093_HB3661sam001

 










                                     LRB093 09245 RLC 15282 a

 1                    AMENDMENT TO HOUSE BILL 3661

 2        AMENDMENT NO.     .  Amend House Bill 3661  by  replacing
 3    everything after the enacting clause with the following:

 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
 
                            -2-      LRB093 09245 RLC 15282 a
 1    requirements of federal law and Sections 367.2, and 367e, and
 2    367e.1 of the Illinois Insurance Code.
 3    (Source: P.A. 85-848.)

 4        Section 5.  The Illinois Insurance  Code  is  amended  by
 5    changing  Sections  245.25,  367.2, and 367e, by resectioning
 6    Section 367e as Sections  367e  and  367e.1,  and  by  adding
 7    Section 367.2-5 as follows:

 8        (215 ILCS 5/245.25) (from Ch. 73, par. 857.25)
 9        Sec. 245.25.   Except for subparagraphs (1) (a), (1) (f),
10    (1)  (g)  and  (3)  of  Section 226 of the Illinois Insurance
11    Code,  in  the  case  of  a  variable  annuity  contract  and
12    subparagraphs (1) (b), (1) (f), (1) (g), (1)  (h),  (1)  (i),
13    and  (1)  (k) of Section 224, subparagraph (1) (c) of Section
14    225, and subparagraph (h) of Section 231 in  the  case  of  a
15    variable  life  insurance  policy, except for Sections 357.4,
16    357.5, and 367e, and 367e.1 in the case of a variable  health
17    insurance  policy,  and  except as otherwise provided in this
18    Article, all pertinent provisions of the  Illinois  Insurance
19    Code  which  are  appropriate  to  those  contracts  apply to
20    separate  accounts  and  contracts  relating   thereto.   Any
21    individual  variable  life  insurance  contract, delivered or
22    issued for  delivery  in  this  State,  must  contain  grace,
23    reinstatement  and  non-forfeiture  provisions appropriate to
24    such a contract. Any individual  variable  annuity  contract,
25    delivered  or issued for delivery in this State, must contain
26    grace and reinstatement  provisions  appropriate  to  such  a
27    contract.   Any   group  variable  life  insurance  contract,
28    delivered or issued for delivery in this State, must  contain
29    a  grace  provision  appropriate  to such a contract. A group
30    variable health insurance contract delivered  or  issued  for
31    delivery  in  this State must contain a continuation of group
32    coverage provision appropriate to the contract.  The  reserve
 
                            -3-      LRB093 09245 RLC 15282 a
 1    liability  for  variable  contracts  must  be  established in
 2    accordance  with  actuarial  procedures  that  recognize  the
 3    variable nature of the benefits provided  and  any  mortality
 4    guarantees.
 5    (Source: P.A. 90-381, eff. 8-14-97.)

 6        (215 ILCS 5/367.2) (from Ch. 73, par. 979.2)
 7        Sec.   367.2.  Spousal   continuation   privilege;  group
 8    contracts.
 9        A.  No policy of group accident or health insurance,  nor
10    any   certificate thereunder shall be delivered or issued for
11    delivery in this State after December  1,  1985,  unless  the
12    policy  provides for a continuation of the existing insurance
13    benefits for an employee's spouse and dependent children  who
14    are  insured  under  the  provisions  of that group policy or
15    certificate thereunder, notwithstanding that the marriage  is
16    dissolved  by  judgment  or  terminated  by  the death of the
17    employee  spouse  or,  after  the  effective  date  of   this
18    amendatory   Act   of   the   93rd   General  Assembly  1991,
19    notwithstanding  the  retirement  of  the   employee   spouse
20    provided  that  the employee's spouse is at least 55 years of
21    age, in each case without any other eligibility requirements.
22    The provisions of this amendatory Act  of  the  93rd  General
23    Assembly  1991  apply  to  every  group policy of accident or
24    health insurance  and  every  certificate  issued  thereunder
25    delivered  or issued for delivery after the effective date of
26    this amendatory Act of the 93rd General Assembly 1991.
27        B.  Within 30 days of the entry of judgment or the  death
28    or  retirement  of  the  employee  spouse,  the  spouse of an
29    employee insured under the policy who seeks a continuation of
30    coverage thereunder  shall  give  the  employer  or  and  the
31    insurer  written notice of the dissolution of the marriage or
32    the  death  or  retirement  of  the  employee  spouse.    The
33    employer,  within 15 days of receipt of the notice shall give
 
                            -4-      LRB093 09245 RLC 15282 a
 1    written notice of the dissolution of the employee's  marriage
 2    or  the  death  or retirement of the employee and that former
 3    spouse's or retired employee's  spouse's  residence,  to  the
 4    insurance  company issuing the policy., of the dissolution of
 5    the employee's marriage or the death  or  retirement  of  the
 6    employee spouse and the former or retired employee's spouse's
 7    residence.
 8        The  employer shall immediately send a copy of the notice
 9    to the former spouse of the employee or  the  spouse  of  the
10    retired employee at the retired employee's spouse's residence
11    or  at  the  former spouse's residence.  For purposes of this
12    Act, the term "former spouse" includes "widow" or "widower".
13        C.  Within 30 days after the date of receipt of a  notice
14    from the employer, retired employee's spouse or former spouse
15    or  of  the  initiation  of a new group policy, the insurance
16    company, by certified mail, return receipt  requested,  shall
17    notify  the retired employee's spouse or former spouse at his
18    or her residence that the policy may be continued for  as  to
19    that  retired  employee's spouse or former spouse and covered
20    dependents, and the notice shall include:
21             (i)  a form for election to continue  the  insurance
22        coverage;
23             (ii)  the  amount of periodic premiums to be charged
24        for continuation coverage and the  method  and  place  of
25        payment; and
26             (iii)  instructions  for returning the election form
27        by certified mail, return receipt  requested,  within  30
28        days  after  the  date it is received from of the mailing
29        receipt of the instruction by the insurance company.
30        Failure of the retired employee's spouse or former spouse
31    to exercise the election to continue  insurance  coverage  by
32    notifying the insurance company in writing by certified mail,
33    return  receipt  requested,  within  such 30 day period shall
34    terminate the continuation  of  benefits  and  the  right  to
 
                            -5-      LRB093 09245 RLC 15282 a
 1    continuation.
 2        If  the  insurance  company  fails  to notify the retired
 3    employee's  spouse  or  former  spouse  as  provided  for  in
 4    subsection C hereof, all premiums shall be  waived  from  the
 5    date  the  notice  was required until notice is sent, and the
 6    benefits shall continue under the terms and provisions of the
 7    policy, from the date  the  notice  was  required  until  the
 8    notice  is  sent, notwithstanding any other provision hereof,
 9    except where the  benefits  in  existence  at  the  time  the
10    company's  notice was to be sent pursuant to subsection C are
11    terminated as to all employees.
12        D.  With respect to a former spouse who has not  attained
13    the  age  of  55  at  the  time  continuation coverage begins
14    hereunder, the monthly  premium  for  continuation  shall  be
15    computed as follows:
16             (i)  an  amount,  if  any,  that would be charged an
17        employee if the former spouse were a current employee  of
18        the employer, plus;
19             (ii)  an  amount,  if  any,  that the employer would
20        contribute toward the premium if the former spouse were a
21        current employee.
22        Failure to pay the initial monthly premium within 30 days
23    after the date of receipt of notice required in subsection  C
24    of  this Section terminates the continuation benefits and the
25    right to continuation benefits.
26        The continuation coverage for right granted hereunder  to
27    former  spouses  who  have  not attained the age of 55 at the
28    time coverage  begins  hereunder  shall  terminate  upon  the
29    earliest to happen of the following:
30             (i)  The failure to pay premiums when due, including
31        any grace period allowed by the policy; or
32             (ii)  When  coverage would terminate under the terms
33        of the existing policy if the employee and former  spouse
34        were  still  married to each other; however, the existing
 
                            -6-      LRB093 09245 RLC 15282 a
 1        coverage shall not be modified or terminated  during  the
 2        first  120  consecutive  days  subsequent to the employee
 3        spouse's death or to the entry of the judgment dissolving
 4        the marriage existing between the employee and the former
 5        spouse unless the master policy in existence at the  time
 6        is modified or terminated as to all employees; or
 7             (iii)  the  date  on  which  the former spouse first
 8        becomes, after the date of election, an insured  employee
 9        under any other group health plan; or
10             (iv)  the date on which the former spouse remarries;
11        or
12             (v)  the   expiration  of  2  years  from  the  date
13        continuation coverage began hereunder.
14        Upon the termination of continuation coverage  hereunder,
15    the  former  spouse shall be entitled to convert the coverage
16    to an individual policy.
17        The continuation rights granted  to  former  spouses  who
18    have   not  attained  age  55  shall  also  include  eligible
19    dependents insured prior to the dissolution  of  marriage  or
20    the death of the employee.
21        E.  With respect to a retired employee's spouse or former
22    spouse   who   has  attained  the  age  of  55  at  the  time
23    continuation coverage begins hereunder, the  monthly  premium
24    for the continuation shall be computed as follows:
25             (i)  an  amount,  if  any,  that would be charged an
26        employee if  the  retired  employee's  spouse  or  former
27        spouse were a current employee of the employer, plus;
28             (ii)  an  amount,  if  any,  that the employer would
29        contribute toward the premium if the  retired  employee's
30        spouse or former spouse were a current employee.
31        Beginning  2  years  after  coverage  begins  under  this
32    paragraph, the monthly premium shall be computed as follows:
33             (i)  an  amount,  if  any,  that would be charged an
34        employee if  the  retired  employee's  spouse  or  former
 
