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90_SB0659ccr001
LRB9000419JSdvccr5
1 90TH GENERAL ASSEMBLY
2 CONFERENCE COMMITTEE REPORT
3 ON SENATE BILL 659
4 -------------------------------------------------------------
5 -------------------------------------------------------------
6 To the President of the Senate and the Speaker of the
7 House of Representatives:
8 We, the conference committee appointed to consider the
9 differences between the houses in relation to House Amendment
10 No. 1 to Senate Bill 659, recommend the following:
11 (1) that the House of Representatives recede from House
12 Amendment No. 1; and
13 (2) that Senate bill 659 be amended by replacing the
14 title with the following:
15 "AN ACT concerning insurance company privilege taxes,
16 amending named Acts."; and
17 by replacing everything after the enacting clause with the
18 following:
19 "Section 5. The Illinois Insurance Code is amended by
20 changing Sections 408, 409, 444, 444.1, and 531.13 as
21 follows:
22 (215 ILCS 5/408) (from Ch. 73, par. 1020)
23 Sec. 408. Fees and charges.
24 (1) The Director shall charge, collect and give proper
25 acquittances for the payment of the following fees and
26 charges:
27 (a) For filing all documents submitted for the
28 incorporation or organization or certification of a
29 domestic company, except for a fraternal benefit society,
30 $1,000.
31 (b) For filing all documents submitted for the
32 incorporation or organization of a fraternal benefit
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1 society, $250.
2 (c) For filing amendments to articles of
3 incorporation and amendments to declaration of
4 organization, except for a fraternal benefit society, a
5 mutual benefit association, a burial society or a farm
6 mutual, $100.
7 (d) For filing amendments to articles of
8 incorporation of a fraternal benefit society, a mutual
9 benefit association or a burial society, $50.
10 (e) For filing amendments to articles of
11 incorporation of a farm mutual, $25.
12 (f) For filing bylaws or amendments thereto, $25.
13 (g) For filing agreement of merger or
14 consolidation:
15 (i) for a domestic company, except for a
16 fraternal benefit society, a mutual benefit
17 association, a burial society, or a farm mutual,
18 $1,000.
19 (ii) for a foreign or alien company, except
20 for a fraternal benefit society, $300.
21 (iii) for a fraternal benefit society, a
22 mutual benefit association, a burial society, or a
23 farm mutual, $100.
24 (h) For filing agreements of reinsurance by a
25 domestic company, $100.
26 (i) For filing all documents submitted by a foreign
27 or alien company to be admitted to transact business or
28 accredited as a reinsurer in this State, except for a
29 fraternal benefit society, $2,500.
30 (j) For filing all documents submitted by a foreign
31 or alien fraternal benefit society to be admitted to
32 transact business in this State, $250.
33 (k) For filing declaration of withdrawal of a
34 foreign or alien company, $25.
35 (l) For filing annual statement, except a fraternal
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1 benefit society, a mutual benefit association, a burial
2 society, or a farm mutual, $100.
3 (m) For filing annual statement by a fraternal
4 benefit society, $50.
5 (n) For filing annual statement by a farm mutual, a
6 mutual benefit association, or a burial society, $25.
7 (o) For issuing a certificate of authority or
8 renewal thereof except to a fraternal benefit society,
9 $100.
10 (p) For issuing a certificate of authority or
11 renewal thereof to a fraternal benefit society, $50.
12 (q) For issuing an amended certificate of
13 authority, $25.
14 (r) For each certified copy of certificate of
15 authority, $10.
16 (s) For each certificate of deposit, or valuation,
17 or compliance or surety certificate, $10.
18 (t) For copies of papers or records per page, $1.
19 (u) For each certification to copies of papers or
20 records, $10.
21 (v) For multiple copies of documents or
22 certificates listed in subparagraphs (r), (s), and (u) of
23 paragraph (1) of this Section, $10 for the first copy of
24 a certificate of any type and $5 for each additional copy
25 of the same certificate requested at the same time,
26 unless, pursuant to paragraph (2) of this Section, the
27 Director finds these additional fees excessive.
28 (w) For issuing a permit to sell shares or increase
29 paid-up capital:
30 (i) in connection with a public stock
31 offering, $150;
32 (ii) in any other case, $50.
33 (x) For issuing any other certificate required or
34 permissible under the law, $25.
35 (y) For filing a plan of exchange of the stock of a
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1 domestic stock insurance company, a plan of
2 demutualization of a domestic mutual company, or a plan
3 of reorganization under Article XII, $1,000.
4 (z) For filing a statement of acquisition of a
5 domestic company as defined in Section 131.4 of this
6 Code, $1,000.
7 (aa) For filing an agreement to purchase the
8 business of an organization authorized under the Dental
9 Service Plan Act or the Voluntary Health Services Plans
10 Act or of a health maintenance organization or a limited
11 health service organization, $1,000.
12 (bb) For filing a statement of acquisition of a
13 foreign or alien insurance company as defined in Section
14 131.12a of this Code, $500.
15 (cc) For filing a registration statement as
16 required in Sections 131.13 and 131.14, the notification
17 as required by Sections 131.16, 131.20a, or 141.4, or an
18 agreement or transaction required by Sections 124.2(2),
19 141, 141a, or 141.1, $100.
20 (dd) For filing an application for licensing of:
21 (i) a religious or charitable risk pooling
22 trust or a workers' compensation pool, $500;
23 (ii) a workers' compensation service company,
24 $250;
25 (iii) a self-insured automobile fleet, $100;
26 or
27 (iv) a renewal of or amendment of any license
28 issued pursuant to (i), (ii), or (iii) above, $50.
29 (ee) For filing articles of incorporation for a
30 syndicate to engage in the business of insurance through
31 the Illinois Insurance Exchange, $1,000.
32 (ff) For filing amended articles of incorporation
33 for a syndicate engaged in the business of insurance
34 through the Illinois Insurance Exchange, $50.
35 (gg) For filing articles of incorporation for a
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1 limited syndicate to join with other subscribers or
2 limited syndicates to do business through the Illinois
3 Insurance Exchange, $500.
4 (hh) For filing amended articles of incorporation
5 for a limited syndicate to do business through the
6 Illinois Insurance Exchange, $50.
7 (ii) For a permit to solicit subscriptions to a
8 syndicate or limited syndicate, $50.
9 (jj) For the filing of each form as required in
10 Section 143 of this Code, $25 per form. The fee for
11 advisory and rating organizations shall be $100 per form.
12 (i) For the purposes of the form filing fee,
13 filings made on insert page basis will be considered
14 one form at the time of its original submission.
15 Changes made to a form subsequent to its approval
16 shall be considered a new filing.
17 (ii) Only one fee shall be charged for a form,
18 regardless of the number of other forms or policies
19 with which it will be used.
20 (iii) Fees charged for a policy filed as it
21 will be issued regardless of the number of forms
22 comprising that policy shall not exceed $500 or
23 $1000 for advisory or rating organizations.
24 (iv) The Director may by rule exempt forms
25 from such fees.
