Public Act 90-0567 of the 90th General Assembly
Public Act 90-0567
HB1400 Enrolled LRB9002243JSgc
AN ACT concerning health insurance coverage, amending
named Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Health Insurance Portability and
Accountability Act is amended by adding Section 50 as
follows:
(215 ILCS 97/50 new)
Sec. 50. Guaranteed renewability of individual health
insurance coverage.
(A) In general. Except as provided in this Section, a
health insurance issuer that provides individual health
insurance coverage to an individual shall renew or continue
in force such coverage at the option of the individual.
(B) General exceptions. A health insurance issuer may
nonrenew or discontinue health insurance coverage of an
individual in the individual market based only on one or more
of the following:
(1) Nonpayment of premiums. The individual has
failed to pay premiums or contributions in accordance
with the terms of the health insurance coverage or the
issuer has not received timely premium payments.
(2) Fraud. The individual has performed an act or
practice that constitutes fraud or made an intentional
misrepresentation of material fact under the terms of the
coverage.
(3) Termination of plan. The issuer is ceasing to
offer coverage in the individual market in accordance
with subsection (C) of this Section and applicable
Illinois law.
(4) Movement outside the service area. In the case
of a health insurance issuer that offers health insurance
coverage in the market through a network plan, the
individual no longer resides, lives, or works in the
service area (or in an area for which the issuer is
authorized to do business), but only if such coverage is
terminated under this paragraph uniformly without regard
to any health status-related factor of covered
individuals.
(5) Association membership ceases. In the case of
health insurance coverage that is made available in the
individual market only through one or more bona fide
associations, the membership of the individual in the
association (on the basis of which the coverage is
provided) ceases, but only if such coverage is terminated
under this paragraph uniformly without regard to any
health status-related factor of covered individuals.
(C) Requirements for uniform termination of coverage.
(1) Particular type of coverage not offered. In
any case in which an issuer decides to discontinue
offering a particular type of health insurance coverage
offered in the individual market, coverage of such type
may be discontinued by the issuer only if:
(a) the issuer provides notice to each covered
individual provided coverage of this type in such
market of such discontinuation at least 90 days
prior to the date of the discontinuation of such
coverage;
(b) the issuer offers, to each individual in
the individual market provided coverage of this
type, the option to purchase any other individual
health insurance coverage currently being offered by
the issuer for individuals in such market; and
(c) in exercising the option to discontinue
coverage of that type and in offering the option of
coverage under subparagraph (b), the issuer acts
uniformly without regard to any health
status-related factor of enrolled individuals or
individuals who may become eligible for such
coverage.
(2) Discontinuance of all coverage.
(a) In general. Subject to subparagraph (c),
in any case in which a health insurance issuer
elects to discontinue offering all health insurance
coverage in the individual market in Illinois,
health insurance coverage may be discontinued by the
issuer only if:
(i) the issuer provides notice to the
Director and to each individual of the
discontinuation at least 180 days prior to the
date of the expiration of such coverage; and
(ii) all health insurance issued or
delivered for issuance in Illinois in such
market is discontinued and coverage under such
health insurance coverage in such market is not
renewed.
(b) Prohibition on market reentry. In the
case of a discontinuation under subparagraph (a) in
the individual market, the issuer may not provide
for the issuance of any health insurance coverage in
Illinois involved during the 5-year period beginning
on the date of the discontinuation of the last
health insurance coverage not so renewed.
(D) Exception for uniform modification of coverage. At
the time of coverage renewal, a health insurance issuer may
modify the health insurance coverage for a policy form
offered to individuals in the individual market so long as
the modification is consistent with Illinois law and
effective on a uniform basis among all individuals with that
policy form.
(E) Application to coverage offered only through
associations. In applying this Section in the case of health
insurance coverage that is made available by a health
insurance issuer in the individual market to individuals only
through one or more associations, a reference to an
"individual" is deemed to include a reference to such an
association (of which the individual is a member).
Section 10. The Comprehensive Health Insurance Plan Act
is amended by changing Sections 5 and 12 as follows:
(215 ILCS 105/5) (from Ch. 73, par. 1305)
Sec. 5. Plan administrator Administering Carrier.
a. The board shall select a plan administrator an
administering carrier through a competitive bidding process
to administer the plan. The board shall evaluate bids
submitted under this Section based on criteria established by
the board which shall include:
(1) The administrator's carrier's proven ability to
handle other large group accident and health benefit plans.
