093_HB3162eng HB3162 Engrossed LRB093 08537 LRD 11985 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 9 hereby defined as unfair methods of competition and unfair 10 and deceptive acts or practices in the business of insurance: 11 (1) The commission by any person of any one or more of 12 the acts defined or prohibited by Sections 134, 143.24c, 147, 13 148, 149, 151, 155.22, 155.22a, 236, 237, 364, and 469 of 14 this Code. 15 (2) Entering into any agreement to commit, or by any 16 concerted action committing, any act of boycott, coercion or 17 intimidation resulting in or tending to result in 18 unreasonable restraint of, or monopoly in, the business of 19 insurance. 20 (3) Making or permitting, in the case of insurance of 21 the types enumerated in Classes 1, 2, and 3 of Section 4, any 22 unfair discrimination between individuals or risks of the 23 same class or of essentially the same hazard and expense 24 element because of the race, color, religion, or national 25 origin of such insurance risks or applicants. The 26 application of this Article to the types of insurance 27 enumerated in Class 1 of Section 4 shall in no way limit, 28 reduce, or impair the protections and remedies already 29 provided for by Sections 236 and 364 of this Code or any 30 other provision of this Code. 31 (4) Engaging in any of the acts or practices defined in HB3162 Engrossed -2- LRB093 08537 LRD 11985 b 1 or prohibited by Sections 154.5 through 154.8 of this Code. 2 (5) Making or charging any rate for insurance against 3 losses arising from the use or ownership of a motor vehicle 4 which requires a higher premium of any person by reason of 5 his physical handicap, race, color, religion, or national 6 origin. 7 (6) Issuing a new policy within an individual health 8 insurance market after notice of withdrawal from that market 9 has been given according to item (i) of subparagraph (a) of 10 paragraph (2) of subsection (C) of Section 50 of the Illinois 11 Health Insurance Portability and Accountability Act if that 12 coverage was among the types of coverage for which notice of 13 withdrawal has been given. 14 (Source: P.A. 92-399, eff. 8-16-01; 92-651, eff. 7-11-02; 15 92-669, eff. 1-1-03.) 16 Section 10. The Illinois Health Insurance Portability 17 and Accountability Act is amended by changing Section 50 and 18 adding Section 60 as follows: 19 (215 ILCS 97/50) 20 Sec. 50. Guaranteed renewability of individual health 21 insurance coverage. 22 (A) In general. Except as provided in this Section, a 23 health insurance issuer that provides individual health 24 insurance coverage to an individual shall renew or continue 25 in force such coverage at the option of the individual. 26 (B) General exceptions. A health insurance issuer may 27 nonrenew or discontinue health insurance coverage of an 28 individual in the individual market based only on one or more 29 of the following: 30 (1) Nonpayment of premiums. The individual has 31 failed to pay premiums or contributions in accordance 32 with the terms of the health insurance coverage or the HB3162 Engrossed -3- LRB093 08537 LRD 11985 b 1 issuer has not received timely premium payments. 2 (2) Fraud. The individual has performed an act or 3 practice that constitutes fraud or made an intentional 4 misrepresentation of material fact under the terms of the 5 coverage. 6 (3) Termination of plan. The issuer is ceasing to 7 offer coverage in the individual market in accordance 8 with subsection (C) of this Section and applicable 9 Illinois law. 10 (4) Movement outside the service area. In the case 11 of a health insurance issuer that offers health insurance 12 coverage in the market through a network plan, the 13 individual no longer resides, lives, or works in the 14 service area (or in an area for which the issuer is 15 authorized to do business), but only if such coverage is 16 terminated under this paragraph uniformly without regard 17 to any health status-related factor of covered 18 individuals. 19 (5) Association membership ceases. In the case of 20 health insurance coverage that is made available in the 21 individual market only through one or more bona fide 22 associations, the membership of the individual in the 23 association (on the basis of which the coverage is 24 provided) ceases, but only if such coverage is terminated 25 under this paragraph uniformly without regard to any 26 health status-related factor of covered individuals. 27 (C) Requirements for uniform termination of coverage. 28 (1) Particular type of coverage not offered. In 29 any case in which an issuer decides to discontinue 30 offering a particular type of health insurance coverage 31 offered in the individual market, coverage of such type 32 may be discontinued by the issuer only if: 33 (a) the issuer provides notice to each covered 34 individual provided coverage of this type in such HB3162 Engrossed -4- LRB093 08537 LRD 11985 b 1 market of such discontinuation at least 90 days 2 prior to the date of the discontinuation of such 3 coverage; 4 (b) the issuer offers, to each individual in 5 the individual market provided coverage of this 6 type, the option to purchase any other individual 7 health insurance coverage currently being offered by 8 the issuer for individuals in such market; and 9 (c) in exercising the option to discontinue 10 coverage of that type and in offering the option of 11 coverage under subparagraph (b), the issuer acts 12 uniformly without regard to any health 13 status-related factor of enrolled individuals or 14 individuals who may become eligible for such 15 coverage. 