26 (kk) For filing an application for licensing of a
27 reinsurance intermediary, $250.
28 (ll) For filing an application for renewal of a
29 license of a reinsurance intermediary, $100.
30 (2) When printed copies or numerous copies of the same
31 paper or records are furnished or certified, the Director may
32 reduce such fees for copies if he finds them excessive. He
33 may, when he considers it in the public interest, furnish
34 without charge to state insurance departments and persons
35 other than companies, copies or certified copies of reports
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1 of examinations and of other papers and records.
2 (3) The expenses incurred in any performance examination
3 authorized by law shall be paid by the company or person
4 being examined. The charge shall be reasonably related to the
5 cost of the examination including but not limited to
6 compensation of examiners, electronic data processing costs,
7 supervision and preparation of an examination report and
8 lodging and travel expenses. All lodging and travel expenses
9 shall be in accord with the applicable travel regulations as
10 published by the Department of Central Management Services
11 and approved by the Governor's Travel Control Board, except
12 that out-of-state lodging and travel expenses related to
13 examinations authorized under Section 132 shall be in
14 accordance with travel rates prescribed under paragraph
15 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
16 for reimbursement of subsistence expenses incurred during
17 official travel. All lodging and travel expenses may be
18 reimbursed directly upon authorization of the Director. With
19 the exception of the direct reimbursements authorized by the
20 Director, all performance examination charges collected by
21 the Department shall be paid to the Insurance Producers
22 Administration Fund, however, the electronic data processing
23 costs incurred by the Department in the performance of any
24 examination shall be billed directly to the company being
25 examined for payment to the Statistical Services Revolving
26 Fund.
27 (4) At the time of any service of process on the
28 Director as attorney for such service, the Director shall
29 charge and collect the sum of $10.00, which may be recovered
30 as taxable costs by the party to the suit or action causing
31 such service to be made if he prevails in such suit or
32 action.
33 (5) (a) The costs incurred by the Department of
34 Insurance in conducting any hearing authorized by law shall
35 be assessed against the parties to the hearing in such
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1 proportion as the Director of Insurance may determine upon
2 consideration of all relevant circumstances including: (1)
3 the nature of the hearing; (2) whether the hearing was
4 instigated by, or for the benefit of a particular party or
5 parties; (3) whether there is a successful party on the
6 merits of the proceeding; and (4) the relative levels of
7 participation by the parties.
8 (b) For purposes of this subsection (5) costs incurred
9 shall mean the hearing officer fees, court reporter fees, and
10 travel expenses of Department of Insurance officers and
11 employees; provided however, that costs incurred shall not
12 include hearing officer fees or court reporter fees unless
13 the Department has retained the services of independent
14 contractors or outside experts to perform such functions.
15 (c) The Director shall make the assessment of costs
16 incurred as part of the final order or decision arising out
17 of the proceeding; provided, however, that such order or
18 decision shall include findings and conclusions in support of
19 the assessment of costs. This subsection (5) shall not be
20 construed as permitting the payment of travel expenses unless
21 calculated in accordance with the applicable travel
22 regulations of the Department of Central Management Services,
23 as approved by the Governor's Travel Control Board. The
24 Director as part of such order or decision shall require all
25 assessments for hearing officer fees and court reporter fees,
26 if any, to be paid directly to the hearing officer or court
27 reporter by the party(s) assessed for such costs. The
28 assessments for travel expenses of Department officers and
29 employees shall be reimbursable to the Director of Insurance
30 for deposit to the fund out of which those expenses had been
31 paid.
32 (d) The provisions of this subsection (5) shall apply in
33 the case of any hearing conducted by the Director of
34 Insurance not otherwise specifically provided for by law.
35 (6) The Director shall charge and collect an annual
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1 financial regulation fee from every domestic company for
2 examination and analysis of its financial condition and to
3 fund the internal costs and expenses of the Interstate
4 Insurance Receivership Commission as may be allocated to the
5 State of Illinois and companies doing an insurance business
6 in this State pursuant to Article X of the Interstate
7 Insurance Receivership Compact. The fee shall be the greater
8 fixed amount based upon the combination of nationwide direct
9 premium income and nationwide reinsurance assumed premium
10 income or upon admitted assets calculated under this
11 subsection as follows:
12 (a) Combination of nationwide direct premium income
13 and nationwide reinsurance assumed premium.
14 (i) $100, if the premium is less than $500,000
15 and there is no reinsurance assumed premium;
16 (ii) $500, if the premium is $500,000 or more,
17 but less than $5,000,000 and there is no reinsurance
18 assumed premium; or if the premium is less than
19 $5,000,000 and the reinsurance assumed premium is
20 less than $10,000,000;
21 (iii) $2,500, if the premium is less than
22 $5,000,000 and the reinsurance assumed premium is
23 $10,000,000 or more;
24 (iv) $5,000, if the premium is $5,000,000 or
25 more, but less than $10,000,000;
26 (v) $12,000 $7,500, if the premium is
27 $10,000,000 or more, but less than $25,000,000;
28 (vi) $15,000 $10,000, if the premium is
29 $25,000,000 or more, but less than $50,000,000;
30 (vii) $20,000 $14,000, if the premium is
31 $50,000,000 or more, but less than $100,000,000;
32 (viii) $25,000 $16,000, if the premium is
33 $100,000,000 or more.
34 (b) Admitted assets.
35 (i) $100, if admitted assets are less than
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1 $1,000,000;
2 (ii) $500, if admitted assets are $1,000,000
3 or more, but less than $5,000,000;
4 (iii) 2,500, if admitted assets are $5,000,000
5 or more, but less than $25,000,000;
6 (iv) $5,000, if admitted assets are
7 $25,000,000 or more, but less than $50,000,000;
8 (v) $12,000 $7,500, if admitted assets are
9 $50,000,000 or more, but less than $100,000,000;
10 (vi) $15,000 $10,000, if admitted assets are
11 $100,000,000 or more, but less than $500,000,000;
12 (vii) $20,000 $14,000, if admitted assets are
13 $500,000,000 or more, but less than $1,000,000,000;
14 (viii) $25,000 $16,000, if admitted assets are
15 $1,000,000,000 or more.
16 (c) The sum of financial regulation fees charged to
17 the domestic companies of the same domestic affiliated
18 group shall not exceed $100,000 in the aggregate in any
19 single year and shall be billed by the Director to the
20 member company designated by the group.