(2) The efficiency and timeliness of the administrator's
carrier's claim processing paying procedures.
(3) An estimate of total net cost charges for
administering the plan, including any discounts or income the
Plan could expect to receive or benefit from.
(4) The administrator's ability to apply effective cost
containment programs and procedures and of the carrier to
administer the plan in a cost-efficient manner.
(5) The financial condition and stability of the
administrator carrier.
b. The plan administrator administering carrier shall
serve for a period of 5 years subject to removal for cause
and subject to the terms, conditions and limitations of the
contract between the board and the plan administrator
administering carrier. At least one year prior to the
expiration of each 5 year period of service by the current
plan administrator an administering carrier, the board shall
begin to advertise for and accept bids to serve as the plan
administrator administering carrier for the succeeding 5 year
period. Selection of the plan administrator administering
carrier for the succeeding period shall be made at least 6
months prior to the end of the current 5 year period.
c. The plan administrator administering carrier shall
perform such eligibility and administrative claims payment
functions relating to the plan as may be assigned to it
including:
(1) The establishment of administering carrier shall
establish a premium billing procedure for collection of
premiums from plan participants. Billings shall be made on a
periodic basis as determined by the board.
(2) Processing of claims and various cost containment
functions.
(3) (2) Other The administering carrier shall perform
all necessary functions to assure timely payment of benefits
to participants under the plan, including:
(a) Making available information relating to the proper
manner of submitting a claim for benefits under the plan and
distributing forms upon which submissions shall be made.
(b) Evaluating the eligibility of each claim for payment
under the plan.
(c) The administrator administering carrier shall be
governed by the requirements of Part 919 of Title 50 of the
Illinois Administrative Code, promulgated by the Department
of Insurance, regarding the handling of claims under this
Act.
d. The administrator administering carrier shall submit
regular reports to the board regarding the operation of the
plan. The frequency, content and form of the report shall be
as determined by the board.
e. The administrator administering carrier shall pay or
be reimbursed for claims expenses from the premium payments
received from or on behalf of plan participants. If the
administrator's administering carrier's payments or
reimbursements for claims expenses exceed the portion of
premiums allocated by the board for payment of claims
expenses, the board shall provide to the administering
carrier additional funds to the administrator for payment or
reimbursement of such claims expenses.
f. The administrator administering carrier shall be paid
as provided in the board's contract between the Board and the
plan administrator with the administering carrier for
expenses incurred in the performance of its services.
(Source: P.A. 85-1013.)
(215 ILCS 105/12) (from Ch. 73, par. 1312)
Sec. 12. Deficit or surplus.
a. If premiums or other receipts by the Board exceed the
amount required for the operation of the Plan, including
actual losses and administrative expenses of the Plan, the
Board shall direct that the excess be held at interest, in a
bank designated by the Board, or used to offset future losses
or to reduce Plan premiums. In this subsection, the term
"future losses" includes reserves for incurred but not
reported claims.
b. Any deficit incurred or expected to be incurred on
behalf of eligible persons who qualify for plan coverage
under Section 7 of this Act shall be recouped by an
appropriation made by the General Assembly.
c. For the purposes of this Section, a deficit shall be
incurred when anticipated losses and incurred but not
reported claims expenses exceed anticipated income from
earned premiums net of administrative expenses.
d. Any deficit incurred or expected to be incurred on
behalf of federally eligible individuals who qualify for Plan
coverage under Section 15 of this Act shall be recouped by an
assessment of all insurers made in accordance with the
provisions of this Section. The Board shall within 90 days
of the effective date of this amendatory Act of 1997 and
within the first quarter of each fiscal year thereafter
assess all insurers for the anticipated deficit in accordance
with the provisions of this Section. The board may also make
additional assessments no more than 4 times a year to fund
unanticipated deficits, implementation expenses, and cash
flow needs.
