository  account, or other type of account
14    for the safekeeping of those securities, and  for  collecting
15    the  income  from  those  securities and providing supportive
16    accounting  services  relating  to   such   safekeeping   and
17    collection.    Such   a   corporation,  in  safekeeping  such
18    securities, shall have all the  powers,  rights,  duties  and
19    responsibilities  that  it  has for holding securities in its
20    fiduciary accounts under the Securities in Fiduciary Accounts
21    Act "An Act concerning the powers of corporations  authorized
22    to accept and execute trusts, to register and hold securities
23    of  fiduciary  accounts  in  bulk  and to deposit same with a
24    clearing  corporation",  approved  September  1,   1972,   as
25    amended.    The  Director  shall  arrange with any depository
26    institution that has been authorized to  accept  and  execute
27    trusts  to provide for collateralization of any cash accounts
28    resulting from the failure of any depositing company to  give
29    instruction regarding the investment of any such cash amounts
30    as  provided  for by Section 6 of the Public Funds Investment
31    Act.
32    (Source: P.A. 83-746.)
 
HB3661 Enrolled             -28-     LRB093 09245 JLS 09478 b
 1        Section 7.  The Comprehensive Health Insurance  Plan  Act
 2    is amended by changing Section 2 as follows:

 3        (215 ILCS 105/2) (from Ch. 73, par. 1302)
 4        Sec.  2.   Definitions.   As used in this Act, unless the
 5    context otherwise requires:
 6        "Plan administrator" means the  insurer  or  third  party
 7    administrator designated under Section 5 of this Act.
 8        "Benefits  plan"  means the coverage to be offered by the
 9    Plan to eligible persons and federally  eligible  individuals
10    pursuant to this Act.
11        "Board" means the Illinois Comprehensive Health Insurance
12    Board.
13        "Church plan" has the same meaning given that term in the
14    federal  Health  Insurance Portability and Accountability Act
15    of 1996.
16        "Continuation coverage" means  continuation  of  coverage
17    under  a group health plan or other health insurance coverage
18    for former employees or dependents of former  employees  that
19    would  otherwise  have  terminated  under  the  terms of that
20    coverage  pursuant  to  any  continuation  provisions   under
21    federal  or  State  law,  including  the Consolidated Omnibus
22    Budget  Reconciliation  Act  of  1985  (COBRA),  as  amended,
23    Sections  367.2,  and  367e,  and  367e.1  of  the   Illinois
24    Insurance  Code,  or any other similar requirement in another
25    State.
26        "Covered person" means a person who is and  continues  to
27    remain eligible for Plan coverage and is covered under one of
28    the benefit plans offered by the Plan.
29        "Creditable  coverage" means, with respect to a federally
30    eligible individual, coverage of the individual under any  of
31    the following:
32             (A)  A group health plan.
33             (B)  Health   insurance  coverage  (including  group
 
HB3661 Enrolled             -29-     LRB093 09245 JLS 09478 b
 1        health insurance coverage).
 2             (C)  Medicare.
 3             (D)  Medical assistance.
 4             (E)  Chapter 55 of title 10, United States Code.
 5             (F)  A medical care program  of  the  Indian  Health
 6        Service or of a tribal organization.
 7             (G)  A state health benefits risk pool.
 8             (H)  A health plan offered under Chapter 89 of title
 9        5, United States Code.
10             (I)  A public health plan (as defined in regulations
11        consistent   with   Section   104   of  the  Health  Care
12        Portability and Accountability Act of 1996  that  may  be
13        promulgated  by  the  Secretary of the U.S. Department of
14        Health and Human Services).
15             (J)  A health benefit plan under Section 5(e) of the
16        Peace Corps Act (22 U.S.C. 2504(e)).
17             (K)  Any other qualifying coverage required  by  the
18        federal  Health  Insurance Portability and Accountability
19        Act of 1996, as it may be amended, or  regulations  under
20        that Act.
21        "Creditable   coverage"   does   not   include   coverage
22    consisting  solely  of  coverage  of  excepted  benefits,  as
23    defined  in  Section  2791(c)  of  title  XXVII of the Public
24    Health Service Act (42 U.S.C. 300 gg-91), nor does it include
25    any period of coverage under any of  items  (A)  through  (K)
26    that  occurred before a break of more than 90 days during all
27    of which the individual was not covered under  any  of  items
28    (A) through (K) above.  Any period that an individual is in a
29    waiting period for any coverage under a group health plan (or
30    for  group health insurance coverage) or is in an affiliation
31    period under the terms of health insurance  coverage  offered
32    by  a health maintenance organization shall not be taken into
33    account in determining if there has been a break of more than
34    90 days in any creditable coverage.
 
