Public Act 90-0177 of the 90th General Assembly
Public Act 90-0177
SB193 Enrolled LRB9000079DPcd
AN ACT to repeal the Vision Service Plan Act.
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 Sections 355a, 408, 531.03, and 1003 as follows:
(215 ILCS 5/355a) (from Ch. 73, par. 967a)
Sec. 355a. Standardization of terms and coverage.
(1) The purpose of this Section shall be (a) to provide
reasonable standardization and simplification of terms and
coverages of individual accident and health insurance
policies to facilitate public understanding and comparisons;
(b) to eliminate provisions contained in individual accident
and health insurance policies which may be misleading or
unreasonably confusing in connection either with the purchase
of such coverages or with the settlement of claims; and (c)
to provide for reasonable disclosure in the sale of accident
and health coverages.
(2) Definitions applicable to this Section are as
follows:
(a) "Policy" means all or any part of the forms
constituting the contract between the insurer and the
insured, including the policy, certificate, subscriber
contract, riders, endorsements, and the application if
attached, which are subject to filing with and approval
by the Director.
(b) "Service corporations" means non-profit
hospital, medical, voluntary health, vision, dental, and
pharmaceutical corporations organized and operating
respectively under "the Non-Profit Hospital Service Plan
Act", "the Medical Service Plan Act", "the Voluntary
Health Services Plans Act", "The Vision Service Plan
Act", "the Dental Service Plan Act", and "the
Pharmaceutical Service Plan Act".
(c) "Accident and health insurance" means insurance
written under Article XX of the Insurance Code, other
than credit accident and health insurance, and coverages
provided in subscriber contracts issued by service
corporations. For purposes of this Section such service
corporations shall be deemed to be insurers engaged in
the business of insurance.
(3) The Director shall issue such rules as he shall deem
necessary or desirable to establish specific standards,
including standards of full and fair disclosure that set
forth the form and content and required disclosure for sale,
of individual policies of accident and health insurance,
which rules and regulations shall be in addition to and in
accordance with the applicable laws of this State, and which
may cover but shall not be limited to: (a) terms of
renewability; (b) initial and subsequent conditions of
eligibility; (c) non-duplication of coverage provisions; (d)
coverage of dependents; (e) pre-existing conditions; (f)
termination of insurance; (g) probationary periods; (h)
limitation, exceptions, and reductions; (i) elimination
periods; (j) requirements regarding replacements; (k)
recurrent conditions; and (l) the definition of terms
including but not limited to the following: hospital,
accident, sickness, injury, physician, accidental means,
total disability, partial disability, nervous disorder,
guaranteed renewable, and non-cancellable.
The Director may issue rules that specify prohibited
policy provisions not otherwise specifically authorized by
statute which in the opinion of the Director are unjust,
unfair or unfairly discriminatory to the policyholder, any
person insured under the policy, or beneficiary.
(4) The Director shall issue such rules as he shall deem
necessary or desirable to establish minimum standards for
benefits under each category of coverage in individual
accident and health policies, other than conversion policies
issued pursuant to a contractual conversion privilege under a
group policy, including but not limited to the following
categories: (a) basic hospital expense coverage; (b) basic
medical-surgical expense coverage; (c) hospital confinement
indemnity coverage; (d) major medical expense coverage; (e)
disability income protection coverage; (f) accident only
coverage; and (g) specified disease or specified accident
coverage.
Nothing in this subsection (4) shall preclude the
issuance of any policy which combines two or more of the
categories of coverage enumerated in subparagraphs (a)
through (f) of this subsection.
No policy shall be delivered or issued for delivery in
this State which does not meet the prescribed minimum
standards for the categories of coverage listed in this
subsection unless the Director finds that such policy is
necessary to meet specific needs of individuals or groups and
such individuals or groups will be adequately informed that
such policy does not meet the prescribed minimum standards,
and such policy meets the requirement that the benefits
provided therein are reasonable in relation to the premium
charged. The standards and criteria to be used by the
Director in approving such policies shall be included in the
rules required under this Section with as much specificity as
practicable.
The Director shall prescribe by rule the method of
identification of policies based upon coverages provided.
(5) (a) In order to provide for full and fair disclosure
in the sale of individual accident and health insurance
policies, no such policy shall be delivered or issued for
delivery in this State unless the outline of coverage
described in paragraph (b) of this subsection either
accompanies the policy, or is delivered to the applicant at
the time the application is made, and an acknowledgment
signed by the insured, of receipt of delivery of such
outline, is provided to the insurer. In the event the policy
is issued on a basis other than that applied for, the outline
of coverage properly describing the policy must accompany the
policy when it is delivered and such outline shall clearly
state that the policy differs, and to what extent, from that
for which application was originally made. All policies,
except single premium nonrenewal policies, shall have a
notice prominently printed on the first page of the policy or
attached thereto stating in substance, that the policyholder
shall have the right to return the policy within ten (10)
days of its delivery and to have the premium refunded if
after examination of the policy the policyholder is not
satisfied for any reason.
(b) The Director shall issue such rules as he shall deem
necessary or desirable to prescribe the format and content of
the outline of coverage required by paragraph (a) of this
subsection. "Format" means style, arrangement, and overall
appearance, including such items as the size, color, and
prominence of type and the arrangement of text and captions.
"Content" shall include without limitation thereto,
statements relating to the particular policy as to the
applicable category of coverage prescribed under subsection
4; principal benefits; exceptions, reductions and
limitations; and renewal provisions, including any
reservation by the insurer of a right to change premiums.
Such outline of coverage shall clearly state that it
constitutes a summary of the policy issued or applied for and
that the policy should be consulted to determine governing
contractual provisions.
(6) Prior to the issuance of rules pursuant to this
Section, the Director shall afford the public, including the
companies affected thereby, reasonable opportunity for
comment. Such rulemaking is subject to the provisions of
"The Illinois Administrative Procedure Act".