                            -7-      LRB093 09245 RLC 15282 a
 1        spouse were a current employee of the employer, plus;
 2             (ii)  an  amount,  if  any,  that the employer would
 3        contribute toward the premium if the  retired  employee's
 4        spouse or former spouse were a current employee.
 5             (iii)  an  additional  amount,  not to exceed 20% of
 6        (i) and (ii) above, for costs of administration.
 7        Failure to pay the initial monthly premium within 30 days
 8    after  the  date  of  receipt  of  the  notice  required   in
 9    subsection  C  of  this  Section  terminates the continuation
10    benefits and the right to continuation benefits.
11        The continuation coverage for right  granted  to  retired
12    employees'  spouses  and former spouses who have attained the
13    age of  55  at  the  time  coverage  begins  hereunder  shall
14    terminate upon the earliest to happen of the following:
15             (i)  The failure to pay premiums when due, including
16        any grace period allowed by the policy; or
17             (ii)  When  coverage  would terminate, except due to
18        the retirement of an employee, under  the  terms  of  the
19        existing  policy  if  the employee and former spouse were
20        still  married  to  each  other;  however,  the  existing
21        coverage shall not be modified or terminated  during  the
22        first  120  consecutive  days  subsequent to the employee
23        spouse's death or retirement to the entry of the judgment
24        dissolving the marriage existing between the employee and
25        the former spouse unless the master policy  in  existence
26        at   the  time  is  modified  or  terminated  as  to  all
27        employees; or
28             (iii)  the date  on  which  the  retired  employee's
29        spouse  or former spouse first becomes, after the date of
30        election, an  insured  employee  under  any  other  group
31        health plan; or
32             (iv)  the date on which the former spouse remarries;
33        or
34             (v)  the date that person reaches the qualifying age
 
                            -8-      LRB093 09245 RLC 15282 a
 1        or  otherwise  establishes eligibility under the Medicare
 2        Program pursuant to Title XVIII  of  the  federal  Social
 3        Security Act.
 4        Upon  the termination of continuation coverage hereunder,
 5    the former spouse shall be entitled to convert  the  coverage
 6    to an individual policy.
 7        The  continuation  rights  granted  to former spouses who
 8    have attained age 55 shall also include  eligible  dependents
 9    insured  prior  to  the dissolution of marriage, the death of
10    the employee, or the retirement of the employee.
11        F.  The renewal, amendment, or  extension  of  any  group
12    policy  affected  by  this  Section  shall  be  deemed  to be
13    delivery or issuance for delivery of a new policy or contract
14    of insurance in this State.
15        G.  If (i) the policy is  canceled  cancelled,  and  (ii)
16    another  insurance  company contracts to provide group health
17    and  accident  insurance   to   the   employer,   and   (iii)
18    continuation coverage is in effect for the retired employee's
19    spouse  or former spouse at the time of cancellation and (iv)
20    the employee is or would have been  included  under  the  new
21    group   policy,   then   the  new  insurer  must  also  offer
22    continuation coverage to the retired employee's spouse and to
23    an  employee's  former  spouse  under  the  same  terms   and
24    conditions as contained in this Section.
25        H.  This Section shall not limit the right of the retired
26    employee's  spouse  or  any  former  spouse  to  exercise the
27    privilege to convert to an individual policy as contained  in
28    this Code.
29        I.  No  person  who  obtains  coverage under this Section
30    shall be required to pay a rate greater than that  applicable
31    to  any employee or member covered under that group except as
32    provided  in  clause  (iii)  of  the  second   paragraph   of
33    subsection E.
34    (Source: P.A. 87-615.)
 
                            -9-      LRB093 09245 RLC 15282 a
 1        (215 ILCS 5/367.2-5 new)
 2        Sec.  367.2-5.  Dependent  child  continuation privilege;
 3    group contracts.
 4        (a)  No policy of group accident or health insurance, nor
 5    any  certificate  thereunder  shall  be   amended,   renewed,
 6    delivered, or issued for delivery in this State after July 1,
 7    2004,  unless  the  policy provides for a continuation of the
 8    existing insurance benefits for an employee's dependent child
 9    who is insured under the provisions of that group  policy  or
10    certificate in the event of the death of the employee and the
11    child  is  not eligible for coverage as a dependent under the
12    provisions of  Section  367.2  or  the  dependent  child  has
13    attained the limiting age under the policy.
14        (b)  In  the  event  of  the  death  of  the employee, if
15    continuation coverage is desired, the dependent  child  or  a
16    responsible  adult  acting  on  behalf of the dependent child
17    shall give the employer or the insurer written notice of  the
18    death  of  employee  within  30 days of the date the coverage
19    terminates. The employer, within 15 days of  receipt  of  the
20    notice,  shall  give  written notice to the insurance company
21    issuing the policy of the  death  of  the  employee  and  the
22    dependent  child's  residence. The employer shall immediately
23    send  a  copy  of  the  notice  to  the  dependent  child  or
24    responsible adult at the dependent child's residence.
25        (c)  In the event of the dependent  child  attaining  the
26    limiting  age  under  the policy, if continuation coverage is
27    desired, the dependent child shall give the employer  or  the
28    insurer  written notice of the attainment of the limiting age
29    within 30 days of  the  date  the  coverage  terminates.  The
30    employer, within 15 days of receipt of the notice, shall give
31    written notice to the insurance company issuing the policy of
32    the attainment of the limiting age by the dependent child and
33    of the dependent child's residence.
34        (d)  Within 30 days after the date of receipt of a notice
 
                            -10-     LRB093 09245 RLC 15282 a
 1    from  the  employer,  dependent  child,  or responsible adult
 2    acting on behalf of the dependent child, or of the initiation
 3    of a new group policy, the insurance  company,  by  certified
 4    mail,  return  receipt  requested, shall notify the dependent
 5    child or responsible adult at the dependent child's residence
 6    that the policy may be continued  for  the  dependent  child.
 7    The notice shall include:
 8             (1)  a  form  for election to continue the insurance
 9        coverage;
10             (2)  the amount of periodic premiums to  be  charged
11        for  continuation  coverage  and  the method and place of
12        payment; and
13             (3)  instructions for returning  the  election  form
14        within  30  days  after  the date it is received from the
15        insurance company.
16        Failure of the dependent child or the  responsible  adult
17    acting  on  behalf  of  the  dependent  child to exercise the
18    election to continue  insurance  coverage  by  notifying  the
19    insurance  company in writing within such 30 day period shall
20    terminate the continuation  of  benefits  and  the  right  to
21    continuation.
22        If  the  insurance  company fails to notify the dependent
23    child or responsible adult acting on behalf of the  dependent
24    child  as  provided  for in this subsection (d), all premiums
25    shall be waived from the date the notice was  required  until
26    notice  was  sent,  and the benefits shall continue under the
27    terms and provisions of the policy, from the date the  notice
28    was  required  until the notice was sent, notwithstanding any
29    other  provision  hereof,  except  where  the   benefits   in
30    existence  at  the  time  the company's notice was to be sent
31    pursuant to this subsection (d)  are  terminated  as  to  all
32    employees.
33        (e)  The   monthly  premium  for  continuation  shall  be
34    computed as follows:
 
                            -11-     LRB093 09245 RLC 15282 a
 1             (1)  an amount, if any, that  would  be  charged  an
 2        employee  if  the dependent child were a current employee
 3        of the employer, plus;
 4             (2)  an amount, if  any,  that  the  employer  would
 5        contribute toward the premium if the dependent child were
 6        a current employee.
 7        Failure to pay the initial monthly premium within 30 days
 8    after  the  date  of receipt of notice required in subsection
 9    (d) of this Section terminates the continuation benefits  and
10    the right to continuation benefits.
11        Continuation  coverage  provided  under  this  Act  shall
12    terminate upon the earliest to happen of the following:
13             (1)  the failure to pay premiums when due, including
14        any grace period allowed by the policy;
15             (2)  when  coverage  would terminate under the terms
16        of the existing policy if the dependent child  was  still
17        an eligible dependent of the employee;
18             (3)  the  date  on  which  the dependent child first
19        becomes, after the date of election, an insured  employee
20        under any other group health plan; or
21             (4)  the   expiration  of  2  years  from  the  date
22        continuation coverage began.
23        Upon  the  termination  of  continuation  coverage,   the
24    dependent  child shall be entitled to convert the coverage to
25    an individual policy.
26        (f)  The renewal, amendment, or extension  of  any  group
27    policy  affected  by  this  Section  shall  be  deemed  to be
28    delivery or issuance for delivery of a new policy or contract
29    of insurance in this State.
30        (g)  If (1) the policy  is  cancelled,  and  (2)  another
31    insurance  company  contracts  to  provide  group  health and
32    accident insurance to  the  employer,  and  (3)  continuation
33    coverage  is in effect for the dependent child at the time of
34    cancellation, and (4) the employee  is  or  would  have  been
 