HB3661 Enrolled             -30-     LRB093 09245 JLS 09478 b
 1        "Department" means the Illinois Department of Insurance.
 2        "Dependent" means an Illinois resident: who is a  spouse;
 3    or who is claimed as a dependent by the principal insured for
 4    purposes of filing a federal income tax return and resides in
 5    the   principal   insured's  household,  and  is  a  resident
 6    unmarried child under the age of  19  years;  or  who  is  an
 7    unmarried child who also is a full-time student under the age
 8    of  23  years  and  who  is  financially  dependent  upon the
 9    principal insured; or who is a child of any age  and  who  is
10    disabled   and   financially  dependent  upon  the  principal
11    insured.
12        "Direct Illinois premiums" means, for Illinois  business,
13    an  insurer's direct premium income for the kinds of business
14    described in clause (b) of Class 1 or clause (a) of  Class  2
15    of  Section  4  of  the  Illinois  Insurance Code, and direct
16    premium income of a  health  maintenance  organization  or  a
17    voluntary  health  services plan, except it shall not include
18    credit health insurance as defined in Article IX 1/2  of  the
19    Illinois Insurance Code.
20        "Director"  means the Director of the Illinois Department
21    of Insurance.
22        "Eligible person" means a  resident  of  this  State  who
23    qualifies for Plan coverage under Section 7 of this Act.
24        "Employee" means a resident of this State who is employed
25    by an employer or has entered into the employment of or works
26    under  contract  or  service  of  an  employer  including the
27    officers, managers and employees of subsidiary or  affiliated
28    corporations  and  the  individual  proprietors, partners and
29    employees  of  affiliated  individuals  and  firms  when  the
30    business of the subsidiary or affiliated corporations,  firms
31    or  individuals  is  controlled  by a common employer through
32    stock ownership, contract, or otherwise.
33        "Employer"    means    any    individual,    partnership,
34    association, corporation, business trust, or  any  person  or
 
HB3661 Enrolled             -31-     LRB093 09245 JLS 09478 b
 1    group  of  persons  acting  directly  or  indirectly  in  the
 2    interest of an employer in relation to an employee, for which
 3    one or more persons is gainfully employed.
 4        "Family" coverage means the coverage provided by the Plan
 5    for the covered person and his or her eligible dependents who
 6    also are covered persons.
 7        "Federally   eligible  individual"  means  an  individual
 8    resident of this State:
 9             (1)(A)  for whom,  as  of  the  date  on  which  the
10        individual  seeks  Plan coverage under Section 15 of this
11        Act, the aggregate of the periods of creditable  coverage
12        is  18  or  more  months, and (B) whose most recent prior
13        creditable coverage  was  under  group  health  insurance
14        coverage  offered  by  a health insurance issuer, a group
15        health plan, a governmental plan, or a  church  plan  (or
16        health  insurance coverage offered in connection with any
17        such plans) or any other type of creditable coverage that
18        may  be  required  by  the   federal   Health   Insurance
19        Portability  and Accountability Act of 1996, as it may be
20        amended, or the regulations under that Act;
21             (2)  who is not eligible for coverage  under  (A)  a
22        group  health  plan, (B) part A or part B of Medicare due
23        to age, or (C) medical  assistance,  and  does  not  have
24        other health insurance coverage;
25             (3)  with  respect  to whom the most recent coverage
26        within the coverage period described in paragraph  (1)(A)
27        of this definition was not terminated based upon a factor
28        relating to nonpayment of premiums or fraud;
29             (4)  if  the  individual had been offered the option
30        of  continuation  coverage  under  a  COBRA  continuation
31        provision or under a similar State program,  who  elected
32        such coverage; and
33             (5)  who,    if    the   individual   elected   such
34        continuation coverage, has  exhausted  such  continuation
 