(7) When a rule has been adopted, pursuant to this
Section, all policies of insurance or subscriber contracts
which are not in compliance with such rule shall, when so
provided in such rule, be deemed to be disapproved as of a
date specified in such rule not less than 120 days following
its effective date, without any further or additional notice
other than the adoption of the rule.
(8) When a rule adopted pursuant to this Section so
provides, a policy of insurance or subscriber contract which
does not comply with the rule shall not less than 120 days
from the effective date of such rule, be construed, and the
insurer or service corporation shall be liable, as if the
policy or contract did comply with the rule.
(9) Violation of any rule adopted pursuant to this
Section shall be a violation of the insurance law for
purposes of Sections 370 and 446 of the Insurance Code.
(Source: P.A. 81-0657; 81-0722; 81-1509.)
(215 ILCS 5/408) (from Ch. 73, par. 1020)
Sec. 408. Fees and charges.
(1) The Director shall charge, collect and give proper
acquittances for the payment of the following fees and
charges:
(a) For filing all documents submitted for the
incorporation or organization or certification of a
domestic company, except for a fraternal benefit society,
$1,000.
(b) For filing all documents submitted for the
incorporation or organization of a fraternal benefit
society, $250.
(c) For filing amendments to articles of
incorporation and amendments to declaration of
organization, except for a fraternal benefit society, a
mutual benefit association, a burial society or a farm
mutual, $100.
(d) For filing amendments to articles of
incorporation of a fraternal benefit society, a mutual
benefit association or a burial society, $50.
(e) For filing amendments to articles of
incorporation of a farm mutual, $25.
(f) For filing bylaws or amendments thereto, $25.
(g) For filing agreement of merger or
consolidation:
(i) for a domestic company, except for a
fraternal benefit society, a mutual benefit
association, a burial society, or a farm mutual,
$1,000.
(ii) for a foreign or alien company, except
for a fraternal benefit society, $300.
(iii) for a fraternal benefit society, a
mutual benefit association, a burial society, or a
farm mutual, $100.
(h) For filing agreements of reinsurance by a
domestic company, $100.
(i) For filing all documents submitted by a foreign
or alien company to be admitted to transact business or
accredited as a reinsurer in this State, except for a
fraternal benefit society, $2,500.
(j) For filing all documents submitted by a foreign
or alien fraternal benefit society to be admitted to
transact business in this State, $250.
(k) For filing declaration of withdrawal of a
foreign or alien company, $25.
(l) For filing annual statement, except a fraternal
benefit society, a mutual benefit association, a burial
society, or a farm mutual, $100.
(m) For filing annual statement by a fraternal
benefit society, $50.
(n) For filing annual statement by a farm mutual, a
mutual benefit association, or a burial society, $25.
(o) For issuing a certificate of authority or
renewal thereof except to a fraternal benefit society,
$100.
(p) For issuing a certificate of authority or
renewal thereof to a fraternal benefit society, $50.
(q) For issuing an amended certificate of
authority, $25.
(r) For each certified copy of certificate of
authority, $10.
(s) For each certificate of deposit, or valuation,
or compliance or surety certificate, $10.
(t) For copies of papers or records per page, $1.
(u) For each certification to copies of papers or
records, $10.
(v) For multiple copies of documents or
certificates listed in subparagraphs (r), (s), and (u) of
paragraph (1) of this Section, $10 for the first copy of
a certificate of any type and $5 for each additional copy
of the same certificate requested at the same time,
unless, pursuant to paragraph (2) of this Section, the
Director finds these additional fees excessive.
(w) For issuing a permit to sell shares or increase
paid-up capital:
(i) in connection with a public stock
offering, $150;
(ii) in any other case, $50.
(x) For issuing any other certificate required or
permissible under the law, $25.
(y) For filing a plan of exchange of the stock of a
domestic stock insurance company, a plan of
demutualization of a domestic mutual company, or a plan
of reorganization under Article XII, $1,000.
(z) For filing a statement of acquisition of a
domestic company as defined in Section 131.4 of this
Code, $1,000.
(aa) For filing an agreement to purchase the
business of an organization authorized under the Dental
Service Plan Act, the Vision Service Plan Act, or the
Voluntary Health Services Plans Act or of a health
maintenance organization or a limited health service
organization, $1,000.
(bb) For filing a statement of acquisition of a
foreign or alien insurance company as defined in Section
131.12a of this Code, $500.
(cc) For filing a registration statement as
required in Sections 131.13 and 131.14, the notification
as required by Sections 131.16, 131.20a, or 141.4, or an
agreement or transaction required by Sections 124.2(2),
141, 141a, or 141.1, $100.
(dd) For filing an application for licensing of:
(i) a religious or charitable risk pooling
trust or a workers' compensation pool, $500;
(ii) a workers' compensation service company,
$250;
(iii) a self-insured automobile fleet, $100;
or
(iv) a renewal of or amendment of any license
issued pursuant to (i), (ii), or (iii) above, $50.
(ee) For filing articles of incorporation for a
syndicate to engage in the business of insurance through
the Illinois Insurance Exchange, $1,000.
(ff) For filing amended articles of incorporation
for a syndicate engaged in the business of insurance
through the Illinois Insurance Exchange, $50.
(gg) For filing articles of incorporation for a
limited syndicate to join with other subscribers or
limited syndicates to do business through the Illinois
Insurance Exchange, $500.
(hh) For filing amended articles of incorporation
for a limited syndicate to do business through the
Illinois Insurance Exchange, $50.
(ii) For a permit to solicit subscriptions to a
syndicate or limited syndicate, $50.
(jj) For the filing of each form as required in
Section 143 of this Code, $25 per form. The fee for
advisory and rating organizations shall be $100 per form.
(i) For the purposes of the form filing fee,
filings made on insert page basis will be considered
one form at the time of its original submission.
Changes made to a form subsequent to its approval
shall be considered a new filing.