e. An insurer's assessment shall be determined by
multiplying the total assessment, as determined in subsection
d. of this Section, by a fraction, the numerator of which
equals that insurer's direct Illinois premiums during the
preceding calendar year and the denominator of which equals
the total of all insurers' direct Illinois premiums. The
Board may exempt those insurers whose share as determined
under this subsection would be so minimal as to not exceed
the estimated cost of levying the assessment.
f. The Board shall charge and collect from each insurer
the amounts determined to be due under this Section. The
assessment shall be billed by Board invoice based upon the
insurer's direct Illinois premium income as shown in its
annual statement for the preceding calendar year as filed
with the Director. The invoice shall be due upon receipt and
must be paid no later than 30 days after receipt by the
insurer.
g. When an insurer fails to pay the full amount of any
assessment of $100 or more due under this Section there shall
be added to the amount due as a penalty the greater of $50 or
an amount equal to 5% of the deficiency for each month or
part of a month that the deficiency remains unpaid.
h. Amounts collected under this Section shall be paid to
the Board for deposit into the Plan Fund authorized by
Section 3 of this Act.
i. An insurer may petition the Director for an abatement
or deferment of all or part of an assessment imposed by the
Board. The Director may abate or defer, in whole or in part,
the assessment if, in the opinion of the Director, payment of
the assessment would endanger the ability of the insurer to
fulfill its contractual obligations. In the event an
assessment against an insurer is abated or deferred in whole
or in part, the amount by which the assessment is abated or
deferred shall be assessed against the other insurers in a
manner consistent with the basis for assessments set forth in
this subsection. The insurer receiving a deferment shall
remain liable to the plan for the deficiency for 4 years.
j. The board shall establish procedures for appeal by
any insurer subject to assessment pursuant to this Section.
Such procedures shall require that:
(1) Any insurer that wishes to appeal all or any
part of an assessment made pursuant to this Section shall
first pay the amount of the assessment as set forth in
the invoice provided by the board within the time
provided in subsection f. of this Section. The board
shall hold such payments in a separate interest-bearing
account. The payments shall be accompanied by a statement
in writing that the payment is made under appeal. The
statement shall specify the grounds for the appeal. The
insurer may be represented in its appeal by counsel or
other representative of its choosing.
(2) Within 90 days following the payment of an
assessment under appeal by any insurer, the board shall
notify the insurer or representative designated by the
insurer in writing of its determination with respect to
the appeal and the basis or bases for that determination
unless the Board notifies the insurer that a reasonable
amount of additional time is required to resolve the
issues raised by the appeal.
(3) The board shall refer to the Director any
question concerning the amount of direct Illinois premium
income as shown in an insurer's annual statement for the
preceding calendar year on file with the Director on the
invoice date of the assessment. Unless additional time
is required to resolve the question, the Director shall
within 60 days report to the board in writing his
determination respecting the amount of direct Illinois
premium income on file on the invoice date of the
assessment.
(4) In the event the board determines that the
insurer is entitled to a refund, the refund shall be paid
within 30 days following the date upon which the board
makes its determination, together with the accrued
interest. Interest on any refund due an insurer shall be
paid at the rate actually earned by the Board on the
separate account.
(5) The amount of any such refund shall then be
assessed against all insurers in a manner consistent with
the basis for assessment as otherwise authorized by this
Section.
(6) The board's determination with respect to any
appeal received pursuant to this subsection shall be a
final administrative decision as defined in Section 3-101
of the Code of Civil Procedure. The provisions of the
Administrative Review Law shall apply to and govern all
proceedings for the judicial review of final
administrative decisions of the board.
(7) If an insurer fails to appeal an assessment in
accordance with the provisions of this subsection, the
insurer shall be deemed to have waived its right of
appeal.
The provisions of this subsection apply to all
assessments made in any calendar year ending on or after
December 31, 1997.
(Source: P.A. 90-30, eff. 7-1-97.)
Section 15. The Health Care Purchasing Group Act is
amended by changing Sections 5, 10, 35, 40, 45, and 65 as
follows:
(215 ILCS 123/5)
Sec. 5. Purpose; applicability of Illinois Health
Insurance Portability and Accountability Act.
(a) The purpose and intent of this Act is to authorize
the formation, operation, and regulation of health care
purchasing groups (referred to in this Act as "HPGs") as
described by this Act, to authorize the sale and regulation
of health insurance products for employers that are sold to
HPGs, and to encourage the development of financially secure
and cost effective markets for the basic health care needs of
employers, employees, and their dependents in this State.