HB3661 Enrolled             -32-     LRB093 09245 JLS 09478 b
 1        coverage under such provision or program.
 2        "Group  health  insurance  coverage" means, in connection
 3    with a group health plan, health insurance  coverage  offered
 4    in connection with that plan.
 5        "Group  health plan" has the same meaning given that term
 6    in   the   federal   Health   Insurance    Portability    and
 7    Accountability Act of 1996.
 8        "Governmental  plan" has the same meaning given that term
 9    in   the   federal   Health   Insurance    Portability    and
10    Accountability Act of 1996.
11        "Health  insurance coverage" means benefits consisting of
12    medical  care  (provided  directly,  through   insurance   or
13    reimbursement,  or otherwise and including items and services
14    paid for as medical care)  under  any  hospital  and  medical
15    expense-incurred policy, certificate, or contract provided by
16    an  insurer,  non-profit  health  care service plan contract,
17    health maintenance organization or other subscriber contract,
18    or any other health care plan or arrangement that pays for or
19    furnishes  medical  or  health  care  services   whether   by
20    insurance  or otherwise.  Health insurance coverage shall not
21    include  short  term,  accident  only,   disability   income,
22    hospital  confinement or fixed indemnity, dental only, vision
23    only, limited benefit, or credit insurance,  coverage  issued
24    as a supplement to liability insurance, insurance arising out
25    of   a  workers'  compensation  or  similar  law,  automobile
26    medical-payment insurance, or insurance under which  benefits
27    are  payable  with  or  without  regard to fault and which is
28    statutorily  required  to  be  contained  in  any   liability
29    insurance policy or equivalent self-insurance.
30        "Health  insurance  issuer"  means  an insurance company,
31    insurance service, or  insurance  organization  (including  a
32    health   maintenance  organization  and  a  voluntary  health
33    services  plan)  that  is  authorized  to   transact   health
34    insurance business in this State.  Such term does not include
 
HB3661 Enrolled             -33-     LRB093 09245 JLS 09478 b
 1    a group health plan.
 2        "Health  Maintenance  Organization" means an organization
 3    as defined in the Health Maintenance Organization Act.
 4        "Hospice" means a program  as  defined  in  and  licensed
 5    under the Hospice Program Licensing Act.
 6        "Hospital"  means  a duly licensed institution as defined
 7    in the Hospital Licensing Act, an institution that meets  all
 8    comparable conditions and requirements in effect in the state
 9    in  which  it  is  located,  or  the  University  of Illinois
10    Hospital as defined in the University  of  Illinois  Hospital
11    Act.
12        "Individual   health  insurance  coverage"  means  health
13    insurance coverage offered to individuals in  the  individual
14    market,  but  does  not  include short-term, limited-duration
15    insurance.
16        "Insured" means any individual resident of this State who
17    is eligible to receive benefits from any  insurer  (including
18    health  insurance coverage offered in connection with a group
19    health plan) or health insurance issuer as  defined  in  this
20    Section.
21        "Insurer"  means  any  insurance  company  authorized  to
22    transact  health  insurance  business  in  this State and any
23    corporation that provides medical services and  is  organized
24    under  the  Voluntary Health Services Plans Act or the Health
25    Maintenance Organization Act.
26        "Medical assistance" means the State  medical  assistance
27    or medical assistance no grant (MANG) programs provided under
28    Title  XIX of the Social Security Act and Articles V (Medical
29    Assistance) and  VI  (General  Assistance)  of  the  Illinois
30    Public  Aid  Code  (or  any  successor  program) or under any
31    similar program of health care benefits in a state other than
32    Illinois.
33        "Medically necessary" means  that  a  service,  drug,  or
34    supply  is  necessary  and  appropriate  for the diagnosis or
 
HB3661 Enrolled             -34-     LRB093 09245 JLS 09478 b
 1    treatment of an illness or injury in  accord  with  generally
 2    accepted  standards  of  medical  practice  at  the  time the
 3    service, drug,  or  supply  is  provided.  When  specifically
 4    applied  to a confinement it further means that the diagnosis
 5    or treatment of the  covered  person's  medical  symptoms  or
 6    condition  cannot  be  safely  provided  to that person as an
 7    outpatient. A service, drug, or supply shall not be medically
 8    necessary if it: (i) is investigational, experimental, or for
 9    research  purposes;  or  (ii)  is  provided  solely  for  the
10    convenience of the patient, the patient's family,  physician,
11    hospital,  or  any other provider; or (iii) exceeds in scope,
12    duration, or intensity that level of care that is  needed  to
13    provide   safe,   adequate,   and  appropriate  diagnosis  or
14    treatment; or (iv) could have been omitted without  adversely
15    affecting  the  covered  person's condition or the quality of
16    medical care; or (v) involves the use of  a  medical  device,
17    drug, or substance not formally approved by the United States
18    Food and Drug Administration.
19        "Medical  care" means the ordinary and usual professional
20    services rendered by a physician or other specified  provider
21    during  a  professional  visit for treatment of an illness or
22    injury.
23        "Medicare" means coverage under both Part A and Part B of
24    Title XVIII of the Social Security Act, 42 U.S.C. Sec.  1395,
25    et seq.
26        "Minimum  premium  plan"  means  an arrangement whereby a
27    specified amount of health care claims  is  self-funded,  but
28    the  insurance  company  assumes  the  risk  that claims will
29    exceed that amount.
30        "Participating  transplant  center"  means   a   hospital
31    designated  by the Board as a preferred or exclusive provider
32    of services for one or more specified human organ  or  tissue
33    transplants  for  which  the hospital has signed an agreement
34    with the Board to accept a transplant payment  allowance  for
 
