HB3976ham001 97TH GENERAL ASSEMBLY

Rep. Karen May

Filed: 2/23/2012

09700HB3976ham001 LRB097 16441 RPM 66509 a

AMENDMENT TO HOUSE BILL 3976

AMENDMENT NO. ______. Amend House Bill 3976 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Insurance Code is amended by adding Section 44.1 as follows:

(215 ILCS 5/44.1 new)

Sec. 44.1. Health insurance cooperatives.

(a) In addition to all other provisions of this Article not in conflict with this Section, an entity seeking to organize under this Article as a health insurance cooperative shall meet all of the following requirements:

(1) The entity shall comply with all provisions applicable to domestic mutual insurance companies under this Code.

(2) The articles of incorporation of the entity shall demonstrate that the entity is to be organized as a nonprofit member corporation and that the governance of the entity shall be subject to a majority vote of all members.

(3) The activities of the entity shall include, but not be limited to, the issuance of health care plans in the individual and small group markets.

(4) Either the articles of incorporation or the bylaws of the entity shall incorporate ethics and conflict of interest standards and the governance requirements set forth in Section 1322(c)(3)(C) of the federal Patient Protection and Affordable Care Act.

(5) The entity or a related entity or any predecessor of either shall not have been a health insurance issuer on July 16, 2009.

(6) The entity shall not be sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.

(7) Surplus shall be used to lower premiums, to improve benefits, or for other programs intended to improve the quality of health care delivered to its members.

(8) No representative of a federal, State, or local government, or any political instrumentality thereof, and no representative of an entity described in paragraph (5) of subsection (a) of this Section may serve on the board of directors of the cooperative.

(b) Notwithstanding Section 37 of this Article, the corporate name of any organization seeking to organize under this Article as a health insurance cooperative need not contain the word "Mutual" but shall contain the phrase "Health Insurance Cooperative". The corporate name shall not be the same as, or deceptively similar to, the name of any domestic organization or of any foreign or alien organization authorized to transact business in this State.

(c) An entity seeking to be organized as a health insurance cooperative shall submit an application to the Director according to procedures and meeting such requirements as the Director shall adopt by rule. No entity shall transact any business of insurance until it has received a certificate of authority as set forth in Section 51 of this Article.

(d) The Department may adopt rules for the administration of the provisions of this Section.

Section 10. The Co-operative Act is amended by changing Section 22 and by adding Section 30 as follows:

(805 ILCS 310/22) (from Ch. 32, par. 326)

Sec. 22. No corporation or association hereafter organized or doing business for profit in this State shall be entitled to use the term "Co-operative" as a part of its corporate or other business name or title unless it has complied with the provisions of this Act, except (1) a corporation organized under the Business Corporation Act of 1983 for the purpose of ownership or administration of residential property on a cooperative basis, or (2) a cooperative corporation organized under the General Not For Profit Corporation Act of 1986 or its predecessor or successor statutes, or (3) a domestic mutual insurance company licensed as a health insurance cooperative by the Director of Insurance under Article III of the Illinois Insurance Code. Any corporation or association violating the provision of this Section may be enjoined from doing business under such name at the instance of any shareholder of any association or corporation organized under this Act.

(Source: P.A. 95-368, eff. 8-23-07.)

(805 ILCS 310/30 new)

Sec. 30. Health insurance cooperative.

(a) Notwithstanding any other provisions of this Act, health insurance cooperatives may be organized under this Section by one or more persons.

(b) The purpose of a health insurance cooperative is to provide health care benefits for the individuals specified in subsection (h) of this Section as a risk-bearing entity.

(c) A health insurance cooperative shall be designed so that all of the following are accomplished:

(1) The members become better informed about health care trends and cost increases.

(2) All members receive their health care benefits under the group health care policy or plan negotiated under subsection (h) of this Section.

(3) The members are actively engaged in designing health care benefit options that are offered by the insurer and that meet the needs of their community.

(4) The health insurance risk of all of the members is pooled.

(5) The members actively participate in health improvement decisions for their community.

(d) The articles of a health insurance cooperative shall set forth the name and address of at least one incorporator who will act as the temporary board.

(e) Each health insurance cooperative shall be organized on a membership basis with no capital stock.

(f) Any person that does business in, is located in, has a principal office in, or resides in the geographic area in which a health insurance cooperative is organized, that meets the membership criteria established by the health insurance cooperative in its bylaws, and that pays the membership fee may be a member of the health insurance cooperative.

(g) Each health insurance cooperative shall file its membership criteria, as well as any amendments to the criteria, with the Director.

(h) Eligible members of the health insurance cooperative include:

(1) An individual who is a member, officer, or eligible employee of a company or organization with 100 or fewer employees.

(2) A self-employed individual.

(3) A dependent of an individual under items (1) and (2) of this subsection (h) who receives coverage.

(i) Each health insurance cooperative shall submit to the Director annually, no later than September 30, a report on the health insurance cooperative described in this Section.

(j) The membership contract between the health insurance cooperative and the member shall be for a term of 3 years. Upon membership enrollment in the health insurance cooperative, each member shall pay to the health insurance cooperative a membership fee of at least $250. If a member withdraws from the health insurance cooperative before the end of the contract term, the member shall not be eligible to rejoin the health insurance cooperative for a period of at least one year, and the health insurance cooperative may retain, as a penalty, the membership fee.

(k) As used in this Section, "Director" means the Director of Insurance.

Section 99. Effective date. This Act takes effect upon becoming law.".