(ii) Only one fee shall be charged for a form,
regardless of the number of other forms or policies
with which it will be used.
(iii) Fees charged for a policy filed as it
will be issued regardless of the number of forms
comprising that policy shall not exceed $500 or
$1000 for advisory or rating organizations.
(iv) The Director may by rule exempt forms
from such fees.
(kk) For filing an application for licensing of a
reinsurance intermediary, $250.
(ll) For filing an application for renewal of a
license of a reinsurance intermediary, $100.
(2) When printed copies or numerous copies of the same
paper or records are furnished or certified, the Director may
reduce such fees for copies if he finds them excessive. He
may, when he considers it in the public interest, furnish
without charge to state insurance departments and persons
other than companies, copies or certified copies of reports
of examinations and of other papers and records.
(3) The expenses incurred in any performance examination
authorized by law shall be paid by the company or person
being examined. The charge shall be reasonably related to the
cost of the examination including but not limited to
compensation of examiners, electronic data processing costs,
supervision and preparation of an examination report and
lodging and travel expenses. All lodging and travel expenses
shall be in accord with the applicable travel regulations as
published by the Department of Central Management Services
and approved by the Governor's Travel Control Board, except
that out-of-state lodging and travel expenses related to
examinations authorized under Section 132 shall be in
accordance with travel rates prescribed under paragraph
301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
for reimbursement of subsistence expenses incurred during
official travel. All lodging and travel expenses may be
reimbursed directly upon authorization of the Director. With
the exception of the direct reimbursements authorized by the
Director, all performance examination charges collected by
the Department shall be paid to the Insurance Producers
Administration Fund, however, the electronic data processing
costs incurred by the Department in the performance of any
examination shall be billed directly to the company being
examined for payment to the Statistical Services Revolving
Fund.
(4) At the time of any service of process on the
Director as attorney for such service, the Director shall
charge and collect the sum of $10.00, which may be recovered
as taxable costs by the party to the suit or action causing
such service to be made if he prevails in such suit or
action.
(5) (a) The costs incurred by the Department of
Insurance in conducting any hearing authorized by law shall
be assessed against the parties to the hearing in such
proportion as the Director of Insurance may determine upon
consideration of all relevant circumstances including: (1)
the nature of the hearing; (2) whether the hearing was
instigated by, or for the benefit of a particular party or
parties; (3) whether there is a successful party on the
merits of the proceeding; and (4) the relative levels of
participation by the parties.
(b) For purposes of this subsection (5) costs incurred
shall mean the hearing officer fees, court reporter fees, and
travel expenses of Department of Insurance officers and
employees; provided however, that costs incurred shall not
include hearing officer fees or court reporter fees unless
the Department has retained the services of independent
contractors or outside experts to perform such functions.
(c) The Director shall make the assessment of costs
incurred as part of the final order or decision arising out
of the proceeding; provided, however, that such order or
decision shall include findings and conclusions in support of
the assessment of costs. This subsection (5) shall not be
construed as permitting the payment of travel expenses unless
calculated in accordance with the applicable travel
regulations of the Department of Central Management Services,
as approved by the Governor's Travel Control Board. The
Director as part of such order or decision shall require all
assessments for hearing officer fees and court reporter fees,
if any, to be paid directly to the hearing officer or court
reporter by the party(s) assessed for such costs. The
assessments for travel expenses of Department officers and
employees shall be reimbursable to the Director of Insurance
for deposit to the fund out of which those expenses had been
paid.
(d) The provisions of this subsection (5) shall apply in
the case of any hearing conducted by the Director of
Insurance not otherwise specifically provided for by law.
(6) The Director shall charge and collect an annual
financial regulation fee from every domestic company for
examination and analysis of its financial condition and to
fund the internal costs and expenses of the Interstate
Insurance Receivership Commission as may be allocated to the
State of Illinois and companies doing an insurance business
in this State pursuant to Article X of the Interstate
Insurance Receivership Compact. The fee shall be the greater
fixed amount based upon the combination of nationwide direct
premium income and nationwide reinsurance assumed premium
income or upon admitted assets calculated under this
subsection as follows:
(a) Combination of nationwide direct premium income
and nationwide reinsurance assumed premium.
(i) $100, if the premium is less than $500,000
and there is no reinsurance assumed premium;
(ii) $500, if the premium is $500,000 or more,
but less than $5,000,000 and there is no reinsurance
assumed premium; or if the premium is less than
$5,000,000 and the reinsurance assumed premium is
less than $10,000,000;
(iii) $2,500, if the premium is less than
$5,000,000 and the reinsurance assumed premium is
$10,000,000 or more;
(iv) $5,000, if the premium is $5,000,000 or
more, but less than $10,000,000;
(v) $7,500, if the premium is $10,000,000 or
more, but less than $25,000,000;
(vi) $10,000, if the premium is $25,000,000 or
more, but less than $50,000,000;
(vii) $14,000, if the premium is $50,000,000
or more, but less than $100,000,000;
(viii) $16,000, if the premium is $100,000,000
or more.
(b) Admitted assets.
(i) $100, if admitted assets are less than
$1,000,000;
(ii) $500, if admitted assets are $1,000,000
or more, but less than $5,000,000;
(iii) 2,500, if admitted assets are $5,000,000
or more, but less than $25,000,000;
(iv) $5,000, if admitted assets are
$25,000,000 or more, but less than $50,000,000;
(v) $7,500, if admitted assets are $50,000,000
or more, but less than $100,000,000;
(vi) $10,000, if admitted assets are
$100,000,000 or more, but less than $500,000,000;
(vii) $14,000, if admitted assets are
$500,000,000 or more, but less than $1,000,000,000;
(viii) $16,000, if admitted assets are
$1,000,000,000 or more.
(c) The sum of financial regulation fees charged to
the domestic companies of the same domestic affiliated
group shall not exceed $100,000 and shall be billed by
the Director to the member company designated by the
group.