HB3661 Enrolled             -35-     LRB093 09245 JLS 09478 b
 1    all  expenses  related  to the transplant during a transplant
 2    benefit period.
 3        "Physician" means a person licensed to practice  medicine
 4    pursuant to the Medical Practice Act of 1987.
 5        "Plan"  means  the  Comprehensive  Health  Insurance Plan
 6    established by this Act.
 7        "Plan of operation" means the plan of  operation  of  the
 8    Plan, including articles, bylaws and operating rules, adopted
 9    by the board pursuant to this Act.
10        "Provider"  means any hospital, skilled nursing facility,
11    hospice, home health agency, physician, registered pharmacist
12    acting within the scope of that registration,  or  any  other
13    person  or  entity  licensed  in  Illinois to furnish medical
14    care.
15        "Qualified high risk pool" has  the  same  meaning  given
16    that  term  in  the  federal Health Insurance Portability and
17    Accountability Act of 1996.
18        "Resident" means a person who  is  and  continues  to  be
19    legally  domiciled and physically residing on a permanent and
20    full-time basis in a place of permanent  habitation  in  this
21    State that remains that person's principal residence and from
22    which  that person is absent only for temporary or transitory
23    purpose.
24        "Skilled nursing  facility"  means  a  facility  or  that
25    portion  of  a  facility  that  is  licensed  by the Illinois
26    Department of Public Health under the Nursing Home  Care  Act
27    or  a  comparable  licensing  authority  in  another state to
28    provide skilled nursing care.
29        "Stop-loss coverage"  means  an  arrangement  whereby  an
30    insurer  insures  against  the  risk  that any one claim will
31    exceed a specific dollar amount or that the entire loss of  a
32    self-insurance plan will exceed a specific amount.
33        "Third  party  administrator"  means  an administrator as
34    defined in Section 511.101 of the Illinois Insurance Code who
 
HB3661 Enrolled             -36-     LRB093 09245 JLS 09478 b
 1    is licensed under Article XXXI 1/4 of that Code.
 2    (Source: P.A. 91-357,  eff.  7-29-99;  91-735,  eff.  6-2-00;
 3    92-153, eff. 7-25-01.)

 4        Section  10.  The  Health Maintenance Organization Act is
 5    amended by changing Sections 4-9.2 and 5-3 as follows:

 6        (215 ILCS 125/4-9.2) (from Ch. 111 1/2, par. 1409.2-2)
 7        Sec. 4-9.2.  Continuation of  group  HMO  coverage  after
 8    termination  of  employee  or  membership.  A  group contract
 9    delivered, issued for delivery, renewed,  or amended in  this
10    State  that  covers  employees  or  members  for  health care
11    services  shall  provide  that  employees  or  members  whose
12    coverage under the group contract would  otherwise  terminate
13    because of termination of employment or membership or because
14    of  a  reduction  in  hours below the minimum required by the
15    group contract shall be entitled to continue  their  coverage
16    under  that group contract, for themselves and their eligible
17    dependents, subject to all of the group contract's terms  and
18    conditions  applicable  to those forms of coverage and to the
19    following conditions:
20             (1)  Continuation shall  only  be  available  to  an
21        employee  or  member  who  has  been continuously covered
22        under the group contract (and for similar benefits  under
23        any  group contract that it replaced) during the entire 3
24        month period ending with the termination of employment or
25        membership  or  reduction  in  hours  below  the  minimum
26        required by the group contract.
27             (2)  Continuation shall not  be  available  for  any
28        enrollee  who  is  covered  by Medicare, except for those
29        individuals who have been covered under a group  Medicare
30        supplement  policy.  Continuation  shall not be available
31        for any enrollee who is covered by any other  insured  or
32        uninsured  plan  that  provides  hospital,  surgical,  or
 