21 (7) The Director shall charge and collect an annual
22 financial regulation fee from every foreign or alien company,
23 except fraternal benefit societies, for the examination and
24 analysis of its financial condition and to fund the internal
25 costs and expenses of the Interstate Insurance Receivership
26 Commission as may be allocated to the State of Illinois and
27 companies doing an insurance business in this State pursuant
28 to Article X of the Interstate Insurance Receivership
29 Compact. The fee shall be a fixed amount based upon Illinois
30 direct premium income and nationwide reinsurance assumed
31 premium income in accordance with the following schedule:
32 (a) $100, if the premium is less than $500,000 and
33 there is no reinsurance assumed premium;
34 (b) $500, if the premium is $500,000 or more, but
35 less than $5,000,000 and there is no reinsurance assumed
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1 premium; or if the premium is less than $5,000,000 and
2 the reinsurance assumed premium is less than $10,000,000;
3 (c) $2,500, if the premium is less than $5,000,000
4 and the reinsurance assumed premium is $10,000,000 or
5 more;
6 (d) $5,000, if the premium is $5,000,000 or more,
7 but less than $10,000,000;
8 (e) $12,000, if the premium is $10,000,000 or more,
9 but less than $25,000,000;
10 (f) $15,000, if the premium is $25,000,000 or more,
11 but less than $50,000,000;
12 (g) $20,000, if the premium is $50,000,000 or more,
13 but less than $100,000,000;
14 (h) $25,000, if the premium is $100,000,000 or
15 more.
16 The sum of financial regulation fees under this
17 subsection (7) charged to the foreign or alien companies
18 within the same affiliated group shall not exceed $100,000 in
19 the aggregate in any single year and shall be billed by the
20 Director to the member company designated by the group.
21 (8) Beginning January 1, 1992, the financial regulation
22 fees imposed under subsections (6) and (7) of this Section
23 shall be paid by each company or domestic affiliated group
24 annually. After January 1, 1994, the fee shall be billed by
25 Department invoice based upon the company's premium income or
26 admitted assets as shown in its annual statement for the
27 preceding calendar year. The invoice is due upon receipt and
28 must be paid no later than June 30 of each calendar year.
29 All financial regulation fees collected by the Department
30 shall be paid to the Insurance Financial Regulation Fund.
31 The Department may not collect financial examiner per diem
32 charges from companies subject to subsections (6) and (7) of
33 this Section undergoing financial examination after June 30,
34 1992.
35 (9) In addition to the financial regulation fee required
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1 by this Section, a company undergoing any financial
2 examination authorized by law shall pay the following costs
3 and expenses incurred by the Department: electronic data
4 processing costs, the expenses authorized under Section
5 131.21 and subsection (d) of Section 132.4 of this Code, and
6 lodging and travel expenses.
7 Electronic data processing costs incurred by the
8 Department in the performance of any examination shall be
9 billed directly to the company undergoing examination for
10 payment to the Statistical Services Revolving Fund. Except
11 for direct reimbursements authorized by the Director or
12 direct payments made under Section 131.21 or subsection (d)
13 of Section 132.4 of this Code, all financial regulation fees
14 and all financial examination charges collected by the
15 Department shall be paid to the Insurance Financial
16 Regulation Fund.
17 All lodging and travel expenses shall be in accordance
18 with applicable travel regulations published by the
19 Department of Central Management Services and approved by the
20 Governor's Travel Control Board, except that out-of-state
21 lodging and travel expenses related to examinations
22 authorized under Sections 132.1 through 132.7 shall be in
23 accordance with travel rates prescribed under paragraph
24 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
25 for reimbursement of subsistence expenses incurred during
26 official travel. All lodging and travel expenses may be
27 reimbursed directly upon the authorization of the Director.
28 In the case of an organization or person not subject to
29 the financial regulation fee, the expenses incurred in any
30 financial examination authorized by law shall be paid by the
31 organization or person being examined. The charge shall be
32 reasonably related to the cost of the examination including,
33 but not limited to, compensation of examiners and other costs
34 described in this subsection.
35 (10) Any company, person, or entity failing to make any
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1 payment of $100 or more as required under this Section shall
2 be subject to the penalty and interest provisions provided
3 for in subsections (4) and (7) of Section 412.
4 (11) Unless otherwise specified, all of the fees
5 collected under this Section shall be paid into the Insurance
6 Financial Regulation Fund.
7 (12) For purposes of this Section:
8 (a) "domestic company" means a company as defined
9 in Section 2 of this Code which is incorporated or
10 organized under the laws of this State, and in addition
11 includes a not-for-profit corporation authorized under
12 the Dental, Pharmaceutical, or Voluntary Health Service
13 Plan Acts, and a health maintenance organization and a
14 limited health service organization;
15 (b) "foreign company" means a company as defined in
16 Section 2 of this Code which is incorporated or organized
17 under the laws of any state of the United States other
18 than this State and in addition includes a health
19 maintenance organization and a limited health service
20 organization which is incorporated or organized under the
21 laws of any state of the United States other than this
22 State;
23 (c) "alien company" means a company as defined in
24 Section 2 of this Code which is incorporated or organized
25 under the laws of any country other than the United
26 States;
27 (d) "fraternal benefit society" means a
28 corporation, society, order, lodge or voluntary
29 association as defined in Section 282.1 of this Code;
30 (e) "mutual benefit association" means a company,
31 association or corporation authorized by the Director to
32 do business in this State under the provisions of Article
33 XVIII of this Code;
34 (f) "burial society" means a person, firm,
35 corporation, society or association of individuals
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1 authorized by the Director to do business in this State
2 under the provisions of Article XIX of this Code; and
3 (g) "farm mutual" means a district, county and
4 township mutual insurance company authorized by the
5 Director to do business in this State under the
6 provisions of the Farm Mutual Insurance Company Act of
7 1986.
8 (Source: P.A. 89-97, eff. 7-7-95; 89-247, eff. 1-1-96;
9 89-626, eff. 8-9-96; 90-177, eff. 7-23-97.)
10 (215 ILCS 5/409) (from Ch. 73, par. 1021)
11 Sec. 409. Annual privilege tax payable by foreign or
12 alien companies.
13 (1) As of January 1, 1999 for all health maintenance
14 organization premiums written; as of July 1, 1998 for all
15 premiums written as accident and health business, voluntary
16 health service plan business, dental service plan business,
17 or limited health service organization business; and as of
18 January 1, 1998 for all other types of insurance premiums
19 written, every company doing any form of insurance business
20 in this State, including, but not limited to, every risk
21 retention group, and excluding all fraternal benefit
22 societies, all farm mutual companies, all religious
23 charitable risk pooling trusts, and excluding all statutory
24 residual market and special purpose entities in which
25 companies are statutorily required to participate, whether
26 incorporated or otherwise, shall pay, for the privilege of
27 doing business in this State, to the Director for the State
28 treasury a State tax equal to 0.5% of the net taxable premium
29 written, together with any amounts due under Section 444 of
30 this Code, except that the tax to be paid on any premium
31 derived from any accident and health insurance or on any
32 insurance business written by any company operating as a
33 health maintenance organization, voluntary health service
34 plan, dental service plan, or limited health service
-14- LRB9000419JSdvccr5
1 organization shall be equal to 0.4% of such net taxable
2 premium written, together with any amounts due under Section
3 444. Upon the failure of any company to pay any such tax
4 due, the Director may, by order, revoke or suspend the
5 company's certificate of authority after giving 20 days
6 written notice to the company, or commence proceedings for
7 the suspension of business in this State under the procedures
8 set forth by Section 401.1 of this Code. The gross taxable
9 premium written shall be the gross amount of premiums
10 received on direct business during the calendar year on
11 contracts covering risks in this State, except premiums on
12 annuities, premiums on which State premium taxes are
13 prohibited by federal law, premiums paid by the State for
14 health care coverage for Medicaid eligible insureds as
15 described in Section 5-2 of the Illinois Public Aid Code,
16 premiums paid for health care services included as an element
17 of tuition charges at any university or college owned and
18 operated by the State of Illinois, premiums on group
19 insurance contracts under the State Employees Group Insurance
20 Act of 1971, and except premiums for deferred compensation
21 plans for employees of the State, units of local government,
22 or school districts. The net taxable premium shall be the
23 gross taxable premium written reduced only by the following:
24 (a) the amount of premiums returned thereon which
25 shall be limited to premiums returned during the same
26 preceding calendar year and shall not include the return
27 of cash surrender values or death benefits on life
28 policies including annuities;
29 (b) dividends on such direct business that have
30 been paid in cash, applied in reduction of premiums or
31 left to accumulate to the credit of policyholders or
32 annuitants. In the case of life insurance, no deduction
33 shall be made for the payment of deferred dividends paid
34 in cash to policyholders on maturing policies; dividends
35 left to accumulate to the credit of policyholders or
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1 annuitants shall be included as gross taxable premium
2 written when such dividend accumulations are applied to
3 purchase paid-up insurance or to shorten the endowment or
4 premium paying period.
