93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB6644

 

Introduced 02/09/04, by Jay C. Hoffman

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/424   from Ch. 73, par. 1031
215 ILCS 97/50
215 ILCS 97/60 new

    Amends the Insurance Code. Provides that it is an unfair or deceptive practice to issue a new policy within an individual health insurance market after notice of withdrawal from that market has been given if that coverage was among the types of coverage for which notice of withdrawal was given. Amends the Illinois Health Insurance Portability and Accountability Act. Provides that a health insurance issuer may not discontinue coverage in an individual market in Illinois if a parent health insurance issuer that owns that health insurance issuer in whole or in part or a subsidiary health insurance issuer that is owned in whole or in part by that health insurance issuer continues selling health insurance in that market. Provides that a modification of coverage by a health insurance issuer is not uniform if a parent health insurance issuer that owns that health insurance issuer in whole or in part or a subsidiary health insurance issuer that is owned in whole or in part by that health insurance issuer does not make the same modification of coverage. Provides that if a health insurance issuer elects to uniformly modify coverage, uniformly terminate coverage, or discontinue coverage in a marketplace, the issuer shall provide notice to the Department of Insurance prior to notifying the plan sponsors, participants, beneficiaries, and covered individuals. Specifies information that shall be included in the notice. Adds a severability clause.


LRB093 19616 SAS 45357 b

 

 

A BILL FOR

 

HB6644 LRB093 19616 SAS 45357 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 5. The Illinois Insurance Code is amended by
5 changing Section 424 as follows:
 
6     (215 ILCS 5/424)  (from Ch. 73, par. 1031)
7     Sec. 424. Unfair methods of competition and unfair or
8 deceptive acts or practices defined. The following are hereby
9 defined as unfair methods of competition and unfair and
10 deceptive acts or practices in the business of insurance:
11     (1) The commission by any person of any one or more of the
12 acts defined or prohibited by Sections 134, 143.24c, 147, 148,
13 149, 151, 155.22, 155.22a, 236, 237, 364, and 469 of this Code.
14     (2) Entering into any agreement to commit, or by any
15 concerted action committing, any act of boycott, coercion or
16 intimidation resulting in or tending to result in unreasonable
17 restraint of, or monopoly in, the business of insurance.
18     (3) Making or permitting, in the case of insurance of the
19 types enumerated in Classes 1, 2, and 3 of Section 4, any
20 unfair discrimination between individuals or risks of the same
21 class or of essentially the same hazard and expense element
22 because of the race, color, religion, or national origin of
23 such insurance risks or applicants. The application of this
24 Article to the types of insurance enumerated in Class 1 of
25 Section 4 shall in no way limit, reduce, or impair the
26 protections and remedies already provided for by Sections 236
27 and 364 of this Code or any other provision of this Code.
28     (4) Engaging in any of the acts or practices defined in or
29 prohibited by Sections 154.5 through 154.8 of this Code.
30     (5) Making or charging any rate for insurance against
31 losses arising from the use or ownership of a motor vehicle
32 which requires a higher premium of any person by reason of his

 

 

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1 physical handicap, race, color, religion, or national origin.
2     (6) Issuing a new policy within an individual health
3 insurance market after notice of withdrawal from that market
4 has been given according to item (i) of subparagraph (a) of
5 paragraph (2) of subsection (C) of Section 50 of the Illinois
6 Health Insurance Portability and Accountability Act if that
7 coverage was among the types of coverage for which notice of
8 withdrawal has been given.
9 (Source: P.A. 92-399, eff. 8-16-01; 92-651, eff. 7-11-02;
10 92-669, eff. 1-1-03.)
 
11     Section 10. The Illinois Health Insurance Portability and
12 Accountability Act is amended by changing Section 50 and adding
13 Section 60 as follows:
 
14     (215 ILCS 97/50)
15     Sec. 50. Guaranteed renewability of individual health
16 insurance coverage.
17     (A) In general. Except as provided in this Section, a
18 health insurance issuer that provides individual health
19 insurance coverage to an individual shall renew or continue in
20 force such coverage at the option of the individual.
21     (B) General exceptions. A health insurance issuer may
22 nonrenew or discontinue health insurance coverage of an
23 individual in the individual market based only on one or more
24 of the following:
25         (1) Nonpayment of premiums. The individual has failed
26     to pay premiums or contributions in accordance with the
27     terms of the health insurance coverage or the issuer has
28     not received timely premium payments.
29         (2) Fraud. The individual has performed an act or
30     practice that constitutes fraud or made an intentional
31     misrepresentation of material fact under the terms of the
32     coverage.
33         (3) Termination of plan. The issuer is ceasing to offer
34     coverage in the individual market in accordance with

 

 

HB6644 - 3 - LRB093 19616 SAS 45357 b

1     subsection (C) of this Section and applicable Illinois law.
2         (4) Movement outside the service area. In the case of a
3     health insurance issuer that offers health insurance
4     coverage in the market through a network plan, the
5     individual no longer resides, lives, or works in the
6     service area (or in an area for which the issuer is
7     authorized to do business), but only if such coverage is
8     terminated under this paragraph uniformly without regard
9     to any health status-related factor of covered
10     individuals.
11         (5) Association membership ceases. In the case of
12     health insurance coverage that is made available in the
13     individual market only through one or more bona fide
14     associations, the membership of the individual in the
15     association (on the basis of which the coverage is
16     provided) ceases, but only if such coverage is terminated
17     under this paragraph uniformly without regard to any health
18     status-related factor of covered individuals.
19     (C) Requirements for uniform termination of coverage.
20         (1) Particular type of coverage not offered. In any
21     case in which an issuer decides to discontinue offering a
22     particular type of health insurance coverage offered in the
23     individual market, coverage of such type may be
24     discontinued by the issuer only if:
25             (a) the issuer provides notice to each covered
26         individual provided coverage of this type in such
27         market of such discontinuation at least 90 days prior
28         to the date of the discontinuation of such coverage;
29             (b) the issuer offers, to each individual in the
30         individual market provided coverage of this type, the
31         option to purchase any other individual health
32         insurance coverage currently being offered by the
33         issuer for individuals in such market; and
34             (c) in exercising the option to discontinue
35         coverage of that type and in offering the option of
36         coverage under subparagraph (b), the issuer acts