HB3661 Enrolled             -37-     LRB093 09245 JLS 09478 b
 1        medical  coverage  for  individuals  in a group and under
 2        which the enrollee was  not  covered  immediately  before
 3        termination  or  reduction  in  hours  below  the minimum
 4        required by the group contract or who  exercises  his  or
 5        her conversion privilege under the group policy.
 6             (3)  Continuation  need  not  include dental, vision
 7        care,  prescription  drug,   or   similar   supplementary
 8        benefits  that  are  provided under the group contract in
 9        addition to its basic health care services.
10             (4)  Upon termination or reduction  in  hours  below
11        the  minimum  required  by  the  group  contract, written
12        notice of continuation shall be presented to the employee
13        or member by the employer or mailed by  the  employer  to
14        the  last  known  address of the employee. An employee or
15        member who wishes continuation of coverage  must  request
16        continuation   in   writing  within  the  10  day  period
17        following the later of (i) the  date  of  termination  or
18        reduction  in  hours  below  the  minimum required by the
19        group contract or (ii) the date  the  employee  is  given
20        written notice of the right of continuation by either the
21        employer or the group policyholder. In no event, however,
22        shall the employee or member elect continuation more than
23        60  days  after  the  date of termination or reduction in
24        hours below the minimum required by the  group  contract.
25        Written  notice of continuation presented to the employee
26        or  member  by  the  policyholder,  or  mailed   by   the
27        policyholder  to  the last known address of the employee,
28        shall constitute the giving of notice for the purpose  of
29        this paragraph.
30             (5)  An  employee  or  member  electing continuation
31        must pay to the group policyholder or his employer, on  a
32        monthly  basis  in  advance,  the total amount of premium
33        required by  the  HMO,  including  that  portion  of  the
34        premium  contributed  by the policyholder or employer, if
 
HB3661 Enrolled             -38-     LRB093 09245 JLS 09478 b
 1        any, but not more than the group rate  for  the  coverage
 2        being continued with appropriate reduction in premium for
 3        any  supplementary  benefits  that have been discontinued
 4        under paragraph (3) of this  Section.  The  premium  rate
 5        required  by  the  HMO  shall  be  the applicable premium
 6        required on the due date of each payment.
 7             (6)  Continuation  of  coverage  under   the   group
 8        contract  for  any person shall terminate when the person
 9        becomes eligible for Medicare or is covered by any  other
10        insured   or   uninsured  plan  that  provides  hospital,
11        surgical, or medical coverage for individuals in a  group
12        and  under  which  the person was not covered immediately
13        before  termination  or  reduction  in  hours  below  the
14        minimum  required  by  the  group contract as provided in
15        paragraph (2) of this Section  or,  if  earlier,  at  the
16        first to occur of the following:
17                  (a)  The  expiration  of  9  months  after  the
18             employee's   or   member's   coverage   because   of
19             termination of employment or membership or reduction
20             in  hours  below  the  minimum required by the group
21             contract.
22                  (b)  If the employee or member  fails  to  make
23             timely  payment  of a required contribution, the end
24             of the period for which contributions were made.
25                  (c)  The date on which the  group  contract  is
26             terminated  or, in the case of an employee, the date
27             his or her employer terminates  participation  under
28             the  group  contract.  If,  however,  this paragraph
29             applies  and  the  coverage  ceasing  by  reason  of
30             termination is replaced by  similar  coverage  under
31             another  group  contract,  then  (i) the employee or
32             member shall have the right to become covered  under
33             the  replacement  group  contract for the balance of
34             the period  that  he  or  she  would  have  remained
 
HB3661 Enrolled             -39-     LRB093 09245 JLS 09478 b
 1             covered under the prior group contract in accordance
 2             with  paragraph  (6)  had a termination described in
 3             this item (c) not occurred and (ii) the prior  group
 4             contract  shall  continue to provide benefits to the
 5             extent of its accrued liabilities and extensions  of
 6             benefits as if the replacement had not occurred.
 7             (7)  A  notification  of  the continuation privilege
 8        shall be included in each evidence of coverage.
 9             (8)  Continuation shall not  be  available  for  any
10        employee  who was discharged because of the commission of
11        a felony in connection with his or her work,  or  because
12        of  theft  in  connection with his or her work, for which
13        the employer was in no way responsible  if  the  employee
14        (i)  admitted  to  committing the felony or theft or (ii)
15        was convicted or placed under supervision by a  court  of
16        competent jurisdiction.
17             The  requirements  of  this  amendatory  Act of 1992
18        shall apply to any group contract,  as  defined  in  this
19        Section, delivered or issued for delivery on or after 180
20        days  following the effective date of this amendatory Act
21        of 1992.
22    (Source: P.A. 87-1090.)

23        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
24        Sec. 5-3.  Insurance Code provisions.
25        (a)  Health Maintenance Organizations shall be subject to
26    the provisions of Sections 133, 134, 137, 140, 141.1,  141.2,
27    141.3,  143,  143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
28    154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v,  356w,  356x,
29    356y,  356z.2,  367.2,  367.2-5, 367i, 368a, 401, 401.1, 402,
30    403, 403A, 408, 408.2, 409, 412, 444,  and  444.1,  paragraph
31    (c)  of subsection (2) of Section 367, and Articles IIA, VIII
32    1/2, XII, XII 1/2, XIII, XIII  1/2,  XXV,  and  XXVI  of  the
33    Illinois Insurance Code.
 