(7) The Director shall charge and collect an annual
financial regulation fee from every foreign or alien company,
except fraternal benefit societies, for the examination and
analysis of its financial condition and to fund the internal
costs and expenses of the Interstate Insurance Receivership
Commission as may be allocated to the State of Illinois and
companies doing an insurance business in this State pursuant
to Article X of the Interstate Insurance Receivership
Compact. The fee shall be a fixed amount based upon Illinois
direct premium income and nationwide reinsurance assumed
premium income in accordance with the following schedule:
(a) $100, if the premium is less than $500,000 and
there is no reinsurance assumed premium;
(b) $500, if the premium is $500,000 or more, but
less than $5,000,000 and there is no reinsurance assumed
premium; or if the premium is less than $5,000,000 and
the reinsurance assumed premium is less than $10,000,000;
(c) $2,500, if the premium is less than $5,000,000
and the reinsurance assumed premium is $10,000,000 or
more;
(d) $5,000, if the premium is $5,000,000 or more,
but less than $10,000,000;
(e) $12,000, if the premium is $10,000,000 or more,
but less than $25,000,000;
(f) $15,000, if the premium is $25,000,000 or more,
but less than $50,000,000;
(g) $20,000, if the premium is $50,000,000 or more,
but less than $100,000,000;
(h) $25,000, if the premium is $100,000,000 or
more.
(8) Beginning January 1, 1992, the financial regulation
fees imposed under subsections (6) and (7) of this Section
shall be paid by each company or domestic affiliated group
annually. After January 1, 1994, the fee shall be billed by
Department invoice based upon the company's premium income or
admitted assets as shown in its annual statement for the
preceding calendar year. The invoice is due upon receipt and
must be paid no later than June 30 of each calendar year.
All financial regulation fees collected by the Department
shall be paid to the Insurance Financial Regulation Fund.
The Department may not collect financial examiner per diem
charges from companies subject to subsections (6) and (7) of
this Section undergoing financial examination after June 30,
1992.
(9) In addition to the financial regulation fee required
by this Section, a company undergoing any financial
examination authorized by law shall pay the following costs
and expenses incurred by the Department: electronic data
processing costs, the expenses authorized under Section
131.21 and subsection (d) of Section 132.4 of this Code, and
lodging and travel expenses.
Electronic data processing costs incurred by the
Department in the performance of any examination shall be
billed directly to the company undergoing examination for
payment to the Statistical Services Revolving Fund. Except
for direct reimbursements authorized by the Director or
direct payments made under Section 131.21 or subsection (d)
of Section 132.4 of this Code, all financial regulation fees
and all financial examination charges collected by the
Department shall be paid to the Insurance Financial
Regulation Fund.
All lodging and travel expenses shall be in accordance
with applicable travel regulations published by the
Department of Central Management Services and approved by the
Governor's Travel Control Board, except that out-of-state
lodging and travel expenses related to examinations
authorized under Sections 132.1 through 132.7 shall be in
accordance with travel rates prescribed under paragraph
301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
for reimbursement of subsistence expenses incurred during
official travel. All lodging and travel expenses may be
reimbursed directly upon the authorization of the Director.
In the case of an organization or person not subject to
the financial regulation fee, the expenses incurred in any
financial examination authorized by law shall be paid by the
organization or person being examined. The charge shall be
reasonably related to the cost of the examination including,
but not limited to, compensation of examiners and other costs
described in this subsection.
(10) Any company, person, or entity failing to make any
payment of $100 or more as required under this Section shall
be subject to the penalty and interest provisions provided
for in subsections (4) and (7) of Section 412.
(11) Unless otherwise specified, all of the fees
collected under this Section shall be paid into the Insurance
Financial Regulation Fund.
(12) For purposes of this Section:
(a) "domestic company" means a company as defined
in Section 2 of this Code which is incorporated or
organized under the laws of this State, and in addition
includes a not-for-profit corporation authorized under
the Dental, Vision, Pharmaceutical, or Voluntary Health
Service Plan Acts, and a health maintenance organization
and a limited health service organization;
(b) "foreign company" means a company as defined in
Section 2 of this Code which is incorporated or organized
under the laws of any state of the United States other
than this State and in addition includes a health
maintenance organization and a limited health service
organization which is incorporated or organized under the
laws of any state of the United States other than this
State;
(c) "alien company" means a company as defined in
Section 2 of this Code which is incorporated or organized
under the laws of any country other than the United
States;
(d) "fraternal benefit society" means a
corporation, society, order, lodge or voluntary
association as defined in Section 282.1 of this Code;
(e) "mutual benefit association" means a company,
association or corporation authorized by the Director to
do business in this State under the provisions of Article
XVIII of this Code;
(f) "burial society" means a person, firm,
corporation, society or association of individuals
authorized by the Director to do business in this State
under the provisions of Article XIX of this Code; and
(g) "farm mutual" means a district, county and
township mutual insurance company authorized by the
Director to do business in this State under the
provisions of the Farm Mutual Insurance Company Act of
1986.
(Source: P.A. 88-364; 89-97, eff. 7-7-95; 89-247, eff.
1-1-96; 89-626, eff. 8-9-96.)
(215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
Sec. 531.03. Coverage and limitations.
(1) This Article shall provide coverage for the policies
and contracts specified in paragraph (2) of this Section:
(a) to persons who, regardless of where they reside
(except for non-resident certificate holders under group
policies or contracts), are the beneficiaries, assignees
or payees of the persons covered under subparagraph
(1)(b), and
(b) to persons who are owners of or certificate
holders under such policies or contracts; or, in the case
of unallocated annuity contracts, to the persons who are
the contract holders, and who
(i) are residents of this State, or
(ii) are not residents, but only under all of
the following conditions:
(A) the insurers which issued such
policies or contracts are domiciled in this
State;
(B) such insurers never held a license or
certificate of authority in the states in which
such persons reside;
(C) such states have associations similar
to the association created by this Act; and
(D) such persons are not eligible for
coverage by such associations.