5 (2) The annual privilege tax payment due from a company
6 under subsection (4) of this Section may be reduced by: (a)
7 the excess amount, if any, by which the aggregate income
8 taxes paid by the company, on a cash basis, for the preceding
9 calendar year under subsections (a) through (d) of Section
10 201 of the Illinois Income Tax Act exceed 1.5% of the
11 company's net taxable premium written for that prior calendar
12 year, as determined under subsection (1) of this Section; and
13 (b) the amount of any fire department taxes paid by the
14 company during the preceding calendar year under Section
15 11-10-1 of the Illinois Municipal Code. Any deductible
16 amount or offset allowed under items (a) and (b) of this
17 subsection for any calendar year will not be allowed as a
18 deduction or offset against the company's privilege tax
19 liability for any other taxing period or calendar year.
20 (3) If a company survives or was formed by a merger,
21 consolidation, reorganization, or reincorporation, the
22 premiums received and amounts returned or paid by all
23 companies party to the merger, consolidation, reorganization,
24 or reincorporation shall, for purposes of determining the
25 amount of the tax imposed by this Section, be regarded as
26 received, returned, or paid by the surviving or new company.
27 (4)(a) All companies subject to the provisions of this
28 Section shall make an annual return for the preceding
29 calendar year on or before March 15 setting forth such
30 information on such forms as the Director may reasonably
31 require. Payments of quarterly installments of the
32 taxpayer's total estimated tax for the current calendar year
33 shall be due on or before April 15, June 15, September 15,
34 and December 15 of such year, except that all companies
35 transacting insurance in this State whose annual tax for the
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1 immediately preceding calendar year was less than $5,000
2 shall make only an annual return. Failure of a company to
3 make the annual payment, or to make the quarterly payments,
4 if required, of at least 25% of either (i) the total tax paid
5 during the previous calendar year or (ii) 80% of the actual
6 tax for the current calendar year shall subject it to the
7 penalty provisions set forth in Section 412 of this Code.
8 (b) Notwithstanding the foregoing provisions, no annual
9 return shall be required or made on March 15, 1998, under
10 this subsection. For the calendar year 1998:
11 (i) each health maintenance organization shall have
12 no estimated tax installments;
13 (ii) all companies subject to the tax as of July 1,
14 1998 as set forth in subsection (1) shall have estimated
15 tax installments due on September 15 and December 15 of
16 1998 which installments shall each amount to no less than
17 one-half of 80% of the actual tax on its net taxable
18 premium written during the period July 1, 1998, through
19 December 31, 1998; and
20 (iii) all other companies shall have estimated tax
21 installments due on June 15, September 15, and December
22 15 of 1998 which installments shall each amount to no
23 less than one-third of 80% of the actual tax on its net
24 taxable premium written during the calendar year 1998.
25 In the year 1999 and thereafter all companies shall make
26 annual and quarterly installments of their estimated tax as
27 provided by paragraph (a) of this subsection.
28 (5) In addition to the authority specifically granted
29 under Article XXV of this Code, the Director shall have such
30 authority to adopt rules and establish forms as may be
31 reasonably necessary for purposes of determining the
32 allocation of Illinois corporate income taxes paid under
33 subsections (a) through (d) of Section 201 of the Illinois
34 Income Tax Act amongst members of a business group that files
35 an Illinois corporate income tax return on a unitary basis,
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1 for purposes of regulating the amendment of tax returns, for
2 purposes of defining terms, and for purposes of enforcing the
3 provisions of Article XXV of this Code. The Director shall
4 also have authority to defer, waive, or abate the tax imposed
5 by this Section if in his opinion the company's solvency and
6 ability to meet its insured obligations would be immediately
7 threatened by payment of the tax due.
8 (1) Every foreign or alien company doing an insurance
9 business in this State, except fraternal benefit societies,
10 shall, for the privilege of doing business in this State by
11 renewal of certificate of authority as provided in Section
12 114, pay to the Director for the State treasury a State tax
13 equal to 2 per cent of the net taxable premium income,
14 together with any amounts due under Section 444. Every
15 domestic insurance company, except a fraternal benefit
16 society, which fails to comply with all the requirements of
17 subsection (4) of this Section must pay to the Director for
18 payment into the State Treasury a State tax equal to 2 per
19 cent of the net taxable premium income and upon the failure
20 of any company to pay any such tax due, the Director may, by
21 order, revoke the company's certificate of authority after
22 giving 20 days written notice to the company. The gross
23 taxable premium income shall be the gross amount of premiums
24 received on direct business during the preceding calendar
25 year on contracts covering risks in this State, except
26 premiums on annuities and except premiums on group insurance
27 contracts awarded after the effective date of this amendatory
28 Act of 1976 under the State Employees Group Insurance Act of
29 1971, and except premiums for deferred compensation plans for
30 employees of the State, units of local government or school
31 districts. The net taxable premium income shall be the gross
32 taxable premium income reduced only by the following:
33 (a) the amount of premiums returned thereon which
34 shall be limited to premiums returned during the
35 preceding calendar year and shall not include the return
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1 of cash surrender values or death benefits on life
2 policies;
3 (b) dividends on such direct business that have
4 been paid in cash, applied in reduction of premiums or
5 left to accumulate to the credit of policyholders or
6 annuitants. In the case of life insurance, no deduction
7 shall be made for the payment of deferred dividends paid
8 in cash to policyholders on maturing policies; dividends
9 left to accumulate to the credit of policyholders or
10 annuitants shall be included as gross taxable premium
11 income when such dividend accumulations are applied to
12 purchase paid-up insurance or to shorten the endowment or
13 premium paying period.