HB3661 Enrolled             -40-     LRB093 09245 JLS 09478 b
 1        (b)  For  purposes of the Illinois Insurance Code, except
 2    for Sections 444 and 444.1 and Articles XIII  and  XIII  1/2,
 3    Health  Maintenance Organizations in the following categories
 4    are deemed to be "domestic companies":
 5             (1)  a  corporation  authorized  under  the   Dental
 6        Service  Plan  Act or the Voluntary Health Services Plans
 7        Act;
 8             (2)  a corporation organized under the laws of  this
 9        State; or
10             (3)  a  corporation  organized  under  the  laws  of
11        another  state, 30% or more of the enrollees of which are
12        residents of this State, except a corporation subject  to
13        substantially  the  same  requirements  in  its  state of
14        organization as is a  "domestic  company"  under  Article
15        VIII 1/2 of the Illinois Insurance Code.
16        (c)  In  considering  the merger, consolidation, or other
17    acquisition of control of a Health  Maintenance  Organization
18    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
19             (1)  the  Director  shall give primary consideration
20        to the continuation of  benefits  to  enrollees  and  the
21        financial  conditions  of the acquired Health Maintenance
22        Organization after the merger,  consolidation,  or  other
23        acquisition of control takes effect;
24             (2)(i)  the  criteria specified in subsection (1)(b)
25        of Section 131.8 of the Illinois Insurance Code shall not
26        apply and (ii) the Director, in making his  determination
27        with  respect  to  the  merger,  consolidation,  or other
28        acquisition of control, need not take  into  account  the
29        effect  on  competition  of the merger, consolidation, or
30        other acquisition of control;
31             (3)  the Director shall have the  power  to  require
32        the following information:
33                  (A)  certification by an independent actuary of
34             the   adequacy   of   the  reserves  of  the  Health
 
HB3661 Enrolled             -41-     LRB093 09245 JLS 09478 b
 1             Maintenance Organization sought to be acquired;
 2                  (B)  pro forma financial statements  reflecting
 3             the combined balance sheets of the acquiring company
 4             and the Health Maintenance Organization sought to be
 5             acquired  as of the end of the preceding year and as
 6             of a date 90 days prior to the acquisition, as  well
 7             as   pro   forma   financial  statements  reflecting
 8             projected combined  operation  for  a  period  of  2
 9             years;
10                  (C)  a  pro  forma  business  plan detailing an
11             acquiring  party's  plans  with   respect   to   the
12             operation  of  the  Health  Maintenance Organization
13             sought to be acquired for a period of not less  than
14             3 years; and
15                  (D)  such  other  information  as  the Director
16             shall require.
17        (d)  The provisions of Article VIII 1/2 of  the  Illinois
18    Insurance  Code  and this Section 5-3 shall apply to the sale
19    by any health maintenance organization of greater than 10% of
20    its enrollee population  (including  without  limitation  the
21    health  maintenance organization's right, title, and interest
22    in and to its health care certificates).
23        (e)  In considering any management  contract  or  service
24    agreement  subject to Section 141.1 of the Illinois Insurance
25    Code, the Director (i) shall, in  addition  to  the  criteria
26    specified  in  Section  141.2 of the Illinois Insurance Code,
27    take into account the effect of the  management  contract  or
28    service   agreement   on  the  continuation  of  benefits  to
29    enrollees  and  the  financial  condition   of   the   health
30    maintenance  organization to be managed or serviced, and (ii)
31    need not take into  account  the  effect  of  the  management
32    contract or service agreement on competition.
33        (f)  Except  for  small employer groups as defined in the
34    Small Employer Rating, Renewability  and  Portability  Health
 
HB3661 Enrolled             -42-     LRB093 09245 JLS 09478 b
 1    Insurance  Act and except for medicare supplement policies as
 2    defined in Section 363 of  the  Illinois  Insurance  Code,  a
 3    Health  Maintenance Organization may by contract agree with a
 4    group or other enrollment unit to effect  refunds  or  charge
 5    additional premiums under the following terms and conditions:
 6             (i)  the  amount  of, and other terms and conditions
 7        with respect to, the refund or additional premium are set
 8        forth in the group or enrollment unit contract agreed  in
 9        advance of the period for which a refund is to be paid or
10        additional  premium  is to be charged (which period shall
11        not be less than one year); and
12             (ii)  the amount of the refund or additional premium
13        shall  not  exceed  20%   of   the   Health   Maintenance
14        Organization's profitable or unprofitable experience with
15        respect  to  the  group  or other enrollment unit for the
16        period (and, for  purposes  of  a  refund  or  additional
17        premium,  the profitable or unprofitable experience shall
18        be calculated taking into account a pro rata share of the
19        Health  Maintenance  Organization's  administrative   and
20        marketing  expenses,  but shall not include any refund to
21        be made or additional premium to be paid pursuant to this
22        subsection (f)).  The Health Maintenance Organization and
23        the  group  or  enrollment  unit  may  agree   that   the
24        profitable  or  unprofitable experience may be calculated
25        taking into account the refund period and the immediately
26        preceding 2 plan years.
27        The  Health  Maintenance  Organization  shall  include  a
28    statement in the evidence of coverage issued to each enrollee
29    describing the possibility of a refund or additional premium,
30    and upon request of any group or enrollment unit, provide  to
31    the group or enrollment unit a description of the method used
32    to   calculate  (1)  the  Health  Maintenance  Organization's
33    profitable experience with respect to the group or enrollment
34    unit and the resulting refund to the group or enrollment unit
 