 

 

HB6644 - 4 - LRB093 19616 SAS 45357 b

1         uniformly without regard to any health status-related
2         factor of enrolled individuals or individuals who may
3         become eligible for such coverage.
4         (2) Discontinuance of all coverage.
5             (a) In general. Subject to subparagraph (c), in any
6         case in which a health insurance issuer elects to
7         discontinue offering all health insurance coverage in
8         the individual market in Illinois, health insurance
9         coverage may be discontinued by the issuer only if:
10                 (i) the issuer provides notice to the Director
11             and to each individual of the discontinuation at
12             least 180 days prior to the date of the expiration
13             of such coverage; and
14                 (ii) all health insurance issued or delivered
15             for issuance in Illinois in such market is
16             discontinued and coverage under such health
17             insurance coverage in such market is not renewed.
18             (a-5) A health insurance issuer may not
19         discontinue offering health insurance coverage in an
20         individual market in Illinois if another health
21         insurance issuer in the same family of companies
22         continues selling health insurance in that market. Any
23         health insurance issuer that discontinued coverage
24         after January 1, 2001, in such a way as to not comply
25         with this subparagraph (a-5) shall reunderwrite all
26         policyholders affected by that discontinuation under
27         terms and conditions identical to those enjoyed by the
28         affected policyholders immediately prior to their
29         policies' discontinuation. The terms and conditions
30         include, but are not limited to, any fees and
31         deductible amounts. To be reunderwritten under these
32         terms and conditions, affected policyholders must
33         notify the relevant insurance issuer in writing by
34         January 1, 2006, of their desire to be reunderwritten.
35             (b) Prohibition on market reentry. In the case of a
36         discontinuation under subparagraph (a) in the

 

 

HB6644 - 5 - LRB093 19616 SAS 45357 b

1         individual market, the issuer may not provide for the
2         issuance of any health insurance coverage in Illinois
3         involved during the 5-year period beginning on the date
4         of the discontinuation of the last health insurance
5         coverage not so renewed.
6     (D) Exception for uniform modification of coverage. At the
7 time of coverage renewal, a health insurance issuer may modify
8 the health insurance coverage for a policy form offered to
9 individuals in the individual market so long as the
10 modification is consistent with Illinois law and effective on a
11 uniform basis among all individuals with that policy form. A
12 modification of coverage by a health insurance issuer is not
13 uniform if another health insurance issuer in the same family
14 of companies does not make the same modification of coverage.
15 Any health insurance issuer that modified coverage after
16 January 1, 2001, in such a way as to not comply with this
17 paragraph (D) shall reunderwrite all policyholders affected by
18 that discontinuation under terms and conditions identical to
19 those enjoyed by the affected policyholders immediately prior
20 to their policies' modification. The terms and conditions
21 include, but are not limited to, any fees and deductible
22 amounts. To be reunderwritten under these terms and conditions,
23 affected policyholders must notify the relevant insurance
24 issuer in writing by January 1, 2006.
25     (E) Application to coverage offered only through
26 associations. In applying this Section in the case of health
27 insurance coverage that is made available by a health insurance
28 issuer in the individual market to individuals only through one
29 or more associations, a reference to an "individual" is deemed
30 to include a reference to such an association (of which the
31 individual is a member).
32     (F) For the purpose of this Section:
33     "Family of companies" means a business entity consisting of
34 a parent company and any subidiaries in which the parent
35 company holds a 50% or greater ownership stake.
36     "Parent company" means a company identified by an employer

 

 

HB6644 - 6 - LRB093 19616 SAS 45357 b

1 identification number that holds a 50% or greater ownership
2 stake in one or more other companies.
3     "Subsidiary" means an insurance issuer licensed to do
4 business in the State of Illinois and in which another company
5 holds a 50% or greater ownership stake.
6 (Source: P.A. 90-567, eff. 1-23-98.)
 
7     (215 ILCS 97/60 new)
8     Sec. 60. Notice requirement to the Department. In any case
9 where a health insurance issuer elects to uniformly modify
10 coverage, uniformly terminate coverage, or discontinue
11 coverage in a marketplace in accordance with Sections 30 and 50
12 of this Act, the issuer shall provide notice to the Department
13 prior to notifying the plan sponsors, participants,
14 beneficiaries, and covered individuals. The notice shall be
15 sent by certified mail to the Department 90 days in advance of
16 any notification of the company's actions. The notice shall
17 include: (i) a complete description of the action to be taken,
18 (ii) a specific description of the type of coverage affected,
19 (iii) the total number of covered lives affected, (iv) a sample
20 draft of all letters being sent to the plan sponsors and
21 participants, beneficiaries, or covered individuals, (v) time
22 frames for the actions being taken, (vi) options the plans
23 sponsors, participants, beneficiaries, or covered individuals
24 may have available to them under the federal Health Insurance
25 Portability and Accountability Act, and (vii) any other
26 information as required by the Department.
 
27     Section 97. Severability. The provisions of this Act are
28 severable under Section 1.31 of the Statute on Statutes.