16 (2) Discontinuance of all coverage. 17 (a) In general. Subject to subparagraph (c), 18 in any case in which a health insurance issuer 19 elects to discontinue offering all health insurance 20 coverage in the individual market in Illinois, 21 health insurance coverage may be discontinued by the 22 issuer only if: 23 (i) the issuer provides notice to the 24 Director and to each individual of the 25 discontinuation at least 180 days prior to the 26 date of the expiration of such coverage; and 27 (ii) all health insurance issued or 28 delivered for issuance in Illinois in such 29 market is discontinued and coverage under such 30 health insurance coverage in such market is not 31 renewed. 32 (a-5) A health insurance issuer may not 33 discontinue offering health insurance coverage in an 34 individual market in Illinois if another health HB3162 Engrossed -5- LRB093 08537 LRD 11985 b 1 insurance issuer in the same family of companies 2 continues selling health insurance in that market. 3 Any health insurance issuer that discontinued 4 coverage after January 1, 2001, in such a way as to 5 not comply with this subparagraph (a-5) shall 6 reunderwrite all policyholders affected by that 7 discontinuation under terms and conditions identical 8 to those enjoyed by the affected policyholders 9 immediately prior to their policies' 10 discontinuation. The terms and conditions include, 11 but are not limited to, any fees and deductible 12 amounts. To be reunderwritten under these terms and 13 conditions, affected policyholders must notify the 14 relevant insurance issuer in writing by January 1, 15 2005, of their desire to be reunderwritten. 16 (b) Prohibition on market reentry. In the 17 case of a discontinuation under subparagraph (a) in 18 the individual market, the issuer may not provide 19 for the issuance of any health insurance coverage in 20 Illinois involved during the 5-year period beginning 21 on the date of the discontinuation of the last 22 health insurance coverage not so renewed. 23 (D) Exception for uniform modification of coverage. At 24 the time of coverage renewal, a health insurance issuer may 25 modify the health insurance coverage for a policy form 26 offered to individuals in the individual market so long as 27 the modification is consistent with Illinois law and 28 effective on a uniform basis among all individuals with that 29 policy form. A modification of coverage by a health 30 insurance issuer is not uniform if another health insurance 31 issuer in the same family of companies does not make the same 32 modification of coverage. Any health insurance issuer that 33 modified coverage after January 1, 2001, in such a way as to 34 not comply with this paragraph (D) shall reunderwrite all HB3162 Engrossed -6- LRB093 08537 LRD 11985 b 1 policyholders affected by that discontinuation under terms 2 and conditions identical to those enjoyed by the affected 3 policyholders immediately prior to their policies' 4 modification. The terms and conditions include, but are not 5 limited to, any fees and deductible amounts. To be 6 reunderwritten under these terms and conditions, affected 7 policyholders must notify the relevant insurance issuer in 8 writing by January 1, 2005. 9 (E) Application to coverage offered only through 10 associations. In applying this Section in the case of health 11 insurance coverage that is made available by a health 12 insurance issuer in the individual market to individuals only 13 through one or more associations, a reference to an 14 "individual" is deemed to include a reference to such an 15 association (of which the individual is a member). 16 (F) For the purpose of this Section: 17 "Family of companies" means a business entity consisting 18 of a parent company and any subidiaries in which the parent 19 company holds a 50% or greater ownership stake. 20 "Parent company" means a company identified by an 21 employer identification number that holds a 50% or greater 22 ownership stake in one or more other companies. 23 "Subsidiary" means an insurance issuer licensed to do 24 business in the State of Illinois and in which another 25 company holds a 50% or greater ownership stake. 26 (Source: P.A. 90-567, eff. 1-23-98.) 27 (215 ILCS 97/60 new) 28 Sec. 60. Notice requirement to the Department. In any 29 case where a health insurance issuer elects to uniformly 30 modify coverage, uniformly terminate coverage, or discontinue 31 coverage in a marketplace in accordance with Sections 30 and 32 50 of this Act, the issuer shall provide notice to the 33 Department prior to notifying the plan sponsors, HB3162 Engrossed -7- LRB093 08537 LRD 11985 b 1 participants, beneficiaries, and covered individuals. The 2 notice shall be sent by certified mail to the Department 90 3 days in advance of any notification of the company's actions. 4 The notice shall include: (i) a complete description of the 5 action to be taken, (ii) a specific description of the type 6 of coverage affected, (iii) the total number of covered lives 7 affected, (iv) a sample draft of all letters being sent to 8 the plan sponsors and participants, beneficiaries, or covered 9 individuals, (v) time frames for the actions being taken, 10 (vi) options the plans sponsors, participants, beneficiaries, 11 or covered individuals may have available to them under the 12 federal Health Insurance Portability and Accountability Act, 13 and (vii) any other information as required by the 14 Department. 15 Section 95. Severability. The provisions of this Act are 16 severable under Section 1.31 of the Statute on Statutes.