(2)(a) This Article shall provide coverage to the
persons specified in paragraph (l) of this Section for
direct, (i) nongroup life, health, annuity and supplemental
policies, or contracts, (ii) for certificates under direct
group policies or contracts, (iii) for unallocated annuity
contracts and (iv) for contracts to furnish health care
services and subscription certificates for medical or health
care services issued by persons licensed to transact
insurance business in this State under the Illinois Insurance
Code. Annuity contracts and certificates under group annuity
contracts include but are not limited to guaranteed
investment contracts, deposit administration contracts,
unallocated funding agreements, allocated funding agreements,
structured settlement agreements, lottery contracts and any
immediate or deferred annuity contracts.
(b) This Article shall not provide coverage for:
(i) that portion or part of such policies or
contracts under which the risk is borne by the
policyholder; provided however, that nothing in this
subparagraph (i) shall make this Article inapplicable to
assessment life and accident and health insurance
policies or contracts; or
(ii) any such policy or contract or part thereof
assumed by the impaired or insolvent insurer under a
contract of reinsurance, other than reinsurance for which
assumption certificates have been issued; or
(iii) any portion of a policy or contract to the
extent such portion represents an accrued value that the
rate of interest on which it is accrued
(A) averaged over the period of four years
prior to the date on which the Association becomes
obligated with respect to such policy or contract,
exceeds a rate of interest determined by subtracting
two percentage points from Moody's Corporate Bond
Yield Average averaged for that same four year
period or for such lesser period if the policy or
contract was issued less than four years before the
Association became obligated; and
(B) on and after the date on which the
Association becomes obligated with respect to such
policy or contract, exceeds the rate of interest
determined by subtracting three percentage points
from Moody's Corporate Bond Yield Average as most
recently available;
(iv) any unallocated annuity contract issued to an
employee benefit plan protected under the federal Pension
Benefit Guaranty Corporation; and
(v) any portion of any unallocated annuity contract
which is not issued to or in connection with a specific
employee, union or association of natural persons benefit
plan or a government lottery.
(vi) any burial society organized under Article XIX
of this Act, any fraternal benefit society organized
under Article XVII of this Act, any mutual benefit
association organized under Article XVIII of this Act,
and any foreign fraternal benefit society licensed under
Article VI of this Act; or
(vii) any health maintenance organization
established pursuant to the Health Maintenance
Organization Act including any health maintenance
organization business of a member insurer; or
(viii) any health services plan corporation
established pursuant to the Voluntary Health Services
Plans Act; or
(ix) (blank); any vision service plan corporation
established pursuant to the Vision Service Plan Act; or
(x) any dental service plan corporation established
pursuant to the Dental Service Plan Act; or
(xi) any stop-loss insurance, as defined in clause
(b) of Class 1 or clause (a) of Class 2 of Section 4, and
further defined in subsection (d) of Section 352; or
(xii) that portion or part of a variable life
insurance or variable annuity contract not guaranteed by
an insurer.
(3) The benefits for which the Association may become
liable shall in no event exceed the lesser of:
(a) the contractual obligations for which the
insurer is liable or would have been liable if it were
not an impaired or insolvent insurer, or
(b)(i) with respect to any one life, regardless of
the number of policies or contracts:
(A) $300,000 in life insurance death benefits,
but not more than $100,000 in net cash surrender and
net cash withdrawal values for life insurance;
(B) $300,000 in health insurance benefits,
including any net cash surrender and net cash
withdrawal values;
(C) $100,000 in the present value of annuity
benefits, including net cash surrender and net cash
withdrawal values;
(ii) with respect to each individual participating
in a governmental retirement plan established under
Section 401, 403(b) or 457 of the U.S. Internal Revenue
Code covered by an unallocated annuity contract or the
beneficiaries of each such individual if deceased, in the
aggregate, $100,000 in present value annuity benefits,
including net cash surrender and net cash withdrawal
values; provided, however, that in no event shall the
Association be liable to expend more than $300,000 in the
aggregate with respect to any one individual under
subparagraph (1) and this subparagraph:
(iii) with respect to any one contract holder
covered by any unallocated annuity contract not included
in subparagraph (3)(b)(ii) of this Section above,
$5,000,000 in benefits, irrespective of the number of
such contracts held by that contract holder.
(Source: P.A. 88-364.)
(215 ILCS 5/1003) (from Ch. 73, par. 1065.703)
Sec. 1003. Definitions. As used in this Article:
(A) "Adverse underwriting decision" means:
(1) any of the following actions with respect to
insurance transactions involving insurance coverage which
is individually underwritten:
(a) a declination of insurance coverage,
(b) a termination of insurance coverage,
(c) failure of an agent to apply for insurance
coverage with a specific insurance institution which
the agent represents and which is requested by an
applicant,
(d) in the case of a property or casualty
insurance coverage:
(i) placement by an insurance institution
or agent of a risk with a residual market
mechanism, an unauthorized insurer or an
insurance institution which specializes in
substandard risks, or
(ii) the charging of a higher rate on the
basis of information which differs from that
which the applicant or policyholder furnished,
or
(e) in the case of life, health or disability
insurance coverage, an offer to insure at higher
than standard rates.
(2) Notwithstanding paragraph (1) above, the
following actions shall not be considered adverse
underwriting decisions but the insurance institution or
agent responsible for their occurrence shall nevertheless
provide the applicant or policyholder with the specific
reason or reasons for their occurrence:
(a) the termination of an individual policy
form on a class or statewide basis,
(b) a declination of insurance coverage solely
because such coverage is not available on a class or
statewide basis, or
(c) the rescission of a policy.
(B) "Affiliate" or "affiliated" means a person that
directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with
another person.