HB3661 Enrolled             -43-     LRB093 09245 JLS 09478 b
 1    or (2) the  Health  Maintenance  Organization's  unprofitable
 2    experience  with  respect to the group or enrollment unit and
 3    the resulting additional premium to be paid by the  group  or
 4    enrollment unit.
 5        In   no  event  shall  the  Illinois  Health  Maintenance
 6    Organization  Guaranty  Association  be  liable  to  pay  any
 7    contractual obligation of an insolvent  organization  to  pay
 8    any refund authorized under this Section.
 9    (Source: P.A.  91-357,  eff.  7-29-99;  91-406,  eff. 1-1-00;
10    91-549, eff. 8-14-99; 91-605,  eff.  12-14-99;  91-788,  eff.
11    6-9-00; 92-764, eff. 1-1-03.)

12        Section  15.   The Voluntary Health Services Plans Act is
13    amended by changing Section 15.5 as follows:

14        (215 ILCS 165/15.5) (from Ch. 32, par. 609.5)
15        Sec. 15.5.  Conversion  Privilege-Group  Type  Contracts.
16    (1)  Every  service  plan  contract  of a health service plan
17    corporation which provides that the continued coverage  of  a
18    beneficiary  is  contingent  upon the continued employment or
19    membership of the  subscriber  with  a  particular  employer,
20    union,  or association shall further provide for the right of
21    said person to make application  for  an  individual  service
22    plan  contract under the circumstances and in accordance with
23    the requirements set  forth  in  Sections  Section  367e  and
24    367e.1  of the "Illinois Insurance Code".  The application of
25    Sections Section 367e and 367e.1 of the  Code  shall  not  be
26    construed  in  such  a  manner as to require a health service
27    plan corporation to furnish a service or kind of benefit  not
28    customarily   provided  by  such  corporation  and  which  is
29    inconsistent with the provision of this Act.
30        (2)  The requirements of this Section shall apply to  all
31    such  contracts  delivered,  issued  for delivery, renewed or
32    amended on or after 180 days following the effective date  of
 
HB3661 Enrolled             -44-     LRB093 09245 JLS 09478 b
 1    this Section.
 2    (Source: P.A. 82-498.)

 3        Section  95.   If and only if House Bill 1640 of the 93rd
 4    General Assembly becomes law in the form it passed the House,
 5    the Use of Credit Information in Personal  Insurance  Act  is
 6    amended by changing Section 20 as follows:

 7        (093 HB 1640 eng, Sec. 20)
 8        Sec.   20.  Use   of   credit  information.   An  insurer
 9    authorized to do business in  this  State  that  uses  credit
10    information to underwrite or rate risks shall not:
11             (1)  Use an insurance score that is calculated using
12        income,  gender, address, ethnic group, religion, marital
13        status, or nationality of the consumer as a factor.
14             (2)  Deny, cancel, or nonrenew a policy of  personal
15        insurance  solely  on  the  basis  of credit information,
16        without   consideration   of   any    other    applicable
17        underwriting factor independent of credit information and
18        not  expressly  prohibited by item (1).  An insurer shall
19        not  be  considered  to  have   denied,   cancelled,   or
20        nonrenewed  a  policy if coverage is available through an
21        affiliate.
22             (3)  Base an insured's renewal  rates  for  personal
23        insurance   solely   upon   credit  information,  without
24        consideration of any other applicable factor  independent
25        of   credit   information.    An  insurer  shall  not  be
26        considered  to  have  based  rates   solely   on   credit
27        information  if coverage is available in a different tier
28        of the same insurer.
29             (4)  Take  an  adverse  action  against  a  consumer
30        solely because he or she does  not  have  a  credit  card
31        account,  without  consideration  of any other applicable
32        factor independent of credit information.
 
