HB6644 93RD GENERAL ASSEMBLY

LRB093 19616 SAS 45357 b

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.

A BILL FOR

AN ACT in relation to insurance.

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

Section 5. The Illinois Insurance Code is amended by changing Section 424 as follows:

(215 ILCS 5/424) (from Ch. 73, par. 1031)

Sec. 424. Unfair methods of competition and unfair or deceptive acts or practices defined. The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:

(1) The commission by any person of any one or more of the acts defined or prohibited by Sections 134, 143.24c, 147, 148, 149, 151, 155.22, 155.22a, 236, 237, 364, and 469 of this Code.

(2) Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance.

(3) Making or permitting, in the case of insurance of the types enumerated in Classes 1, 2, and 3 of Section 4, any unfair discrimination between individuals or risks of the same class or of essentially the same hazard and expense element because of the race, color, religion, or national origin of such insurance risks or applicants. The application of this Article to the types of insurance enumerated in Class 1 of Section 4 shall in no way limit, reduce, or impair the protections and remedies already provided for by Sections 236 and 364 of this Code or any other provision of this Code.

(4) Engaging in any of the acts or practices defined in or prohibited by Sections 154.5 through 154.8 of this Code.

(5) Making or charging any rate for insurance against losses arising from the use or ownership of a motor vehicle which requires a higher premium of any person by reason of his physical handicap, race, color, religion, or national origin.

(6) Issuing a new policy within an individual health insurance market after notice of withdrawal from that market has been given according to item (i) of subparagraph (a) of paragraph (2) of subsection (C) of Section 50 of the Illinois Health Insurance Portability and Accountability Act if that coverage was among the types of coverage for which notice of withdrawal has been given.

(Source: P.A. 92-399, eff. 8-16-01; 92-651, eff. 7-11-02; 92-669, eff. 1-1-03.)

Section 10. The Illinois Health Insurance Portability and Accountability Act is amended by changing Section 50 and adding Section 60 as follows:

(215 ILCS 97/50)

Sec. 50. Guaranteed renewability of individual health insurance coverage.

(A) In general. Except as provided in this Section, a health insurance issuer that provides individual health insurance coverage to an individual shall renew or continue in force such coverage at the option of the individual.

(B) General exceptions. A health insurance issuer may nonrenew or discontinue health insurance coverage of an individual in the individual market based only on one or more of the following:

(1) Nonpayment of premiums. The individual has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the issuer has not received timely premium payments.

(2) Fraud. The individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage.

(3) Termination of plan. The issuer is ceasing to offer coverage in the individual market in accordance with subsection (C) of this Section and applicable Illinois law.

(4) Movement outside the service area. In the case of a health insurance issuer that offers health insurance coverage in the market through a network plan, the individual no longer resides, lives, or works in the service area (or in an area for which the issuer is authorized to do business), but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals.

(5) Association membership ceases. In the case of health insurance coverage that is made available in the individual market only through one or more bona fide associations, the membership of the individual in the association (on the basis of which the coverage is provided) ceases, but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals.

(C) Requirements for uniform termination of coverage.

(1) Particular type of coverage not offered. In any case in which an issuer decides to discontinue offering a particular type of health insurance coverage offered in the individual market, coverage of such type may be discontinued by the issuer only if:

(a) the issuer provides notice to each covered individual provided coverage of this type in such market of such discontinuation at least 90 days prior to the date of the discontinuation of such coverage;

(b) the issuer offers, to each individual in the individual market provided coverage of this type, the option to purchase any other individual health insurance coverage currently being offered by the issuer for individuals in such market; and

(c) in exercising the option to discontinue coverage of that type and in offering the option of coverage under subparagraph (b), the issuer acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for such coverage.

(2) Discontinuance of all coverage.

(a) In general. Subject to subparagraph (c), in any case in which a health insurance issuer elects to discontinue offering all health insurance coverage in the individual market in Illinois, health insurance coverage may be discontinued by the issuer only if:

(i) the issuer provides notice to the Director and to each individual of the discontinuation at least 180 days prior to the date of the expiration of such coverage; and

(ii) all health insurance issued or delivered for issuance in Illinois in such market is discontinued and coverage under such health insurance coverage in such market is not renewed.

(a-5) A health insurance issuer may not discontinue offering health insurance coverage in an individual market in Illinois if another health insurance issuer in the same family of companies continues selling health insurance in that market. Any health insurance issuer that discontinued coverage after January 1, 2001, in such a way as to not comply with this subparagraph (a-5) shall reunderwrite all policyholders affected by that discontinuation under terms and conditions identical to those enjoyed by the affected policyholders immediately prior to their policies' discontinuation. The terms and conditions include, but are not limited to, any fees and deductible amounts. To be reunderwritten under these terms and conditions, affected policyholders must notify the relevant insurance issuer in writing by January 1, 2006, of their desire to be reunderwritten.

(b) Prohibition on market reentry. In the case of a discontinuation under subparagraph (a) in the individual market, the issuer may not provide for the issuance of any health insurance coverage in Illinois involved during the 5-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed.

(D) Exception for uniform modification of coverage. At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a policy form offered to individuals in the individual market so long as the modification is consistent with Illinois law and effective on a uniform basis among all individuals with that policy form. A modification of coverage by a health insurance issuer is not uniform if another health insurance issuer in the same family of companies does not make the same modification of coverage. Any health insurance issuer that modified coverage after January 1, 2001, in such a way as to not comply with this paragraph (D) shall reunderwrite all policyholders affected by that discontinuation under terms and conditions identical to those enjoyed by the affected policyholders immediately prior to their policies' modification. The terms and conditions include, but are not limited to, any fees and deductible amounts. To be reunderwritten under these terms and conditions, affected policyholders must notify the relevant insurance issuer in writing by January 1, 2006.

(E) Application to coverage offered only through associations. In applying this Section in the case of health insurance coverage that is made available by a health insurance issuer in the individual market to individuals only through one or more associations, a reference to an "individual" is deemed to include a reference to such an association (of which the individual is a member).

(F) For the purpose of this Section:

"Family of companies" means a business entity consisting of a parent company and any subidiaries in which the parent company holds a 50% or greater ownership stake.

"Parent company" means a company identified by an employer identification number that holds a 50% or greater ownership stake in one or more other companies.

"Subsidiary" means an insurance issuer licensed to do business in the State of Illinois and in which another company holds a 50% or greater ownership stake.

(Source: P.A. 90-567, eff. 1-23-98.)

(215 ILCS 97/60 new)

Sec. 60. Notice requirement to the Department. In any case where a health insurance issuer elects to uniformly modify coverage, uniformly terminate coverage, or discontinue coverage in a marketplace in accordance with Sections 30 and 50 of this Act, the issuer shall provide notice to the Department prior to notifying the plan sponsors, participants, beneficiaries, and covered individuals. The notice shall be sent by certified mail to the Department 90 days in advance of any notification of the company's actions. The notice shall include: (i) a complete description of the action to be taken, (ii) a specific description of the type of coverage affected, (iii) the total number of covered lives affected, (iv) a sample draft of all letters being sent to the plan sponsors and participants, beneficiaries, or covered individuals, (v) time frames for the actions being taken, (vi) options the plans sponsors, participants, beneficiaries, or covered individuals may have available to them under the federal Health Insurance Portability and Accountability Act, and (vii) any other information as required by the Department.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.