                            -12-     LRB093 09245 RLC 15282 a
 1    included  under  the  new  group policy, then the new insurer
 2    must also offer continuation coverage to the dependent  child
 3    under  the  same  terms  and  conditions as contained in this
 4    Section.
 5        (h)  This Section  shall  not  limit  the  right  of  any
 6    dependent  child  to  exercise the privilege to convert to an
 7    individual policy as contained in this Code.
 8        (i)  No person who obtains coverage  under  this  Section
 9    shall  be required to pay a rate greater than that applicable
10    to any employee or member covered under that group.

11        (215 ILCS 5/367e) (from Ch. 73, par. 979e)
12        Sec. 367e.  Continuation of Group Hospital, Surgical  and
13    Major  Medical  Coverage  After  Termination of Employment or
14    Membership.
15        A group policy delivered, issued for delivery, renewed or
16    amended in this state which insures employees or members  for
17    hospital,  surgical  or major medical insurance on an expense
18    incurred or service basis, other than for  specific  diseases
19    or for accidental injuries only, shall provide that employees
20    or  members  whose  insurance  under  the  group policy would
21    otherwise terminate because of termination of  employment  or
22    membership  or  because  of  a  reduction  in hours below the
23    minimum required by the  group  plan  shall  be  entitled  to
24    continue their hospital, surgical and major medical insurance
25    under  that  group  policy, for themselves and their eligible
26    dependents, subject to all of the group  policy's  terms  and
27    conditions  applicable to those forms of insurance and to the
28    following conditions:
29        1.  Continuation shall only be available to  an  employee
30    or  member  who has been continuously insured under the group
31    policy (and for similar benefits under any group policy which
32    it replaced) during the entire 3 months  period  ending  with
33    such  termination  or  reduction  in  hours below the minimum
 
                            -13-     LRB093 09245 RLC 15282 a
 1    required by the group plan.
 2        2.  Continuation shall not be available  for  any  person
 3    who  is covered by Medicare, except for those individuals who
 4    have been covered under a group Medicare  supplement  policy.
 5    Neither shall continuation be available for any person who is
 6    covered by any other insured or uninsured plan which provides
 7    hospital,  surgical  or medical coverage for individuals in a
 8    group and under which the person was not covered  immediately
 9    prior  to  such  termination  or reduction in hours below the
10    minimum required by the  group  plan  or  who  exercises  his
11    conversion privilege under the group policy.
12        3.  Continuation  need  not  include dental, vision care,
13    prescription  drug  benefits,  disability  income,  specified
14    disease, or similar supplementary benefits which are provided
15    under the group policy in addition to its hospital,  surgical
16    or major medical benefits.
17        4.  Upon  termination  or  reduction  in  hours below the
18    minimum  required  by  the  group  plan  written  notice   of
19    continuation  shall be presented to the employee or member by
20    the employer or mailed by the  employer  to  the  last  known
21    address  of  the  employee.  An employee or member who wishes
22    continuation of coverage must request  such  continuation  in
23    writing within the ten-day period following the later of: (i)
24    the  date of such termination or reduction in hours below the
25    minimum required by the group plan,  or  (ii)  the  date  the
26    employee is given written notice of the right of continuation
27    by  either  the  employer  or  the group policyholder.  In no
28    event, however, may the employee or member elect continuation
29    more than 60 days after  the  date  of  such  termination  or
30    reduction  in  hours  below the minimum required by the group
31    plan.  Written  notice  of  continuation  presented  to   the
32    employee  or  member  by  the  policyholder, or mailed by the
33    policyholder to the last known address of the employee, shall
34    constitute the giving of  notice  for  the  purpose  of  this
 
                            -14-     LRB093 09245 RLC 15282 a
 1    provision.
 2        5.  An  employee or member electing continuation must pay
 3    to the group policyholder or his employer, on a monthly basis
 4    in advance, the total  amount  of  premium  required  by  the
 5    insurer, including that portion of the premium contributed by
 6    the  policyholder  or employer, if any, but not more than the
 7    group rate for the insurance being continued with appropriate
 8    reduction in premium for  any  supplementary  benefits  which
 9    have  been  discontinued under paragraph (3) of this Section.
10    The premium  rate  required  by  the  insurer  shall  be  the
11    applicable premium required on the due date of each payment.
12        6.  Continuation  of insurance under the group policy for
13    any person shall  terminate  when  he  becomes  eligible  for
14    Medicare or is covered by any other insured or uninsured plan
15    which  provides  hospital,  surgical  or medical coverage for
16    individuals in a group and under which  the  person  was  not
17    covered immediately prior to such termination or reduction in
18    hours  below  the  minimum  required  by  the  group  plan as
19    provided in condition 2 above or, if earlier, at the first to
20    occur of the following:
21             (a)  The date 9 months after the date the employee's
22        or member's insurance under the  policy  would  otherwise
23        have  terminated  because of termination of employment or
24        membership  or  reduction  in  hours  below  the  minimum
25        required by the group plan.
26             (b)  If the employee or member fails to make  timely
27        payment of a required contribution, the end of the period
28        for which contributions were made.
29             (c)  The   date   on   which  the  group  policy  is
30        terminated or, in the case of an employee, the  date  his
31        employer terminates participation under the group policy.
32        However,  if this (c) applies and the coverage ceasing by
33        reason  of  such  termination  is  replaced  by   similar
34        coverage  under another group policy, the following shall
 
                            -15-     LRB093 09245 RLC 15282 a
 1        apply:
 2                  (i)  The employee  or  member  shall  have  the
 3             right  to  become  covered  under  that  other group
 4             policy, for the balance of the period that he  would
 5             have  remained  covered under the prior group policy
 6             in accordance with condition  6  had  a  termination
 7             described in this (c) not occurred.
 8                  (ii)  The  prior group policy shall continue to
 9             provide  benefits  to  the  extent  of  its  accrued
10             liabilities and extensions of  benefits  as  if  the
11             replacement had not occurred.
12        7.  A notification of the continuation privilege shall be
13    included in each certificate of coverage.
14        8.  Continuation  shall not be available for any employee
15    who was discharged because of the commission of a  felony  in
16    connection  with  his work, or because of theft in connection
17    with  his  work,  for  which  the  employer  was  in  no  way
18    responsible; provided the employee admitted his commission of
19    the felony or theft or such act has resulted in a  conviction
20    or order of supervision by a court of competent jurisdiction.
21        The  requirements  of  this  amendatory Act of 1983 shall
22    apply to  any  group  policy  as  defined  in  this  Section,
23    delivered  or  issued  for  delivery  on  or  after  180 days
24    following the effective date of this amendatory Act of 1983.
25        The requirements of this amendatory  Act  of  1985  shall
26    apply  to  any  group  policy  as  defined  in  this Section,
27    delivered, issued for delivery,  renewed  or  amended  on  or
28    after   180   days  following  the  effective  date  of  this
29    amendatory Act of 1985.
30    (Source: P.A. 85-210; 86-1475.)

31        (215 ILCS 5/367e.1 new)
32        Sec.  367e.1.  Group  Accident   and   Health   Insurance
33    Conversion Privilege.
 