(C) "Agent" means an individual, firm, partnership,
association or corporation who is involved in the
solicitation, negotiation or binding of coverages for or on
applications or policies of insurance, covering property or
risks located in this State. For the purposes of this
Article, both "Insurance Agent" and "Insurance Broker", as
defined in Section 490, shall be considered an agent.
(D) "Applicant" means any person who seeks to contract
for insurance coverage other than a person seeking group
insurance that is not individually underwritten.
(E) "Director" means the Director of Insurance.
(F) "Consumer report" means any written, oral or other
communication of information bearing on a natural person's
credit worthiness, credit standing, credit capacity,
character, general reputation, personal characteristics or
mode of living which is used or expected to be used in
connection with an insurance transaction.
(G) "Consumer reporting agency" means any person who:
(1) regularly engages, in whole or in part, in the
practice of assembling or preparing consumer reports for
a monetary fee,
(2) obtains information primarily from sources other
than insurance institutions, and
(3) furnishes consumer reports to other persons.
(H) "Control", including the terms "controlled by" or
"under common control with", means the possession, direct or
indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the
ownership of voting securities, by contract other than a
commercial contract for goods or nonmanagement services, or
otherwise, unless the power is the result of an official
position with or corporate office held by the person.
(I) "Declination of insurance coverage" means a denial,
in whole or in part, by an insurance institution or agent of
requested insurance coverage.
(J) "Individual" means any natural person who:
(1) in the case of property or casualty insurance,
is a past, present or proposed named insured or
certificateholder;
(2) in the case of life, health or disability
insurance, is a past, present or proposed principal
insured or certificateholder;
(3) is a past, present or proposed policyowner;
(4) is a past or present applicant;
(5) is a past or present claimant; or
(6) derived, derives or is proposed to derive
insurance coverage under an insurance policy or
certificate subject to this Article.
(K) "Institutional source" means any person or
governmental entity that provides information about an
individual to an agent, insurance institution or
insurance-support organization, other than:
(1) an agent,
(2) the individual who is the subject of the
information, or
(3) a natural person acting in a personal capacity
rather than in a business or professional capacity.
(L) "Insurance institution" means any corporation,
association, partnership, reciprocal exchange, inter-insurer,
Lloyd's insurer, fraternal benefit society or other person
engaged in the business of insurance, health maintenance
organizations as defined in Section 2 of the "Health
Maintenance Organization Act", medical service plans as
defined in Section 2 of "the Medical Service Plan Act",
hospital service corporation under "the Nonprofit Health Care
Service Plan Act", voluntary health services plans as defined
in Section 2 of "the Voluntary Health Services Plans Act",
vision service plans as defined in Section 2 of-"The Vision
Service Plan Act", dental service plans as defined in Section
4 of "the Dental Service Plan Act", and pharmaceutical
service plans as defined in Section 4 of "the Pharmaceutical
Service Plan Act". "Insurance institution" shall not include
agents or insurance-support organizations.
(M) "Insurance-support organization" means:
(1) any person who regularly engages, in whole or in
part, in the practice of assembling or collecting
information about natural persons for the primary purpose
of providing the information to an insurance institution
or agent for insurance transactions, including:
(a) the furnishing of consumer reports or
investigative consumer reports to an insurance
institution or agent for use in connection with an
insurance transaction, or
(b) the collection of personal information
from insurance institutions, agents or other
insurance-support organizations for the purpose of
detecting or preventing fraud, material
misrepresentation or material nondisclosure in
connection with insurance underwriting or insurance
claim activity.
(2) Notwithstanding paragraph (1) above, the
following persons shall not be considered
"insurance-support organizations" for purposes of this
Article: agents, government institutions, insurance
institutions, medical care institutions and medical
professionals.
(N) "Insurance transaction" means any transaction
involving insurance primarily for personal, family or
household needs rather than business or professional needs
which entails:
(1) the determination of an individual's
eligibility for an insurance coverage, benefit or
payment, or
(2) the servicing of an insurance application,
policy, contract or certificate.
(O) "Investigative consumer report" means a consumer
report or portion thereof in which information about a
natural person's character, general reputation, personal
characteristics or mode of living is obtained through
personal interviews with the person's neighbors, friends,
associates, acquaintances or others who may have knowledge
concerning such items of information.
(P) "Medical-care institution" means any facility or
institution that is licensed to provide health care services
to natural persons, including but not limited to: hospitals,
skilled nursing facilities, home-health agencies, medical
clinics, rehabilitation agencies and public-health agencies
and health-maintenance organizations.
(Q) "Medical professional" means any person licensed or
certified to provide health care services to natural
persons, including but not limited to, a physician, dentist,
nurse, optometrist, chiropractor, pharmacist, physical or
occupational therapist, psychiatric social worker, speech
therapist, clinical dietitian or clinical psychologist.
(R) "Medical-record information" means personal
information which:
(1) relates to an individual's physical or mental
condition, medical history or medical treatment, and
(2) is obtained from a medical professional or
medical-care institution, from the individual, or from
the individual's spouse, parent or legal guardian.
(S) "Person" means any natural person, corporation,
association, partnership or other legal entity.
(T) "Personal information" means any individually
identifiable information gathered in connection with an
insurance transaction from which judgments can be made about
an individual's character, habits, avocations, finances,
occupation, general reputation, credit, health or any other
personal characteristics. "Personal information" includes an
individual's name and address and "medical-record
information" but does not include "privileged information".
(U) "Policyholder" means any person who:
(1) in the case of individual property or casualty
insurance, is a present named insured;
(2) in the case of individual life, health or
disability insurance, is a present policyowner; or
(3) in the case of group insurance which is
individually underwritten, is a present group
certificateholder.
(V) "Pretext interview" means an interview whereby a
person, in an attempt to obtain information about a natural
person, performs one or more of the following acts:
(1) pretends to be someone he or she is not,
(2) pretends to represent a person he or she is not
in fact representing,
(3) misrepresents the true purpose of the
interview, or
(4) refuses to identify himself or herself upon
request.