14 (2) There shall be deducted from the tax thus computed,
15 but only to the extent thereof, the amount, if any, paid
16 during the preceding calendar year: (a) for the benefit of
17 organized fire departments, to cities, villages, incorporated
18 towns and fire protection districts of this State as a tax on
19 premiums received by such company in such cities, villages,
20 incorporated towns and fire protection districts, and (b) as
21 a tax to this State or any subdivision thereof on or measured
22 by net income, and (c) as a tax to this State or any
23 subdivision thereof on or measured by the value of the
24 company in excess of the value of its tangible property, and
25 (d) as a fee or charge for the valuation of life insurance
26 policies, and (e) if the company is not an Illinois domestic
27 company, as a financial regulation fee under subsection (7)
28 of Section 408 of this Code for the examination and analysis
29 of financial condition, and the remainder shall be paid by
30 such company as its annual privilege tax, and (f) for fees
31 paid pursuant to Section 408 (1) (jj).
32 (3) If a company survives or was formed by a merger,
33 consolidation, reorganization or reincorporation, the
34 premiums received, and amounts returned or paid, by all
35 foreign or alien companies parties to such merger,
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1 consolidation, reorganization or reincorporation, shall, for
2 the purposes of determining the amount of the tax imposed by
3 this Section, be regarded as received, returned or paid by
4 such surviving or new company.
5 (4) A domestic company must pay the State tax in
6 subsection (1) of this Section unless:
7 (a) it maintains its principal place of business in
8 this State; and
9 (b) it maintains in this State officers and
10 personnel knowledgeable of and responsible for the
11 company's operation, books, records, administration, and
12 annual statement; and
13 (c) it conducts in this State substantially all of
14 its underwriting, policy issuing, and serving operations
15 relating to Illinois policyholders and certificate
16 holders; and
17 (d) it complies with the provisions of Section 133
18 (2) of this Code.
19 Payments shall be due on an estimated basis for all of
20 calendar year 1969 on or before September 1, 1969. Effective
21 January 1, 1970, a company shall make an annual return for
22 the preceding calendar year on or before March 1st setting
23 forth such information on such forms as the Director may
24 reasonably require. Payments of quarterly installments of
25 the taxpayer's total estimated tax for the current calendar
26 year shall be due on or before April 15th, June 15th,
27 September 15th and December 15th, unless for the calendar
28 year 1971, and each calendar year thereafter, insurers
29 transacting insurance in this State whose annual tax for the
30 preceding calendar year was less than $5,000, shall then make
31 only an annual return. Failure of a company to make
32 quarterly payments, if required, of at least one-fourth of
33 either (a) the total tax paid during the previous calendar
34 year or (b) 80% of the actual tax for the current calendar
35 year shall subject it to the penalty provisions set forth in
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1 Section 412 of this Act.
2 (Source: P.A. 86-753; 87-108.)
3 (215 ILCS 5/444) (from Ch. 73, par. 1056)
4 Sec. 444. Retaliation.
5 (1) Whenever the existing or future laws of any other
6 state or country shall require of companies incorporated or
7 organized under the laws of this State as a condition
8 precedent to their doing business in such other state or
9 country, compliance with laws, rules, regulations, and
10 prohibitions more onerous or burdensome than the rules and
11 regulations imposed by this State on foreign or alien
12 companies, or shall require any deposit of securities or
13 other obligations in such state or country, for the
14 protection of policyholders or otherwise or require of such
15 companies or agents thereof or brokers the payment of
16 penalties, fees, charges, or taxes greater than the
17 penalties, fees, charges, or taxes required in the aggregate
18 for like purposes by this Code or any other law of this
19 State, of foreign or alien companies, agents thereof or
20 brokers, then such laws, rules, regulations, and prohibitions
21 of said other state or country shall apply to companies
22 incorporated or organized under the laws of such state or
23 country doing business in this State, and all such companies,
24 agents thereof, or brokers doing business in this State,
25 shall be required to make deposits, pay penalties, fees,
26 charges, and taxes, in amounts equal to those required in the
27 aggregate for like purposes of Illinois companies doing
28 business in such state or country, agents thereof or brokers.
29 Whenever any other state or country shall refuse to permit
30 any insurance company incorporated or organized under the
31 laws of this State to transact business according to its
32 usual plan in such other state or country, the director may,
33 if satisfied that such company of this State is solvent,
34 properly managed, and can operate legally under the laws of
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1 such other state or country, forthwith suspend or cancel the
2 license of every insurance company doing business in this
3 State which is incorporated or organized under the laws of
4 such other state or country to the extent that it insures in
5 this State against any of the risks or hazards which are
6 sought to be insured against by the company of this State in
7 such other state or country.
8 (2) The provisions of this Section shall not apply to
9 residual market or special purpose assessments or guaranty
10 fund or guaranty association assessments, both under the laws
11 of this State and under the laws of any other state or
12 country, and any tax offset or credit for any such assessment
13 shall, for purposes of this Section, be treated as a tax paid
14 both under the laws of this State and under the laws of any
15 other state or country.
16 (3) The terms "penalties", "fees", "charges", and
17 "taxes" in subsection (1) of this Section shall include: the
18 penalties, fees, charges, and taxes collected under State law
19 and referenced within Article XXV exclusive of any items
20 referenced by subsection (2) of this Section, but including
21 any tax offset allowed under Section 531.13 of this Code; the
22 Illinois corporate income taxes imposed under subsections (a)
23 through (d) of Section 201 of the Illinois Income Tax Act
24 after any tax offset allowed under Section 531.13 of this
25 Code; income or personal property taxes imposed by other
26 states or countries; penalties, fees, charges, and taxes of
27 other states or countries imposed for purposes like those of
28 the penalties, fees, charges, and taxes specified in Article
29 XXV of this Code exclusive of any item referenced in
30 subsection (2) of this Section; and any penalties, fees,
31 charges, and taxes required as a franchise, privilege, or
32 licensing tax for conducting the business of insurance
33 whether calculated as a percentage of income, gross receipts,
34 premium, or otherwise.
35 (4) Nothing contained in this Section or Section 409 or
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1 Section 444.1 is intended to authorize or expand any power of
2 local governmental units or municipalities to impose taxes,
3 fees, or charges.
4 (Source: Laws 1941, vol. 1, p. 837.)
5 (215 ILCS 5/444.1) (from Ch. 73, par. 1056.1)
6 Sec. 444.1. Payment of retaliatory taxes.
7 (1) Every foreign or alien company doing insurance
8 business in this State shall pay the Director the retaliatory
9 tax determined in accordance with Section 444.