                            -16-     LRB093 09245 RLC 15282 a
 1        (A)  A  group policy which provides hospital, medical, or
 2    major medical expense insurance, or any combination of  these
 3    coverages,  on an expense-incurred basis, but not including a
 4    policy which provides benefits for specific diseases  or  for
 5    accidental  injuries  only, shall provide that an employee or
 6    member (i) whose insurance under the group  policy  has  been
 7    terminated  for  any  reason other than discontinuance of the
 8    group policy in its entirety  where  there  is  a  succeeding
 9    carrier,  or  failure  of  the  employee or member to pay any
10    required contribution; and (ii)  who  has  been  continuously
11    insured  under  the  group policy (and under any group policy
12    providing similar benefits which it replaces)  for  at  least
13    three  months  immediately  prior  to  termination,  shall be
14    entitled to have issued to him by the  insurer  a  policy  of
15    health  insurance  (hereafter  referred  to  as the converted
16    policy), subject to the following conditions:
17             (1)  Written application for  the  converted  policy
18        shall  be  made and the first premium paid to the insurer
19        not later than the latter of (i)  thirty-one  days  after
20        such  termination  or  (ii) 15 days after the employee or
21        member has been given written notice of the existence  of
22        the  conversion  privilege, but in no event later than 60
23        days after such termination.
24          Written notice presented to the employee or  member  by
25        the  policyholder,  or  mailed by the policyholder to the
26        last known address  of  the  employee  or  member,  shall
27        constitute  the  giving of notice for the purpose of this
28        provision.
29             (2)  The converted policy shall  be  issued  without
30        evidence of insurability.
31             (3)  The  initial  premium  for the converted policy
32        shall be determined  in  accordance  with  the  insurer's
33        table of premium rates applicable to the age and class of
34        risk  of  each  person  to be covered under the converted
 
                            -17-     LRB093 09245 RLC 15282 a
 1        policy and to  the  type  and  amount  of  the  insurance
 2        provided. Conditions pertaining to health shall not be an
 3        acceptable  basis  of  classification for the purposes of
 4        this subsection.  The frequency of premium payment  shall
 5        be  the frequency customarily required by the insurer for
 6        the policy form and  plan  selected,  provided  that  the
 7        insurer   shall   not   require   premium  payments  less
 8        frequently than quarterly  without  the  consent  of  the
 9        insured.
10             (4)  The  effective  date  of  the  converted policy
11        shall be the day following the termination  of  insurance
12        under the group policy.
13             (5)  The  converted  policy shall cover the employee
14        or member and his dependents  who  were  covered  by  the
15        group policy on the date of termination of insurance.  At
16        the  option  of  the insurer, a separate converted policy
17        may be issued to cover any dependent.
18             (6)  The insurer shall not be required  to  issue  a
19        converted policy covering any person if such person is or
20        could  be  covered by Medicare (Title XVIII of the United
21        States  Social  Security  Act  as  added  by  the  Social
22        Security Amendments  of  1965  or  as  later  amended  or
23        superseded).   Furthermore,  the  insurer  shall  not  be
24        required to issue a converted policy covering any  person
25        if  (i)  such  person  is covered for similar benefits by
26        another hospital, surgical,  medical,  or  major  medical
27        expense  insurance  policy or hospital or medical service
28        subscriber  contract  or  medical   practice   or   other
29        prepayment  plan or by any other plan or program; or (ii)
30        such person is eligible for similar benefits (whether  or
31        not  covered  therefor) under any arrangement of coverage
32        for individuals in a group,  whether  on  an  insured  or
33        uninsured  basis;  or (iii) similar benefits are provided
34        for or available  to  such  person,  pursuant  to  or  in
 
                            -18-     LRB093 09245 RLC 15282 a
 1        accordance  with the requirements of any statute, and the
 2        benefits provided or available under the sources referred
 3        to in (i), (ii), (iii) above  for  such  person  together
 4        with  the  converted policy would result in overinsurance
 5        according to the insurer's standards.
 6             (7)  In the event that coverage would  be  continued
 7        under  the  group  policy  on  an  employee following his
 8        retirement prior to the time he is or could be covered by
 9        Medicare, he may elect, in lieu of such  continuation  of
10        such  group insurance, to have the same conversion rights
11        as would apply had his insurance terminated at retirement
12        by reason of termination of employment or membership.
13             (8)  Subject to the conditions set forth above,  the
14        conversion  privilege  shall also be available (i) to the
15        surviving spouse, if any, at the death of the employee or
16        member, with respect to  the  spouse  and  such  children
17        whose  coverage  under  the  group  policy  terminates by
18        reason of such death, otherwise to each  surviving  child
19        whose  coverage  under  the  group  policy  terminates by
20        reason of such death, or, if the  group  policy  provides
21        for  continuation  of  dependents' coverage following the
22        employee's  or  member's  death,  at  the  end  of   such
23        continuation;  (ii)  to  the  spouse  of  the employee or
24        member upon termination of coverage of the spouse,  while
25        the  employee  or  member remains insured under the group
26        policy, by reason of ceasing to  be  a  qualified  family
27        member under the group policy, with respect to the spouse
28        and  such  children whose coverage under the group policy
29        terminates at the same time; or (iii) to a  child  solely
30        with  respect to himself upon termination of his coverage
31        by reason of ceasing to  be  a  qualified  family  member
32        under  the group policy, if a conversion privilege is not
33        otherwise   provided   above   with   respect   to   such
34        termination.
 
                            -19-     LRB093 09245 RLC 15282 a
 1             (9)  A  notification  of  the  conversion  privilege
 2        shall be included in each certificate.
 3             (10)  The  insurer  may  elect  to   provide   group
 4        insurance coverage in lieu of the issuance of a converted
 5        policy.
 6        (B)  A  converted  policy issued upon the exercise of the
 7    conversion privilege  required  by  subsection  (A)  of  this
 8    Section shall conform to the following minimum standards:
 9             (1)  If   the   group   policy   provided  hospital,
10        surgical, or medical expense insurance, or a  combination
11        thereof,  the  converted policy shall provide benefits on
12        an expense-incurred basis equal to the lesser of (i)  the
13        hospital room and board, miscellaneous hospital, surgical
14        and medical benefits provided under the group policy; and
15        (ii) the corresponding benefits described below:
16                  (a)  Hospital  room  and  board  benefits in an
17             amount per day elected by  the  group  policyholder,
18             but  in  no  event less than 60% of the then average
19             semi-private hospital room and board charge  in  the
20             State,  such benefits to be payable for a maximum of
21             not less than 70 days for  any  period  of  hospital
22             confinement, as defined in the converted policy.
23                  (b)  Miscellaneous  hospital  benefits  for any
24             one period of hospital confinement in an  amount  up
25             to  twenty  times  the hospital room and board daily
26             benefit provided under the converted policy.
27                  (c)  Surgical benefits according to a  surgical
28             schedule  providing  a benefit amount elected by the
29             group policy holder, but in no event less  than  60%
30             of the then average surgical charge in the State and
31             with  a  maximum  amount  appropriate  thereto.  The
32             maximum surgical benefit shall be applicable to  all
33             surgical  operations of an individual resulting from
34             or contributed to by the same and all related causes
 
                            -20-     LRB093 09245 RLC 15282 a
 1             occurring in one period of disability.  Two or  more
 2             surgical  procedures  performed  in  the course of a
 3             single operation through the same  incision,  or  in
 4             the same natural body orifice, may be treated as one
 5             surgical  procedure  with  the payment determined by
 6             the  scheduled  benefit  for  the   most   expensive
 7             procedure performed.  The surgical schedule shall be
 8             consistent   with   the   schedule   of   operations
 9             customarily  offered  by  the insurer under group or
10             individual health insurance policies.
11                  (d)  Non-surgical medical  attendance  benefits
12             for in-hospital services in an amount elected by the
13             group policyholder, but in no event less than 60% of
14             the   then  average  in-hospital  physician's  visit
15             charge in the State, such benefits may be limited to
16             one visit per day of hospitalization and  a  maximum
17             number of visits numbering not less than seventy for
18             any period of hospital confinement as defined in the
19             converted policy.
20             (2)  If  the  group  policy  provided  major medical
21        insurance, the insurer may offer the insurance  described
22        in  (1)  above  only,  major medical insurance only, or a
23        combination of the insurance described in (1)  above  and
24        major  medical  insurance.   If  the  insurer  elects  to
25        provide  major  medical  insurance,  the converted policy
26        shall provide:
27                  (a)  A maximum benefit at least equal to (i) or
28             (ii) below:
29                       (i)  A  maximum  payment  of   twenty-five
30                  thousand   dollars   for  all  covered  medical
31                  expenses incurred during the  covered  person's
32                  lifetime  with  an  annual  restoration  of the
33                  lesser of, while  coverage  is  in  force,  one
34                  thousand dollars and the amount counted against
 