(W) "Privileged information" means any individually
identifiable information that: (1) relates to a claim for
insurance benefits or a civil or criminal proceeding
involving an individual, and (2) is collected in connection
with or in reasonable anticipation of a claim for insurance
benefits or civil or criminal proceeding involving an
individual; provided, however, information otherwise meeting
the requirements of this subsection shall nevertheless be
considered "personal information" under this Article if it is
disclosed in violation of Section 1014 of this Article.
(X) "Residual market mechanism" means an association,
organization or other entity described in Article XXXIII of
this Act, or Section 7-501 of "The Illinois Vehicle Code".
(Y) "Termination of insurance coverage" or "termination
of an insurance policy" means either a cancellation or
nonrenewal of an insurance policy, in whole or in part, for
any reason other than the failure to pay a premium as
required by the policy.
(Z) "Unauthorized insurer" means an insurance institution
that has not been granted a certificate of authority by the
Director to transact the business of insurance in this State.
(Source: P.A. 82-108.)
Section 10. The Health Maintenance Organization Act is
amended by changing Sections 1-2, 5-3, and 5-6 as follows:
(215 ILCS 125/1-2) (from Ch. 111 1/2, par. 1402)
Sec. 1-2. Definitions. As used in this Act, unless the
context otherwise requires, the following terms shall have
the meanings ascribed to them:
(1) "Advertisement" means any printed or published
material, audiovisual material and descriptive literature of
the health care plan used in direct mail, newspapers,
magazines, radio scripts, television scripts, billboards and
similar displays; and any descriptive literature or sales
aids of all kinds disseminated by a representative of the
health care plan for presentation to the public including,
but not limited to, circulars, leaflets, booklets,
depictions, illustrations, form letters and prepared sales
presentations.
(2) "Director" means the Director of Insurance.
(3) "Basic health care services" means emergency care,
and inpatient hospital and physician care, outpatient medical
services, mental health services and care for alcohol and
drug abuse, including any reasonable deductibles and
co-payments, all of which are subject to such limitations as
are determined by the Director pursuant to rule.
(4) "Enrollee" means an individual who has been enrolled
in a health care plan.
(5) "Evidence of coverage" means any certificate,
agreement, or contract issued to an enrollee setting out the
coverage to which he is entitled in exchange for a per capita
prepaid sum.
(6) "Group contract" means a contract for health care
services which by its terms limits eligibility to members of
a specified group.
(7) "Health care plan" means any arrangement whereby any
organization undertakes to provide or arrange for and pay for
or reimburse the cost of basic health care services from
providers selected by the Health Maintenance Organization and
such arrangement consists of arranging for or the provision
of such health care services, as distinguished from mere
indemnification against the cost of such services, except as
otherwise authorized by Section 2-3 of this Act, on a per
capita prepaid basis, through insurance or otherwise. A
"health care plan" also includes any arrangement whereby an
organization undertakes to provide or arrange for or pay for
or reimburse the cost of any health care service for persons
who are enrolled in the integrated health care program
established under Section 5-16.3 of the Illinois Public Aid
Code through providers selected by the organization and the
arrangement consists of making provision for the delivery of
health care services, as distinguished from mere
indemnification. Nothing in this definition, however,
affects the total medical services available to persons
eligible for medical assistance under the Illinois Public Aid
Code.
(8) "Health care services" means any services included
in the furnishing to any individual of medical or dental
care, or the hospitalization or incident to the furnishing of
such care or hospitalization as well as the furnishing to any
person of any and all other services for the purpose of
preventing, alleviating, curing or healing human illness or
injury.
(9) "Health Maintenance Organization" means any
organization formed under the laws of this or another state
to provide or arrange for one or more health care plans under
a system which causes any part of the risk of health care
delivery to be borne by the organization or its providers.
(10) "Net worth" means admitted assets, as defined in
Section 1-3 of this Act, minus liabilities.
(11) "Organization" means any insurance company, or a
nonprofit corporation authorized under the Medical Service
Plan Act, the Dental Service Plan Act, the Vision Service
Plan Act, the Pharmaceutical Service Plan Act, the Voluntary
Health Services Plans Act or the Non-profit Health Care
Service Plan Act, or a corporation organized under the laws
of this or another state for the purpose of operating one or
more health care plans and doing no business other than that
of a Health Maintenance Organization or an insurance company.
Organization shall also mean the University of Illinois
Hospital as defined in the University of Illinois Hospital
Act.
(12) "Provider" means any physician, hospital facility,
or other person which is licensed or otherwise authorized to
furnish health care services and also includes any other
entity that arranges for the delivery or furnishing of health
care service.
(13) "Producer" means a person directly or indirectly
associated with a health care plan who engages in
solicitation or enrollment.
(14) "Per capita prepaid" means a basis of prepayment by
which a fixed amount of money is prepaid per individual or
any other enrollment unit to the Health Maintenance
Organization or for health care services which are provided
during a definite time period regardless of the frequency or
extent of the services rendered by the Health Maintenance
Organization, except for copayments and deductibles and
except as provided in subsection (f) of Section 5-3 of this
Act.
(15) "Subscriber" means a person who has entered into a
contractual relationship with the Health Maintenance
Organization for the provision of or arrangement of at least
basic health care services to the beneficiaries of such
contract.
(Source: P.A. 88-554, eff. 7-26-94; 89-90, eff. 6-30-95.)
(215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356m, 367i, 401, 401.1,
402, 403, 403A, 408, 408.2, and 412, paragraph (c) of
subsection (2) of Section 367, and Articles VIII 1/2, XII,
XII 1/2, XIII, XIII 1/2, and XXVI of the Illinois Insurance
Code.