10 (2) (a) All companies subject to the provisions of this
11 Section shall make an annual return for the preceding
12 calendar year on or before March 15 setting forth such
13 information on such forms as the Director may reasonably
14 require. Payments of quarterly installments of the
15 taxpayer's total estimated retaliatory tax for the current
16 calendar year shall be due on or before April 15, June 15,
17 September 15, and December 15 of such year, except that all
18 companies transacting insurance business in this State whose
19 annual tax for the immediately preceding calendar year was
20 less than $5,000 shall make only an annual return. Failure
21 of a company to make the annual payment, or to make the
22 quarterly payments, if required, of at least one-fourth of
23 either (i) the total tax paid during the previous calendar
24 year or (ii) 80% of the actual tax for the current calendar
25 year shall subject it to the penalty provisions set forth in
26 Section 412 of this Code.
27 (b) Notwithstanding the foregoing provisions of
28 paragraph (a) of this subsection, the retaliatory tax
29 liability of companies under Section 444 of this Code for the
30 calendar years ended December 31, 1997 shall be determined in
31 accordance with this Amendatory Act of 1998 and shall include
32 in the aggregate comparative tax burden for the State of
33 Illinois, any tax offset allowed under Section 531.13 of this
34 Code and any income taxes paid for the year 1997 under
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1 subsections (a) through (d) of Section 201 of the Illinois
2 Income Tax Act after any tax offset allowed under Section
3 531.13 of this Code.
4 (i) Any annual retaliatory tax returns and payments
5 made for the year ended December 31, 1997 and any
6 quarterly installments of the taxpayer's total estimated
7 1998 retaliatory tax liability paid prior to the
8 effective date of this Amendatory Act of 1998 that do not
9 include the items specified by subsection (1) of this
10 Section shall be amended and restated, at the taxpayer's
11 election, on forms prepared by the Director so as to
12 provide for the inclusion of such items. An amended and
13 restated return for the year ended December 31, 1997
14 filed under this subparagraph shall treat any payment of
15 estimated privilege taxes under Section 409 as in effect
16 prior to October 23, 1997 as a payment of estimated
17 retaliatory taxes for the year ended December 31, 1997.
18 (ii) Any overpayment resulting from such amended
19 return and restated tax liability shall be allowed as a
20 credit against any subsequent privilege or retaliatory
21 tax obligations of the taxpayer.
22 (iii) In the year 1999 and thereafter all companies
23 shall make annual and quarterly installments of their
24 estimated tax as provided by paragraph (a) of this
25 subsection. The Director may order that payments of such
26 tax shall be due on an estimated basis for the 1982
27 calendar year as provided in Section 409 on or before
28 April 15, June 15, September 15 and December 15. For the
29 1983 calendar year, and each calendar year thereafter,
30 the Director may order that payments of quarterly
31 installments of the total estimated tax shall be due and
32 payable on or before April 15, June 15, September 15 and
33 December 15 pursuant to this Section, and such payments
34 shall be in lieu of retaliatory tax payments otherwise
35 required by Section 409. For the 1983 calendar year, and
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1 each calendar year thereafter, the taxpayer shall make
2 only an annual return if the annual tax for the preceding
3 calendar year was less than $5,000. Effective January 1,
4 1983, a company shall make an annual return for the
5 preceding calendar year on or before March 1 setting
6 forth such information on such forms as the Director may
7 reasonably require.
8 (3) Any tax payment made under this Section and any tax
9 returns prepared in compliance with Section 410 shall give
10 full consideration to the impact of any future reduction in
11 or elimination of a taxpayer's liability under Section 409,
12 whether such reduction or elimination is due to an operation
13 of law or an Act of the General Assembly.
14 (4) Any foreign or alien taxpayer who makes, under
15 protest, a tax payment required by Section 409 shall, at the
16 time of payment, file a retaliatory tax return sufficient to
17 disclose the full amount of retaliatory taxes which would be
18 due and owing for the tax period in question if the protest
19 were upheld. Notwithstanding the provisions of the State
20 Officers and Employees Money Disposition Act "An Act in
21 relation to the payment and disposition of moneys received by
22 officers and employees of the State of Illinois by virtue of
23 their office or employment", approved June 9, 1911, as now or
24 hereafter amended, or any other laws of this State, the
25 protested payment, to the extent of the retaliatory tax so
26 disclosed, shall be deposited directly in the General Revenue
27 Fund; and the balance of the payment, if any, shall be
28 deposited in a protest account pursuant to the provisions of
29 the aforesaid Act, as now or hereafter amended.
30 (5) The failure of a company to make the annual payment
31 or to make the quarterly payments, if required, of equal to
32 at least one-fourth of either (i) the total tax paid during
33 the preceding calendar year or (ii) 80% of the actual tax for
34 the current calendar year, whichever is greater, shall
35 subject it to the penalty provisions set forth in Section 412
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1 of this Code.
2 (Source: P.A. 82-767.)
3 (215 ILCS 5/531.13) (from Ch. 73, par. 1065.80-13)
4 Sec. 531.13. Tax offset. In the event the aggregate
5 Class A, B and C assessments for all member insurers do not
6 exceed $3,000,000 in any one calendar year, no member insurer
7 shall receive a tax offset. However, for in any one calendar
8 year before 1998 in which the total of such assessments
9 exceeds $3,000,000, the amount in excess of $3,000,000 shall
10 be subject to a tax offset to the extent of 20% of the amount
11 of such assessment for each of the 5 five calendar years
12 following the year in which such assessment was paid and each
13 member insurer may offset the proportionate amount of such
14 excess paid by the insurer against its liabilities for the
15 tax imposed by subsections (a) and (b) of Section 201 of the
16 "Illinois Income Tax Act. The provisions of this Section
17 shall expire and be given no effect for any tax period
18 commencing on and after January 1, 2003", for the tax imposed
19 by Section 409 of the "Illinois Insurance Code", and for the
20 fees imposed by Section 408.1 of the "Illinois Insurance
21 Code".
22 (Source: P.A. 84-221.)
23 Section 10. The Illinois Insurance Code is amended by
24 changing Section 408.1 as follows:
25 (215 ILCS 5/408.1) (from Ch. 73, par. 1020.1)
26 Sec. 408.1. Fee for valuation of life insurance
27 policies. Upon the effective date of this amendatory Act of
28 1998, all actions to collect life insurance policy valuation
29 fees or to transfer such fees to the General Revenue Fund
30 from any protest account established under the State Officers
31 and Employees Money Disposition Act shall cease and any such
32 protested life insurance policy valuation fee payments shall
-26- LRB9000419JSdvccr5
1 be returned to the taxpayer who initiated the protest.) The
2 Director shall charge and collect an annual fee from every
3 domestic company for the valuation of life insurance policies
4 except group contracts awarded under the State Employee Group
5 Insurance Act of 1971, as now or hereafter amended. The fee
6 shall be 3¢ for each $1,000 of direct life insurance policies
7 in force as of December 31, each year, but not less than
8 $100. Each domestic company shall pay the fee under this
9 Section not later than 60 days after the date on which such
10 company is required to file its annual statement for the
11 preceding calendar year, under this Code. Failure of a
12 company to make payment as required shall subject it to the
13 penalty provisions set forth in Section 412 of this Act.
14 (Source: P.A. 81-603.)