                            -21-     LRB093 09245 RLC 15282 a
 1                  the  maximum  benefit  which was not previously
 2                  restored; or
 3                       (ii)  A  maximum  payment  of  twenty-five
 4                  thousand dollars for each unrelated  injury  or
 5                  illness.
 6                  (b)  Payment  of  benefits  for covered medical
 7             expenses, in excess of the deductible, at a rate not
 8             less than 80% except as otherwise permitted below.
 9                  (c)  A  deductible  for  each  benefit   period
10             which,  at  the  option of the insurer, shall be (i)
11             the greater of $500  and  the  benefits  deductible;
12             (ii) the sum of the benefits deductible and $100; or
13             (iii)  the  corresponding  deductible  in  the group
14             policy.  The term "benefit period," as used  herein,
15             means, when the maximum payment is determined by (a)
16             (i)  above,  either  a  calendar year or a period of
17             twelve consecutive months;  and,  when  the  maximum
18             payment is determined by (a) (ii) above, a period of
19             twenty-four  consecutive months.  The term "benefits
20             deductible," as used herein, means the value of  any
21             benefits provided on an expense-incurred basis which
22             are   provided   with  respect  to  covered  medical
23             expenses by any other hospital, surgical, or medical
24             insurance policy  or  hospital  or  medical  service
25             subscriber  contract  of  medical  practice or other
26             prepayment plan,  or  any  other  plans  or  program
27             whether  on an insured or uninsured basis, or of any
28             similar  benefits  which  are   provided   or   made
29             available  pursuant  to  or  in  accordance with the
30             requirements of any statute and, if, pursuant to the
31             provisions of this subsection, the converted  policy
32             provides  both  the  coverage described in (1) above
33             and  major  medical  insurance,  the  value  of  the
34             coverage described in (1) above.   The  insurer  may
 
                            -22-     LRB093 09245 RLC 15282 a
 1             require  that  the  deductible be satisfied during a
 2             period of not less than three months. If the maximum
 3             payment is determined by (a) (i) above,  and  if  no
 4             benefits become payable during the preceding benefit
 5             period   due   to  the  cash  deductible  not  being
 6             satisfied; credit shall be given, in the  succeeding
 7             benefit  period,  to  any expense applied toward the
 8             cash deductible of the preceding benefit period  and
 9             incurred  during  the  last  three  months  of  such
10             preceding benefit period, subject to any requirement
11             that  the deductible be satisfied during a specified
12             period of time.
13                  (d)  The term "covered  medical  expenses,"  as
14             used  above,  may  be  limited  (i)  in  the case of
15             hospital room and board benefits,  maximum  surgical
16             schedule,   and   non-surgical   medical  attendance
17             benefits  to  amounts  not  less  than  the  amounts
18             provided in (1) (a), (1) (c) and (1) (d) above;  and
19             (ii)  in  the  case  of mental and nervous condition
20             treatments while  the  patient  is  not  a  hospital
21             in-patient,   to  co-insurance  of  50%,  a  maximum
22             benefit  of  $500  per  calendar  year   or   twelve
23             consecutive  month  periods subject to the inclusion
24             by the insurer of reasonable limits on the number of
25             visits  and  the  maximum  permissible  expense  per
26             visit.
27             (3)  The converted policy may contain any exclusion,
28        reduction, or limitation contained in  the  group  policy
29        and  any  exclusion, reduction, or limitation customarily
30        used in individual accident and health policies delivered
31        or issued for delivery in this state.  It is not required
32        that the converted policy  contain  all  of  the  covered
33        medical  expenses  or  the  same  level  of  benefits  as
34        provided in the group policy.
 
                            -23-     LRB093 09245 RLC 15282 a
 1             (4)  The  insurer  may,  at  its  option, also offer
 2        alternative  plans  for   group   accident   and   health
 3        conversion.
 4             (5)  The   converted   policy  may  only  exclude  a
 5        pre-existing condition  excluded  by  the  group  policy.
 6        Any hospital, surgical, medical or major medical benefits
 7        payable  under the converted policy may be reduced by the
 8        amount of any  such  benefits  payable  under  the  group
 9        policy   after   the   termination  of  the  individual's
10        insurance thereunder and, during the first policy year of
11        such converted policy, the  benefits  payable  under  the
12        converted  policy  may be so reduced so that they are not
13        in excess of the benefits that would  have  been  payable
14        had  the  individual's  insurance  under the group policy
15        remained in force and effect.
16             (6)  The  converted  policy  may  provide  for   the
17        termination  of coverage thereunder of any person when he
18        is or could be covered by Medicare (Title  XVIII  of  the
19        United  States Social Security Act as added by the Social
20        Security Amendments  of  1965  or  as  later  amended  or
21        superseded).
22             (7)  The  converted  policy  may  provide  that  the
23        insurer   may  request  information  from  the  converted
24        policyholder, in advance of any premium due date  of  the
25        converted policy, to determine whether any person covered
26        thereunder (i) is covered for similar benefits by another
27        hospital,  surgical,  medical,  or  major medical expense
28        insurance  policy  or   hospital   or   medical   service
29        subscriber   contract   or   medical  practice  or  other
30        prepayment plan or by any other plan or program; or  (ii)
31        is  eligible for similar benefits (whether or not covered
32        therefor)  under  any   arrangement   of   coverage   for
33        individuals   in  a  group,  whether  on  an  insured  or
34        uninsured basis; or (iii) has similar  benefits  provided
 
                            -24-     LRB093 09245 RLC 15282 a
 1        for  or  available  to  such  person,  pursuant  to or in
 2        accordance with the requirements  of  any  statute.   The
 3        converted  policy  may also provide that the insurer need
 4        not renew the converted policy or  the  coverage  of  any
 5        person insured thereunder if either the benefits provided
 6        or  available under the sources referred to in (i), (ii),
 7        (iii) above for such person, together with the  converted
 8        policy,  would  result  in overinsurance according to the
 9        insurer's standards, or  if  the  converted  policyholder
10        refuses to provide the requested information.
11             (8)  The  converted  policy  shall  not  contain any
12        provision allowing the insurer  to  non-renew  due  to  a
13        change in the health of an insured.
14             (9)  The converted policy may contain any provisions
15        permitted   herein   and   may  also  include  any  other
16        provisions  not  expressly   prohibited   by   law.   Any
17        provisions  required  or  permitted  herein may be made a
18        part of the converted policy by means of  an  endorsement
19        or rider.
20             (10)  In the conversion of group health insurance in
21        accordance  with  the provisions of subsection (A) above,
22        the insurer may, at its option, accomplish the conversion
23        by issuing one or more converted policies.
24             (11)  With respect to any person who was covered  by
25        the  group policy, the period specified in the Time Limit
26        on Certain Defenses provisions of  the  converted  policy
27        shall  commence  with  the  date  the  person's insurance
28        became effective under the group policy.
29             (12)  If  the  insurer  elects  to   provide   group
30        insurance  coverage  in  lieu  of a converted policy, the
31        benefit levels required for a converted  policy  must  be
32        applicable to such group insurance coverage.
33        (C)  The  requirements of this Section shall apply to any
34    group policy of  accident  and  health  insurance  delivered,
 
                            -25-     LRB093 09245 RLC 15282 a
 1    issued  for delivery, renewed or amended on or after 180 days
 2    following the effective date of this Section.
 3    (Source: P.A. 85-210; 86-1475.)

 4        Section 7.  The Comprehensive Health Insurance  Plan  Act
 5    is amended by changing Section 2 as follows:

 6        (215 ILCS 105/2) (from Ch. 73, par. 1302)
 7        Sec.  2.   Definitions.   As used in this Act, unless the
 8    context otherwise requires:
 9        "Plan administrator" means the  insurer  or  third  party
10    administrator designated under Section 5 of this Act.
11        "Benefits  plan"  means the coverage to be offered by the
12    Plan to eligible persons and federally  eligible  individuals
13    pursuant to this Act.
14        "Board" means the Illinois Comprehensive Health Insurance
15    Board.
16        "Church plan" has the same meaning given that term in the
17    federal  Health  Insurance Portability and Accountability Act
18    of 1996.
19        "Continuation coverage" means  continuation  of  coverage
20    under  a group health plan or other health insurance coverage
21    for former employees or dependents of former  employees  that
22    would  otherwise  have  terminated  under  the  terms of that
23    coverage  pursuant  to  any  continuation  provisions   under
24    federal  or  State  law,  including  the Consolidated Omnibus
25    Budget  Reconciliation  Act  of  1985  (COBRA),  as  amended,
26    Sections  367.2,  and  367e,  and  367e.1  of  the   Illinois
27    Insurance  Code,  or any other similar requirement in another
28    State.
29        "Covered person" means a person who is and  continues  to
30    remain eligible for Plan coverage and is covered under one of
31    the benefit plans offered by the Plan.
32        "Creditable  coverage" means, with respect to a federally
 