HB3661 Enrolled             -45-     LRB093 09245 JLS 09478 b
 1             (5)  Consider an absence of credit information or an
 2        inability to calculate an insurance score in underwriting
 3        or rating personal insurance, unless the insurer does one
 4        of the following:
 5                  (A)  Treats the  consumer  as  otherwise  filed
 6             with  approved  by  the  Department,  if the insurer
 7             presents  information  that  such  an   absence   or
 8             inability  relates  to  the risk for the insurer and
 9             submits a filing certification  form  signed  by  an
10             officer   for   the  insurer  certifying  that  such
11             treatment is actuarially justified.
12                  (B)  Treats the consumer as if the applicant or
13             insured had neutral credit information,  as  defined
14             by the insurer.
15                  (C)  Excludes  the use of credit information as
16             a factor and uses only other underwriting criteria.
17             (6)  Take an adverse action against a consumer based
18        on credit information, unless an insurer obtains and uses
19        a credit report issued or an insurance  score  calculated
20        within  90 days from the date the policy is first written
21        or renewal is issued.
22             (7)  Use credit information unless  not  later  than
23        every  36 months following the last time that the insurer
24        obtained current credit information for the insured,  the
25        insurer  recalculates  the  insurance score or obtains an
26        updated  credit   report.   Regardless   of   the   other
27        requirements of this Section:
28                  (A)  At  annual  renewal, upon the request of a
29             consumer or the consumer's agent, the insurer  shall
30             re-underwrite  and  re-rate  the policy based upon a
31             current credit report or insurance score. An insurer
32             need not recalculate the insurance score  or  obtain
33             the   updated  credit  report  of  a  consumer  more
34             frequently than once in a 12-month period.
 
HB3661 Enrolled             -46-     LRB093 09245 JLS 09478 b
 1                  (B)  The insurer shall have the  discretion  to
 2             obtain  current  credit information upon any renewal
 3             before the expiration of 36  months,  if  consistent
 4             with its underwriting guidelines.
 5                  (C)  An  insurer  is  not  required  to  obtain
 6             current  credit  information for an insured, despite
 7             the requirements of subitem (A) of item (7) of  this
 8             Section if one of the following applies:
 9                       (a)  The  insurer is treating the consumer
10                  as  otherwise  filed  with  approved   by   the
11                  Department.
12                       (b)  The    insured   is   in   the   most
13                  favorably-priced tier of the insurer, within  a
14                  group  of  affiliated  insurers.  However,  the
15                  insurer  shall  have  the  discretion  to order
16                  credit  information,  if  consistent  with  its
17                  underwriting guidelines.
18                       (c)  Credit was not used for  underwriting
19                  or  rating  the  insured  when  the  policy was
20                  initially written.  However, the insurer  shall
21                  have   the   discretion   to   use  credit  for
22                  underwriting  or  rating   the   insured   upon
23                  renewal,  if  consistent  with its underwriting
24                  guidelines.
25                       (d)  The insurer re-evaluates the  insured
26                  beginning   no   later  than  36  months  after
27                  inception  and  thereafter  based  upon   other
28                  underwriting   or   rating  factors,  excluding
29                  credit information.
30             (8)  Use the following as a negative factor  in  any
31        insurance  scoring  methodology  or  in  reviewing credit
32        information for the purpose of underwriting or  rating  a
33        policy of personal insurance:
34                  (A)  Credit  inquiries  not  initiated  by  the
 
HB3661 Enrolled             -47-     LRB093 09245 JLS 09478 b
 1             consumer  or inquiries requested by the consumer for
 2             his or her own credit information.
 3                  (B)  Inquiries relating to insurance  coverage,
 4             if so identified on a consumer's credit report.
 5                  (C)  Collection   accounts   with   a   medical
 6             industry  code,  if  so identified on the consumer's
 7             credit report.
 8                  (D)  Multiple lender inquiries, if coded by the
 9             consumer reporting agency on the  consumer's  credit
10             report  as being from the home mortgage industry and
11             made within 30 days of one another, unless only  one
12             inquiry is considered.
13                  (E)  Multiple lender inquiries, if coded by the
14             consumer  reporting  agency on the consumer's credit
15             report as being from the automobile lending industry
16             and made within 30 days of one another, unless  only
17             one inquiry is considered.
18    (Source: 093 HB 1640 eng, Sec. 20)

19        Section  99.   Effective  date.   This  Section  and  the
20    changes  made  to Sec. 143.17a of the Illinois Insurance Code
21    in Section 5 of this  Act  take  effect  upon  becoming  law.
22    Section  95 of this Act takes effect on October 1, 2003.  The
23    rest of this Act takes effect on the uniform  effective  date
24    provided by law.