15 Section 15. The Dental Service Plan Act is amended by
16 changing Section 43 as follows:
17 (215 ILCS 110/43) (from Ch. 32, par. 690.43)
18 Sec. 43. Every dental service plan corporation organized
19 hereunder shall be operated and conducted not-for-profit and
20 shall be deemed a charitable and benevolent corporation, and
21 all of its funds and property shall be exempt from every
22 State, county, district, municipal and school tax or
23 assessment, and all other taxes and license fees, from the
24 payment of which charitable and benevolent corporations or
25 institutions are now or may hereafter be exempt. This
26 exemption shall not prevail against fees and charges imposed
27 by Sections 408, and 408.2, 409, 444, and 444.1 of the
28 Illinois Insurance Code. The laws of this state applicable to
29 the merger, dissolution and liquidation of domestic
30 not-for-profit corporations and in respect to the rights,
31 classification and meetings of members, the selection,
32 change, duties and powers of corporate officers, and the
33 filing of annual reports by domestic not-for-profit
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1 corporations shall be applicable to corporations organized
2 under this act to the extent the same are not inconsistent
3 with the provisions of this act. Wherever in any such laws
4 reference is made to "Directors" of such not-for-profit
5 corporations, such statutory provisions shall be deemed to
6 apply to the trustees of corporations organized under this
7 act, and wherever the office of the Secretary of State is
8 mentioned in such an act, such provisions shall be deemed to
9 refer to and designate the Director of Insurance when applied
10 to corporations organized hereunder.
11 (Source: P.A. 84-989.)
12 Section 20. The Farm Mutual Insurance Company Act of
13 1986 is amended by changing Section 15 as follows:
14 (215 ILCS 120/15) (from Ch. 73, par. 1265)
15 Sec. 15. Application of law. Companies subject to this
16 Act shall be subject to the provisions of Article X (Merger)
17 and Article XXV of the Illinois Insurance Code but shall not
18 be subject to any other provisions of the Illinois Insurance
19 Code unless specifically enumerated therein.
20 (Source: P.A. 84-1431.)
21 Section 25. The Health Maintenance Organization Act is
22 amended by changing Section 5-3 as follows:
23 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
24 (Text of Section before amendment by P.A. 90-372)
25 Sec. 5-3. Insurance Code provisions.
26 (a) Health Maintenance Organizations shall be subject to
27 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
28 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
29 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356t, 367i,
30 401, 401.1, 402, 403, 403A, 408, 408.2, 409, and 412, 444,
31 and 444.1, paragraph (c) of subsection (2) of Section 367,
-28- LRB9000419JSdvccr5
1 and Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
2 XXVI of the Illinois Insurance Code.
3 (b) For purposes of the Illinois Insurance Code, except
4 for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
5 Health Maintenance Organizations in the following categories
6 are deemed to be "domestic companies":
7 (1) a corporation authorized under the Medical
8 Service Plan Act, the Dental Service Plan Act, the
9 Pharmaceutical Service Plan Act, or the Voluntary Health
10 Services Plans Plan Act, or the Nonprofit Health Care
11 Service Plan 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;
35 (3) the Director shall have the power to require
-29- LRB9000419JSdvccr5
1 the following information:
2 (A) certification by an independent actuary of
3 the adequacy of the reserves of the Health
4 Maintenance Organization sought to be acquired;
5 (B) pro forma financial statements reflecting
6 the combined balance sheets of the acquiring company
7 and the Health Maintenance Organization sought to be
8 acquired as of the end of the preceding year and as
9 of a date 90 days prior to the acquisition, as well
10 as pro forma financial statements reflecting
11 projected combined operation for a period of 2
12 years;
13 (C) a pro forma business plan detailing an
14 acquiring party's plans with respect to the
15 operation of the Health Maintenance Organization
16 sought to be acquired for a period of not less than
17 3 years; and
18 (D) such other information as the Director
19 shall require.
20 (d) The provisions of Article VIII 1/2 of the Illinois
21 Insurance Code and this Section 5-3 shall apply to the sale
22 by any health maintenance organization of greater than 10% of
23 its enrollee population (including without limitation the
24 health maintenance organization's right, title, and interest
25 in and to its health care certificates).
26 (e) In considering any management contract or service
27 agreement subject to Section 141.1 of the Illinois Insurance
28 Code, the Director (i) shall, in addition to the criteria
29 specified in Section 141.2 of the Illinois Insurance Code,
30 take into account the effect of the management contract or
31 service agreement on the continuation of benefits to
32 enrollees and the financial condition of the health
33 maintenance organization to be managed or serviced, and (ii)
34 need not take into account the effect of the management
35 contract or service agreement on competition.
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1 (f) Except for small employer groups as defined in the
2 Small Employer Rating, Renewability and Portability Health
3 Insurance Act and except for medicare supplement policies as
4 defined in Section 363 of the Illinois Insurance Code, a
5 Health Maintenance Organization may by contract agree with a
6 group or other enrollment unit to effect refunds or charge
7 additional premiums under the following terms and conditions:
8 (i) the amount of, and other terms and conditions
9 with respect to, the refund or additional premium are set
10 forth in the group or enrollment unit contract agreed in
11 advance of the period for which a refund is to be paid or
12 additional premium is to be charged (which period shall
13 not be less than one year); and
14 (ii) the amount of the refund or additional premium
15 shall not exceed 20% of the Health Maintenance
16 Organization's profitable or unprofitable experience with
17 respect to the group or other enrollment unit for the
18 period (and, for purposes of a refund or additional
19 premium, the profitable or unprofitable experience shall
20 be calculated taking into account a pro rata share of the
21 Health Maintenance Organization's administrative and
22 marketing expenses, but shall not include any refund to
23 be made or additional premium to be paid pursuant to this
24 subsection (f)). The Health Maintenance Organization and
25 the group or enrollment unit may agree that the
26 profitable or unprofitable experience may be calculated
27 taking into account the refund period and the immediately
28 preceding 2 plan years.
29 The Health Maintenance Organization shall include a
30 statement in the evidence of coverage issued to each enrollee
31 describing the possibility of a refund or additional premium,
32 and upon request of any group or enrollment unit, provide to
33 the group or enrollment unit a description of the method used
34 to calculate (1) the Health Maintenance Organization's
35 profitable experience with respect to the group or enrollment
-31- LRB9000419JSdvccr5
1 unit and the resulting refund to the group or enrollment unit
2 or (2) the Health Maintenance Organization's unprofitable
3 experience with respect to the group or enrollment unit and
4 the resulting additional premium to be paid by the group or
5 enrollment unit.
6 In no event shall the Illinois Health Maintenance
7 Organization Guaranty Association be liable to pay any
8 contractual obligation of an insolvent organization to pay
9 any refund authorized under this Section.
10 (Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
11 90-177, eff. 7-23-97; revised 11-21-97.)