                            -26-     LRB093 09245 RLC 15282 a
 1    eligible individual, coverage of the individual under any  of
 2    the following:
 3             (A)  A group health plan.
 4             (B)  Health   insurance  coverage  (including  group
 5        health insurance coverage).
 6             (C)  Medicare.
 7             (D)  Medical assistance.
 8             (E)  Chapter 55 of title 10, United States Code.
 9             (F)  A medical care program  of  the  Indian  Health
10        Service or of a tribal organization.
11             (G)  A state health benefits risk pool.
12             (H)  A health plan offered under Chapter 89 of title
13        5, United States Code.
14             (I)  A public health plan (as defined in regulations
15        consistent   with   Section   104   of  the  Health  Care
16        Portability and Accountability Act of 1996  that  may  be
17        promulgated  by  the  Secretary of the U.S. Department of
18        Health and Human Services).
19             (J)  A health benefit plan under Section 5(e) of the
20        Peace Corps Act (22 U.S.C. 2504(e)).
21             (K)  Any other qualifying coverage required  by  the
22        federal  Health  Insurance Portability and Accountability
23        Act of 1996, as it may be amended, or  regulations  under
24        that Act.
25        "Creditable   coverage"   does   not   include   coverage
26    consisting  solely  of  coverage  of  excepted  benefits,  as
27    defined  in  Section  2791(c)  of  title  XXVII of the Public
28    Health Service Act (42 U.S.C. 300 gg-91), nor does it include
29    any period of coverage under any of  items  (A)  through  (K)
30    that  occurred before a break of more than 90 days during all
31    of which the individual was not covered under  any  of  items
32    (A) through (K) above.  Any period that an individual is in a
33    waiting period for any coverage under a group health plan (or
34    for  group health insurance coverage) or is in an affiliation
 
                            -27-     LRB093 09245 RLC 15282 a
 1    period under the terms of health insurance  coverage  offered
 2    by  a health maintenance organization shall not be taken into
 3    account in determining if there has been a break of more than
 4    90 days in any creditable coverage.
 5        "Department" means the Illinois Department of Insurance.
 6        "Dependent" means an Illinois resident: who is a  spouse;
 7    or who is claimed as a dependent by the principal insured for
 8    purposes of filing a federal income tax return and resides in
 9    the   principal   insured's  household,  and  is  a  resident
10    unmarried child under the age of  19  years;  or  who  is  an
11    unmarried child who also is a full-time student under the age
12    of  23  years  and  who  is  financially  dependent  upon the
13    principal insured; or who is a child of any age  and  who  is
14    disabled   and   financially  dependent  upon  the  principal
15    insured.
16        "Direct Illinois premiums" means, for Illinois  business,
17    an  insurer's direct premium income for the kinds of business
18    described in clause (b) of Class 1 or clause (a) of  Class  2
19    of  Section  4  of  the  Illinois  Insurance Code, and direct
20    premium income of a  health  maintenance  organization  or  a
21    voluntary  health  services plan, except it shall not include
22    credit health insurance as defined in Article IX 1/2  of  the
23    Illinois Insurance Code.
24        "Director"  means the Director of the Illinois Department
25    of Insurance.
26        "Eligible person" means a  resident  of  this  State  who
27    qualifies for Plan coverage under Section 7 of this Act.
28        "Employee" means a resident of this State who is employed
29    by an employer or has entered into the employment of or works
30    under  contract  or  service  of  an  employer  including the
31    officers, managers and employees of subsidiary or  affiliated
32    corporations  and  the  individual  proprietors, partners and
33    employees  of  affiliated  individuals  and  firms  when  the
34    business of the subsidiary or affiliated corporations,  firms
 
                            -28-     LRB093 09245 RLC 15282 a
 1    or  individuals  is  controlled  by a common employer through
 2    stock ownership, contract, or otherwise.
 3        "Employer"    means    any    individual,    partnership,
 4    association, corporation, business trust, or  any  person  or
 5    group  of  persons  acting  directly  or  indirectly  in  the
 6    interest of an employer in relation to an employee, for which
 7    one or more persons is gainfully employed.
 8        "Family" coverage means the coverage provided by the Plan
 9    for the covered person and his or her eligible dependents who
10    also are covered persons.
11        "Federally   eligible  individual"  means  an  individual
12    resident of this State:
13             (1)(A)  for whom,  as  of  the  date  on  which  the
14        individual  seeks  Plan coverage under Section 15 of this
15        Act, the aggregate of the periods of creditable  coverage
16        is  18  or  more  months, and (B) whose most recent prior
17        creditable coverage  was  under  group  health  insurance
18        coverage  offered  by  a health insurance issuer, a group
19        health plan, a governmental plan, or a  church  plan  (or
20        health  insurance coverage offered in connection with any
21        such plans) or any other type of creditable coverage that
22        may  be  required  by  the   federal   Health   Insurance
23        Portability  and Accountability Act of 1996, as it may be
24        amended, or the regulations under that Act;
25             (2)  who is not eligible for coverage  under  (A)  a
26        group  health  plan, (B) part A or part B of Medicare due
27        to age, or (C) medical  assistance,  and  does  not  have
28        other health insurance coverage;
29             (3)  with  respect  to whom the most recent coverage
30        within the coverage period described in paragraph  (1)(A)
31        of this definition was not terminated based upon a factor
32        relating to nonpayment of premiums or fraud;
33             (4)  if  the  individual had been offered the option
34        of  continuation  coverage  under  a  COBRA  continuation
 
                            -29-     LRB093 09245 RLC 15282 a
 1        provision or under a similar State program,  who  elected
 2        such coverage; and
 3             (5)  who,    if    the   individual   elected   such
 4        continuation coverage, has  exhausted  such  continuation
 5        coverage under such provision or program.
 6        "Group  health  insurance  coverage" means, in connection
 7    with a group health plan, health insurance  coverage  offered
 8    in connection with that plan.
 9        "Group  health plan" has the same meaning given that term
10    in   the   federal   Health   Insurance    Portability    and
11    Accountability Act of 1996.
12        "Governmental  plan" has the same meaning given that term
13    in   the   federal   Health   Insurance    Portability    and
14    Accountability Act of 1996.
15        "Health  insurance coverage" means benefits consisting of
16    medical  care  (provided  directly,  through   insurance   or
17    reimbursement,  or otherwise and including items and services
18    paid for as medical care)  under  any  hospital  and  medical
19    expense-incurred policy, certificate, or contract provided by
20    an  insurer,  non-profit  health  care service plan contract,
21    health maintenance organization or other subscriber contract,
22    or any other health care plan or arrangement that pays for or
23    furnishes  medical  or  health  care  services   whether   by
24    insurance  or otherwise.  Health insurance coverage shall not
25    include  short  term,  accident  only,   disability   income,
26    hospital  confinement or fixed indemnity, dental only, vision
27    only, limited benefit, or credit insurance,  coverage  issued
28    as a supplement to liability insurance, insurance arising out
29    of   a  workers'  compensation  or  similar  law,  automobile
30    medical-payment insurance, or insurance under which  benefits
31    are  payable  with  or  without  regard to fault and which is
32    statutorily  required  to  be  contained  in  any   liability
33    insurance policy or equivalent self-insurance.
34        "Health  insurance  issuer"  means  an insurance company,
 
                            -30-     LRB093 09245 RLC 15282 a
 1    insurance service, or  insurance  organization  (including  a
 2    health   maintenance  organization  and  a  voluntary  health
 3    services  plan)  that  is  authorized  to   transact   health
 4    insurance business in this State.  Such term does not include
 5    a group health plan.
 6        "Health  Maintenance  Organization" means an organization
 7    as defined in the Health Maintenance Organization Act.
 8        "Hospice" means a program  as  defined  in  and  licensed
 9    under the Hospice Program Licensing Act.
10        "Hospital"  means  a duly licensed institution as defined
11    in the Hospital Licensing Act, an institution that meets  all
12    comparable conditions and requirements in effect in the state
13    in  which  it  is  located,  or  the  University  of Illinois
14    Hospital as defined in the University  of  Illinois  Hospital
15    Act.
16        "Individual   health  insurance  coverage"  means  health
17    insurance coverage offered to individuals in  the  individual
18    market,  but  does  not  include short-term, limited-duration
19    insurance.
20        "Insured" means any individual resident of this State who
21    is eligible to receive benefits from any  insurer  (including
22    health  insurance coverage offered in connection with a group
23    health plan) or health insurance issuer as  defined  in  this
24    Section.
25        "Insurer"  means  any  insurance  company  authorized  to
26    transact  health  insurance  business  in  this State and any
27    corporation that provides medical services and  is  organized
28    under  the  Voluntary Health Services Plans Act or the Health
29    Maintenance Organization Act.
30        "Medical assistance" means the State  medical  assistance
31    or medical assistance no grant (MANG) programs provided under
32    Title  XIX of the Social Security Act and Articles V (Medical
33    Assistance) and  VI  (General  Assistance)  of  the  Illinois
34    Public  Aid  Code  (or  any  successor  program) or under any
 