(b) For purposes of the Illinois Insurance Code, except
for Articles XIII and XIII 1/2, Health Maintenance
Organizations in the following categories are deemed to be
"domestic companies":
(1) a corporation authorized under the Medical
Service Plan Act, the Dental Service Plan Act, the Vision
Service Plan Act, the Pharmaceutical Service Plan Act,
the Voluntary Health Services Plan Act, or the Nonprofit
Health Care Service Plan Act;
(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of
another state, 30% or more of the enrollees of which are
residents of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article
VIII 1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration
to the continuation of benefits to enrollees and the
financial conditions of the acquired Health Maintenance
Organization after the merger, consolidation, or other
acquisition of control takes effect;
(2)(i) the criteria specified in subsection (1)(b)
of Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination
with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or
other acquisition of control;
(3) the Director shall have the power to require
the following information:
(A) certification by an independent actuary of
the adequacy of the reserves of the Health
Maintenance Organization sought to be acquired;
(B) pro forma financial statements reflecting
the combined balance sheets of the acquiring company
and the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as
of a date 90 days prior to the acquisition, as well
as pro forma financial statements reflecting
projected combined operation for a period of 2
years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the
operation of the Health Maintenance Organization
sought to be acquired for a period of not less than
3 years; and
(D) such other information as the Director
shall require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale
by any health maintenance organization of greater than 10% of
its enrollee population (including without limitation the
health maintenance organization's right, title, and interest
in and to its health care certificates).
(e) In considering any management contract or service
agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code,
take into account the effect of the management contract or
service agreement on the continuation of benefits to
enrollees and the financial condition of the health
maintenance organization to be managed or serviced, and (ii)
need not take into account the effect of the management
contract or service agreement on competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a
Health Maintenance Organization may by contract agree with a
group or other enrollment unit to effect refunds or charge
additional premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions
with respect to, the refund or additional premium are set
forth in the group or enrollment unit contract agreed in
advance of the period for which a refund is to be paid or
additional premium is to be charged (which period shall
not be less than one year); and
(ii) the amount of the refund or additional premium
shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the
period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and
marketing expenses, but shall not include any refund to
be made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the
profitable or unprofitable experience may be calculated
taking into account the refund period and the immediately
preceding 2 plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and
the resulting additional premium to be paid by the group or
enrollment unit.
In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay
any refund authorized under this Section.
(Source: P.A. 88-313; 89-90, eff. 6-30-95.)
(215 ILCS 125/5-6) (from Ch. 111 1/2, par. 1414)
Sec. 5-6. Supervision of rehabilitation, liquidation or
conservation by the Director.
(a) For purposes of the rehabilitation, liquidation or
conservation of a health maintenance organization, the
operation of a health maintenance organization in this State
constitutes a form of insurance protection which should be
governed by the same provisions governing the rehabilitation,
liquidation or conservation of insurance companies. Any
rehabilitation, liquidation or conservation of a Health
Maintenance Organization shall be based upon the grounds set
forth in and subject to the provisions of the laws of this
State regarding the rehabilitation, liquidation, or
conservation of an insurance company and shall be conducted
under the supervision of the Director. Insolvency, as a
ground for rehabilitation, liquidation, or conservation of a
Health Maintenance Organization, shall be recognized when a
Health Maintenance Organization cannot be expected to satisfy
its financial obligations when such obligations are to become
due or when the Health Maintenance Organization has neglected
to correct within the time prescribed by subsection (c) of
Section 2-4, a deficiency occurring due to such
organization's prescribed minimum net worth or special
contingent reserve being impaired. For purpose of
determining the priority of distribution of general assets,
claims of enrollees and enrollees' beneficiaries shall have
the same priority as established by Section 205 of the
Illinois Insurance Code for policyholders and beneficiaries
of insureds of insurance companies. If an enrollee is liable
to any provider for services provided pursuant to and covered
by the health care plan, that liability shall have the status
of an enrollee claim for distribution of general assets.
Any provider who is obligated by statute or agreement to
hold enrollees harmless from liability for services provided
pursuant to and covered by a health care plan shall have a
priority of distribution of the general assets immediately
following that of enrollees and enrollees' beneficiaries as
described herein, and immediately preceding the priority of
distribution described in paragraph (e) of subsection (1) of
Section 205 of the Illinois Insurance Code.
(b) For purposes of Articles XIII and XIII-1/2 of the
Illinois Insurance Code, organizations in the following
categories shall be deemed to be a "domestic company" and a
"domiciliary company":
(i) a corporation authorized under the Medical
Service Plan Act, the Dental Service Plan Act, the Vision
Service Plan Act, the Pharmaceutical Service Plan Act,
the Voluntary Health Services Plans Act or the Non-Profit
Health Care Service Plan Act;
(ii) a corporation organized under the laws of this
State; or
(iii) a corporation organized under the laws of
another state, 20% or more of the enrollees of which are
residents of this State, except where such a corporation
is, in its state of incorporation, subject to
rehabilitation, liquidation and conservation under the
laws relating to insurance companies.
(c) In the event of the insolvency of a health
maintenance organization, no enrollee of such organization
shall be liable to any provider for medical services rendered
by such provider, except for applicable co-payments or
deductibles for covered services or fees for services not
covered by the health maintenance organization, with respect
to the amounts such provider is not paid by the Association
pursuant to the provisions of Section 6-8 (8)(b) and (c).
No provider, whether or not the provider is obligated by
statute or agreement to hold enrollees harmless from
liability, shall seek to recover any such amount from any
enrollee until the Association has made a final determination
of its liability (or the resolution of any dispute or
litigation resulting therefrom) with respect to the matters
specified in such provisions. In the event that the provider
seeks to recover such amounts before the Association's final
determination of its liability (or the resolution of any
dispute or litigation resulting therefrom), the provider
shall be liable for all reasonable costs and attorney fees
incurred by the Director or the Association in enforcing this
provision or any court orders related hereto.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)
(215 ILCS 160/Act rep.)
Section 15. The Vision Service Plan Act is repealed.
Section 99. Effective date. This Act takes effect upon
becoming law.