12 (Text of Section after amendment by P.A. 90-372)
13 Sec. 5-3. Insurance Code provisions.
14 (a) Health Maintenance Organizations shall be subject to
15 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
16 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
17 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356t, 367i,
18 401, 401.1, 402, 403, 403A, 408, 408.2, 409, and 412, 444,
19 and 444.1, paragraph (c) of subsection (2) of Section 367,
20 and Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
21 XXVI of the Illinois Insurance Code.
22 (b) For purposes of the Illinois Insurance Code, except
23 for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
24 Health Maintenance Organizations in the following categories
25 are deemed to be "domestic companies":
26 (1) a corporation authorized under the Medical
27 Service Plan Act, the Dental Service Plan Act or, the
28 Voluntary Health Services Plans Plan Act, or the
29 Nonprofit Health Care Service Plan Act;
30 (2) a corporation organized under the laws of this
31 State; or
32 (3) a corporation organized under the laws of
33 another state, 30% or more of the enrollees of which are
34 residents of this State, except a corporation subject to
-32- LRB9000419JSdvccr5
1 substantially the same requirements in its state of
2 organization as is a "domestic company" under Article
3 VIII 1/2 of the Illinois Insurance Code.
4 (c) In considering the merger, consolidation, or other
5 acquisition of control of a Health Maintenance Organization
6 pursuant to Article VIII 1/2 of the Illinois Insurance Code,
7 (1) the Director shall give primary consideration
8 to the continuation of benefits to enrollees and the
9 financial conditions of the acquired Health Maintenance
10 Organization after the merger, consolidation, or other
11 acquisition of control takes effect;
12 (2)(i) the criteria specified in subsection (1)(b)
13 of Section 131.8 of the Illinois Insurance Code shall not
14 apply and (ii) the Director, in making his determination
15 with respect to the merger, consolidation, or other
16 acquisition of control, need not take into account the
17 effect on competition of the merger, consolidation, or
18 other acquisition of control;
19 (3) the Director shall have the power to require
20 the following information:
21 (A) certification by an independent actuary of
22 the adequacy of the reserves of the Health
23 Maintenance Organization sought to be acquired;
24 (B) pro forma financial statements reflecting
25 the combined balance sheets of the acquiring company
26 and the Health Maintenance Organization sought to be
27 acquired as of the end of the preceding year and as
28 of a date 90 days prior to the acquisition, as well
29 as pro forma financial statements reflecting
30 projected combined operation for a period of 2
31 years;
32 (C) a pro forma business plan detailing an
33 acquiring party's plans with respect to the
34 operation of the Health Maintenance Organization
35 sought to be acquired for a period of not less than
-33- LRB9000419JSdvccr5
1 3 years; and
2 (D) such other information as the Director
3 shall require.
4 (d) The provisions of Article VIII 1/2 of the Illinois
5 Insurance Code and this Section 5-3 shall apply to the sale
6 by any health maintenance organization of greater than 10% of
7 its enrollee population (including without limitation the
8 health maintenance organization's right, title, and interest
9 in and to its health care certificates).
10 (e) In considering any management contract or service
11 agreement subject to Section 141.1 of the Illinois Insurance
12 Code, the Director (i) shall, in addition to the criteria
13 specified in Section 141.2 of the Illinois Insurance Code,
14 take into account the effect of the management contract or
15 service agreement on the continuation of benefits to
16 enrollees and the financial condition of the health
17 maintenance organization to be managed or serviced, and (ii)
18 need not take into account the effect of the management
19 contract or service agreement on competition.
20 (f) Except for small employer groups as defined in the
21 Small Employer Rating, Renewability and Portability Health
22 Insurance Act and except for medicare supplement policies as
23 defined in Section 363 of the Illinois Insurance Code, a
24 Health Maintenance Organization may by contract agree with a
25 group or other enrollment unit to effect refunds or charge
26 additional premiums under the following terms and conditions:
27 (i) the amount of, and other terms and conditions
28 with respect to, the refund or additional premium are set
29 forth in the group or enrollment unit contract agreed in
30 advance of the period for which a refund is to be paid or
31 additional premium is to be charged (which period shall
32 not be less than one year); and
33 (ii) the amount of the refund or additional premium
34 shall not exceed 20% of the Health Maintenance
35 Organization's profitable or unprofitable experience with
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1 respect to the group or other enrollment unit for the
2 period (and, for purposes of a refund or additional
3 premium, the profitable or unprofitable experience shall
4 be calculated taking into account a pro rata share of the
5 Health Maintenance Organization's administrative and
6 marketing expenses, but shall not include any refund to
7 be made or additional premium to be paid pursuant to this
8 subsection (f)). The Health Maintenance Organization and
9 the group or enrollment unit may agree that the
10 profitable or unprofitable experience may be calculated
11 taking into account the refund period and the immediately
12 preceding 2 plan years.
13 The Health Maintenance Organization shall include a
14 statement in the evidence of coverage issued to each enrollee
15 describing the possibility of a refund or additional premium,
16 and upon request of any group or enrollment unit, provide to
17 the group or enrollment unit a description of the method used
18 to calculate (1) the Health Maintenance Organization's
19 profitable experience with respect to the group or enrollment
20 unit and the resulting refund to the group or enrollment unit
21 or (2) the Health Maintenance Organization's unprofitable
22 experience with respect to the group or enrollment unit and
23 the resulting additional premium to be paid by the group or
24 enrollment unit.
25 In no event shall the Illinois Health Maintenance
26 Organization Guaranty Association be liable to pay any
27 contractual obligation of an insolvent organization to pay
28 any refund authorized under this Section.
29 (Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
30 90-177, eff. 7-23-97; 90-372, eff. 7-1-98; revised 11-21-97.)
31 Section 30. The Limited Health Service Organization Act
32 is amended by changing Section 4003 as follows:
33 (215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
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1 Sec. 4003. Illinois Insurance Code provisions. Limited
2 health service organizations shall be subject to the
3 provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
4 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
5 154.6, 154.7, 154.8, 155.04, 355.2, 356v, 356t, 401, 401.1,
6 402, 403, 403A, 408, 408.2, 409, and 412, 444, and 444.1 and
7 Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
8 XXVI of the Illinois Insurance Code. For purposes of the
9 Illinois Insurance Code, except for Sections 444 and 444.1
10 and Articles XIII and XIII 1/2, limited health service
11 organizations in the following categories are deemed to be
12 domestic companies:
13 (1) a corporation under the laws of this State; or
14 (2) a corporation organized under the laws of
15 another state, 30% of 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 VIII
19 1/2 of the Illinois Insurance Code.
20 (Source: P.A. 90-25, eff. 1-1-98; revised 10-14-97.)
21 Section 95. No acceleration or delay. Where this Act
22 makes changes in a statute that is represented in this Act by
23 text that is not yet or no longer in effect (for example, a
24 Section represented by multiple versions), the use of that
25 text does not accelerate or delay the taking effect of (i)
26 the changes made by this Act or (ii) provisions derived from
27 any other Public Act.
28 Section 99. Effective date. This Act takes effect upon
29 becoming law.".
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1 Submitted on , 1998.
2 ______________________________ _____________________________
3 Senator Madigan, R. Representative Mautino
4 ______________________________ _____________________________
5 Senator Walsh, T. Representative Woolard
6 ______________________________ _____________________________
7 Senator Petka Representative Hannig
8 ______________________________ _____________________________
9 Senator Jones Representative Churchill
10 ______________________________ _____________________________
11 Senator Demuzio Representative Brady
12 Committee for the Senate Committee for the House