                            -31-     LRB093 09245 RLC 15282 a
 1    similar program of health care benefits in a state other than
 2    Illinois.
 3        "Medically necessary" means  that  a  service,  drug,  or
 4    supply  is  necessary  and  appropriate  for the diagnosis or
 5    treatment of an illness or injury in  accord  with  generally
 6    accepted  standards  of  medical  practice  at  the  time the
 7    service, drug,  or  supply  is  provided.  When  specifically
 8    applied  to a confinement it further means that the diagnosis
 9    or treatment of the  covered  person's  medical  symptoms  or
10    condition  cannot  be  safely  provided  to that person as an
11    outpatient. A service, drug, or supply shall not be medically
12    necessary if it: (i) is investigational, experimental, or for
13    research  purposes;  or  (ii)  is  provided  solely  for  the
14    convenience of the patient, the patient's family,  physician,
15    hospital,  or  any other provider; or (iii) exceeds in scope,
16    duration, or intensity that level of care that is  needed  to
17    provide   safe,   adequate,   and  appropriate  diagnosis  or
18    treatment; or (iv) could have been omitted without  adversely
19    affecting  the  covered  person's condition or the quality of
20    medical care; or (v) involves the use of  a  medical  device,
21    drug, or substance not formally approved by the United States
22    Food and Drug Administration.
23        "Medical  care" means the ordinary and usual professional
24    services rendered by a physician or other specified  provider
25    during  a  professional  visit for treatment of an illness or
26    injury.
27        "Medicare" means coverage under both Part A and Part B of
28    Title XVIII of the Social Security Act, 42 U.S.C. Sec.  1395,
29    et seq.
30        "Minimum  premium  plan"  means  an arrangement whereby a
31    specified amount of health care claims  is  self-funded,  but
32    the  insurance  company  assumes  the  risk  that claims will
33    exceed that amount.
34        "Participating  transplant  center"  means   a   hospital
 
                            -32-     LRB093 09245 RLC 15282 a
 1    designated  by the Board as a preferred or exclusive provider
 2    of services for one or more specified human organ  or  tissue
 3    transplants  for  which  the hospital has signed an agreement
 4    with the Board to accept a transplant payment  allowance  for
 5    all  expenses  related  to the transplant during a transplant
 6    benefit period.
 7        "Physician" means a person licensed to practice  medicine
 8    pursuant to the Medical Practice Act of 1987.
 9        "Plan"  means  the  Comprehensive  Health  Insurance Plan
10    established by this Act.
11        "Plan of operation" means the plan of  operation  of  the
12    Plan, including articles, bylaws and operating rules, adopted
13    by the board pursuant to this Act.
14        "Provider"  means any hospital, skilled nursing facility,
15    hospice, home health agency, physician, registered pharmacist
16    acting within the scope of that registration,  or  any  other
17    person  or  entity  licensed  in  Illinois to furnish medical
18    care.
19        "Qualified high risk pool" has  the  same  meaning  given
20    that  term  in  the  federal Health Insurance Portability and
21    Accountability Act of 1996.
22        "Resident" means a person who  is  and  continues  to  be
23    legally  domiciled and physically residing on a permanent and
24    full-time basis in a place of permanent  habitation  in  this
25    State that remains that person's principal residence and from
26    which  that person is absent only for temporary or transitory
27    purpose.
28        "Skilled nursing  facility"  means  a  facility  or  that
29    portion  of  a  facility  that  is  licensed  by the Illinois
30    Department of Public Health under the Nursing Home  Care  Act
31    or  a  comparable  licensing  authority  in  another state to
32    provide skilled nursing care.
33        "Stop-loss coverage"  means  an  arrangement  whereby  an
34    insurer  insures  against  the  risk  that any one claim will
 
                            -33-     LRB093 09245 RLC 15282 a
 1    exceed a specific dollar amount or that the entire loss of  a
 2    self-insurance plan will exceed a specific amount.
 3        "Third  party  administrator"  means  an administrator as
 4    defined in Section 511.101 of the Illinois Insurance Code who
 5    is licensed under Article XXXI 1/4 of that Code.
 6    (Source: P.A. 91-357,  eff.  7-29-99;  91-735,  eff.  6-2-00;
 7    92-153, eff. 7-25-01.)

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

10        (215 ILCS 125/4-9.2) (from Ch. 111 1/2, par. 1409.2-2)
11        Sec. 4-9.2.  Continuation of  group  HMO  coverage  after
12    termination  of  employee  or  membership.  A  group contract
13    delivered, issued for delivery, renewed,  or amended in  this
14    State  that  covers  employees  or  members  for  health care
15    services  shall  provide  that  employees  or  members  whose
16    coverage under the group contract would  otherwise  terminate
17    because of termination of employment or membership or because
18    of  a  reduction  in  hours below the minimum required by the
19    group contract shall be entitled to continue  their  coverage
20    under  that group contract, for themselves and their eligible
21    dependents, subject to all of the group contract's terms  and
22    conditions  applicable  to those forms of coverage and to the
23    following conditions:
24             (1)  Continuation shall  only  be  available  to  an
25        employee  or  member  who  has  been continuously covered
26        under the group contract (and for similar benefits  under
27        any  group contract that it replaced) during the entire 3
28        month period ending with the termination of employment or
29        membership  or  reduction  in  hours  below  the  minimum
30        required by the group contract.
31             (2)  Continuation shall not  be  available  for  any
32        enrollee  who  is  covered  by Medicare, except for those
 
                            -34-     LRB093 09245 RLC 15282 a
 1        individuals who have been covered under a group  Medicare
 2        supplement  policy.  Continuation  shall not be available
 3        for any enrollee who is covered by any other  insured  or
 4        uninsured  plan  that  provides  hospital,  surgical,  or
 5        medical  coverage  for  individuals  in a group and under
 6        which the enrollee was  not  covered  immediately  before
 7        termination  or  reduction  in  hours  below  the minimum
 8        required by the group contract or who  exercises  his  or
 9        her conversion privilege under the group policy.
10             (3)  Continuation  need  not  include dental, vision
11        care,  prescription  drug,   or   similar   supplementary
12        benefits  that  are  provided under the group contract in
13        addition to its basic health care services.
14             (4)  Upon termination or reduction  in  hours  below
15        the  minimum  required  by  the  group  contract, written
16        notice of continuation shall be presented to the employee
17        or member by the employer or mailed by  the  employer  to
18        the  last  known  address of the employee. An employee or
19        member who wishes continuation of coverage  must  request
20        continuation   in   writing  within  the  10  day  period
21        following the later of (i) the  date  of  termination  or
22        reduction  in  hours  below  the  minimum required by the
23        group contract or (ii) the date  the  employee  is  given
24        written notice of the right of continuation by either the
25        employer or the group policyholder. In no event, however,
26        shall the employee or member elect continuation more than
27        60  days  after  the  date of termination or reduction in
28        hours below the minimum required by the  group  contract.
29        Written  notice of continuation presented to the employee
30        or  member  by  the  policyholder,  or  mailed   by   the
31        policyholder  to  the last known address of the employee,
32        shall constitute the giving of notice for the purpose  of
33        this paragraph.
34             (5)  An  employee  or  member  electing continuation
 
                            -35-     LRB093 09245 RLC 15282 a
 1        must pay to the group policyholder or his employer, on  a
 2        monthly  basis  in  advance,  the total amount of premium
 3        required by  the  HMO,  including  that  portion  of  the
 4        premium  contributed  by the policyholder or employer, if
 5        any, but not more than the group rate  for  the  coverage
 6        being continued with appropriate reduction in premium for
 7        any  supplementary  benefits  that have been discontinued
 8        under paragraph (3) of this  Section.  The  premium  rate
 9        required  by  the  HMO  shall  be  the applicable premium
10        required on the due date of each payment.
11             (6)  Continuation  of  coverage  under   the   group
12        contract  for  any person shall terminate when the person
13        becomes eligible for Medicare or is covered by any  other
14        insured   or   uninsured  plan  that  provides  hospital,
15        surgical, or medical coverage for individuals in a  group
16        and  under  which  the person was not covered immediately
17        before  termination  or  reduction  in  hours  below  the
18        minimum  required  by  the  group contract as provided in
19        paragraph (2) of this Section  or,  if  earlier,  at  the
20        first to occur of the following:
21                  (a)  The  expiration  of  9  months  after  the
22             employee's   or   member's   coverage   because   of
23             termination of employment or membership or reduction
24             in  hours  below  the  minimum required by the group
25             contract.
26                  (b)  If the employee or member  fails  to  make
27             timely  payment  of a required contribution, the end
28             of the period for which contributions were made.
29                  (c)  The date on which the  group  contract  is
30             terminated  or, in the case of an employee, the date
31             his or her employer terminates  participation  under
32             the  group  contract.  If,  however,  this paragraph
33             applies  and  the  coverage  ceasing  by  reason  of
34             termination is replaced by  similar  coverage  under
 
                            -36-     LRB093 09245 RLC 15282 a
 1             another  group  contract,  then  (i) the employee or
 2             member shall have the right to become covered  under
 3             the  replacement  group  contract for the balance of
 4             the period  that  he  or  she  would  have  remained
 5             covered under the prior group contract in accordance
 6             with  paragraph  (6)  had a termination described in
 7             this item (c) not occurred and (ii) the prior  group
 8             contract  shall  continue to provide benefits to the
 9             extent of its accrued liabilities and extensions  of
10             benefits as if the replacement had not occurred.
11             (7)  A  notification  of  the continuation privilege
12        shall be included in each evidence of coverage.
13             (8)  Continuation shall not  be  available  for  any
14        employee  who was discharged because of the commission of
15        a felony in connection with his or her work,  or  because
16        of  theft  in  connection with his or her work, for which
17        the employer was in no way responsible  if  the  employee
18        (i)  admitted  to  committing the felony or theft or (ii)
19        was convicted or placed under supervision by a  court  of
20        competent jurisdiction.
21             The  requirements  of  this  amendatory  Act of 1992
22        shall apply to any group contract,  as  defined  in  this
23        Section, delivered or issued for delivery on or after 180
24        days  following the effective date of this amendatory Act
25        of 1992.
26    (Source: P.A. 87-1090.)

27        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
28        Sec. 5-3.  Insurance Code provisions.
29        (a)  Health Maintenance Organizations shall be subject to
30    the provisions of Sections 133, 134, 137, 140, 141.1,  141.2,
31    141.3,  143,  143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
32    154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v,  356w,  356x,
33    356y,  356z.2,  367.2,  367.2-5, 367i, 368a, 401, 401.1, 402,
 
                            -37-     LRB093 09245 RLC 15282 a
 1    403, 403A, 408, 408.2, 409, 412, 444,  and  444.1,  paragraph
 2    (c)  of subsection (2) of Section 367, and Articles IIA, VIII
 3    1/2, XII, XII 1/2, XIII, XIII  1/2,  XXV,  and  XXVI  of  the
 4    Illinois Insurance Code.
 5        (b)  For  purposes of the Illinois Insurance Code, except
 6    for Sections 444 and 444.1 and Articles XIII  and  XIII  1/2,
 7    Health  Maintenance Organizations in the following categories
 8    are deemed to be "domestic companies":
 9             (1)  a  corporation  authorized  under  the   Dental
10        Service  Plan  Act or the Voluntary Health Services Plans
11        Act;
12             (2)  a corporation organized under the laws of  this
13        State; or
14             (3)  a  corporation  organized  under  the  laws  of
15        another  state, 30% or more of the enrollees of which are
16        residents of this State, except a corporation subject  to
17        substantially  the  same  requirements  in  its  state of
18        organization as is a  "domestic  company"  under  Article
19        VIII 1/2 of the Illinois Insurance Code.
20        (c)  In  considering  the merger, consolidation, or other
21    acquisition of control of a Health  Maintenance  Organization
22    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
23             (1)  the  Director  shall give primary consideration
24        to the continuation of  benefits  to  enrollees  and  the
25        financial  conditions  of the acquired Health Maintenance
26        Organization after the merger,  consolidation,  or  other
27        acquisition of control takes effect;
28             (2)(i)  the  criteria specified in subsection (1)(b)
29        of Section 131.8 of the Illinois Insurance Code shall not
30        apply and (ii) the Director, in making his  determination
31        with  respect  to  the  merger,  consolidation,  or other
32        acquisition of control, need not take  into  account  the
33        effect  on  competition  of the merger, consolidation, or
34        other acquisition of control;
 
                            -38-     LRB093 09245 RLC 15282 a
 1             (3)  the Director shall have the  power  to  require
 2        the following information:
 3                  (A)  certification by an independent actuary of
 4             the   adequacy   of   the  reserves  of  the  Health
 5             Maintenance Organization sought to be acquired;
 6                  (B)  pro forma financial statements  reflecting
 7             the combined balance sheets of the acquiring company
 8             and the Health Maintenance Organization sought to be
 9             acquired  as of the end of the preceding year and as
10             of a date 90 days prior to the acquisition, as  well
11             as   pro   forma   financial  statements  reflecting
12             projected combined  operation  for  a  period  of  2
13             years;
14                  (C)  a  pro  forma  business  plan detailing an
15             acquiring  party's  plans  with   respect   to   the
16             operation  of  the  Health  Maintenance Organization
17             sought to be acquired for a period of not less  than
18             3 years; and
19                  (D)  such  other  information  as  the Director
20             shall require.
21        (d)  The provisions of Article VIII 1/2 of  the  Illinois
22    Insurance  Code  and this Section 5-3 shall apply to the sale
23    by any health maintenance organization of greater than 10% of
24    its enrollee population  (including  without  limitation  the
25    health  maintenance organization's right, title, and interest
26    in and to its health care certificates).
27        (e)  In considering any management  contract  or  service
28    agreement  subject to Section 141.1 of the Illinois Insurance
29    Code, the Director (i) shall, in  addition  to  the  criteria
30    specified  in  Section  141.2 of the Illinois Insurance Code,
31    take into account the effect of the  management  contract  or
32    service   agreement   on  the  continuation  of  benefits  to
33    enrollees  and  the  financial  condition   of   the   health
34    maintenance  organization to be managed or serviced, and (ii)
 
                            -39-     LRB093 09245 RLC 15282 a
 1    need not take into  account  the  effect  of  the  management
 2    contract or service agreement on competition.
 3        (f)  Except  for  small employer groups as defined in the
 4    Small Employer Rating, Renewability  and  Portability  Health
 5    Insurance  Act and except for medicare supplement policies as
 6    defined in Section 363 of  the  Illinois  Insurance  Code,  a
 7    Health  Maintenance Organization may by contract agree with a
 8    group or other enrollment unit to effect  refunds  or  charge
 9    additional premiums under the following terms and conditions:
10             (i)  the  amount  of, and other terms and conditions
11        with respect to, the refund or additional premium are set
12        forth in the group or enrollment unit contract agreed  in
13        advance of the period for which a refund is to be paid or
14        additional  premium  is to be charged (which period shall
15        not be less than one year); and
16             (ii)  the amount of the refund or additional premium
17        shall  not  exceed  20%   of   the   Health   Maintenance
18        Organization's profitable or unprofitable experience with
19        respect  to  the  group  or other enrollment unit for the
20        period (and, for  purposes  of  a  refund  or  additional
21        premium,  the profitable or unprofitable experience shall
22        be calculated taking into account a pro rata share of the
23        Health  Maintenance  Organization's  administrative   and
24        marketing  expenses,  but shall not include any refund to
25        be made or additional premium to be paid pursuant to this
26        subsection (f)).  The Health Maintenance Organization and
27        the  group  or  enrollment  unit  may  agree   that   the
28        profitable  or  unprofitable experience may be calculated
29        taking into account the refund period and the immediately
30        preceding 2 plan years.
31        The  Health  Maintenance  Organization  shall  include  a
32    statement in the evidence of coverage issued to each enrollee
33    describing the possibility of a refund or additional premium,
34    and upon request of any group or enrollment unit, provide  to
 
                            -40-     LRB093 09245 RLC 15282 a
 1    the group or enrollment unit a description of the method used
 2    to   calculate  (1)  the  Health  Maintenance  Organization's
 3    profitable experience with respect to the group or enrollment
 4    unit and the resulting refund to the group or enrollment unit
 5    or (2) the  Health  Maintenance  Organization's  unprofitable
 6    experience  with  respect to the group or enrollment unit and
 7    the resulting additional premium to be paid by the  group  or
 8    enrollment unit.
 9        In   no  event  shall  the  Illinois  Health  Maintenance
10    Organization  Guaranty  Association  be  liable  to  pay  any
11    contractual obligation of an insolvent  organization  to  pay
12    any refund authorized under this Section.
13    (Source: P.A.  91-357,  eff.  7-29-99;  91-406,  eff. 1-1-00;
14    91-549, eff. 8-14-99; 91-605,  eff.  12-14-99;  91-788,  eff.
15    6-9-00; 92-764, eff. 1-1-03.)

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

18        (215 ILCS 165/15.5) (from Ch. 32, par. 609.5)
19        Sec. 15.5.  Conversion  Privilege-Group  Type  Contracts.
20    (1)  Every  service  plan  contract  of a health service plan
21    corporation which provides that the continued coverage  of  a
22    beneficiary  is  contingent  upon the continued employment or
23    membership of the  subscriber  with  a  particular  employer,
24    union,  or association shall further provide for the right of
25    said person to make application  for  an  individual  service
26    plan  contract under the circumstances and in accordance with
27    the requirements set  forth  in  Sections  Section  367e  and
28    367e.1  of the "Illinois Insurance Code".  The application of
29    Sections Section 367e and 367e.1 of the  Code  shall  not  be
30    construed  in  such  a  manner as to require a health service
31    plan corporation to furnish a service or kind of benefit  not
32    customarily   provided  by  such  corporation  and  which  is
 
                            -41-     LRB093 09245 RLC 15282 a
 1    inconsistent with the provision of this Act.
 2        (2)  The requirements of this Section shall apply to  all
 3    such  contracts  delivered,  issued  for delivery, renewed or
 4    amended on or after 180 days following the effective date  of
 5    this Section.
 6    (Source: P.A. 82-498.)".