Nothing in this Act authorizes an employer to join with other
employers to self-insure through risk pooling.
(b) All health insurance contracts issued under this Act
are subject to the Illinois Health Insurance Portability and
Accountability Act.
(Source: P.A. 90-337, eff. 1-1-98.)
(215 ILCS 123/10)
Sec. 10. Definitions. Words and phrases As used in this
Act, unless defined in this Section, have the meanings
attributed to them in Section 5 of the Illinois Health
Insurance Portability and Accountability Act.:
"Director" means the Director of Insurance.
"Employee" means a person who works on a full-time basis
for the employer, with a normal week of 30 or more hours, and
has satisfied any applicable waiting periods for insurance.
"Employee" may also include a sole proprietor, a partner of a
partnership, a retired employee, or an independent
contractor, provided the sole proprietor, partner, retired
employee, or independent contractor is included as an
employee under a health benefit plan of the employer. It
does not need to include an employee who works on a
part-time, temporary, seasonal, or substitute basis.
"Employer" may include any legal form of doing business
or employing people, including a self-employed sole
proprietor.
"Health benefit plan" means any hospital or medical
expense-incurred policy or certificate, hospital or medical
service plan contract, or health maintenance organization
subscriber contract. Health benefit plan shall not include a
policy or certificate of individual, accident-only, credit,
dental, vision, medicare supplement, hospital indemnity,
specified disease, long term care or disability income
insurance, coverage issued as a supplement to liability
insurance, workers' compensation or similar insurance, or
automobile medical payment insurance.
"Health insurance contract", "group or master health
insurance contract" and "insurance" refer to the forms of
insurance obligations which a "risk-bearer" as defined in
this Section has been authorized to issue.
"Late enrollee" means an employee or dependent who
requests enrollment in a health benefit plan of an employer
following the initial enrollment period during which the
individual is entitled to enroll under the terms of the
health insurance contract, provided that the initial
enrollment period is a period of at least 30 days. However,
an employee or dependent shall not be considered a late
enrollee if:
(1) The individual meets each of the following:
(A) the individual was covered under a prior
employer based health benefit plan at the time of the
initial enrollment;
(B) the individual lost coverage under qualifying
previous coverage as a result of termination of
employment or eligibility, the involuntary termination of
the qualifying previous coverage, death of a spouse or
divorce; and
(C) the individual requests enrollment within 30
days after the termination of the qualifying previous
coverage;
(2) the individual is employed by an employer that
offers multiple health insurance alternatives and the
individual elects a different coverage during an open
enrollment period; or
(3) a court has ordered coverage be provided for a
spouse or minor or dependent child under a covered employee's
health insurance contract and request for enrollment is made
within 30 days after issuance of the court order.
"Preexisting condition" means a condition that, during a
period of no more than 12 months immediately preceding the
effective date of coverage, had manifested itself in a manner
that would cause an ordinarily prudent person to seek medical
advice, diagnosis, care, or treatment, or for which medical
advice, diagnosis, care, or treatment was recommended or
received.
"Risk-bearer" means an insurance company licensed in this
State and authorized to transact the kinds of business
described in clause (b) of Class 1 and clause (a) of Class 2
of Section 4 of the Illinois Insurance Code and entities
authorized under the Health Maintenance Organization Act.
(Source: P.A. 90-337, eff. 1-1-98.)
(215 ILCS 123/35)
Sec. 35. Underwriting provisions. All health insurance
contracts issued under this Act shall be subject to the
portability and preexisting condition provisions of the
Illinois Health Insurance Portability and Accountability Act.
following provisions, as applicable:
(1) Preexisting condition limitation: No health
insurance contract or certificate issued under the
contract shall exclude or limit coverage for a
preexisting condition for a period beyond 12 months from
the effective date of a person's coverage.
(2) Portability of coverage: Preexisting condition
limitation periods shall be reduced to the extent a
person was covered under a prior employer-based health
benefit plan, notwithstanding the benefit levels of the
prior plan, if:
(A) the person is not a late enrollee; and
(B) the prior coverage was continuous to a
date not more than 30 days prior to the effective
date of the new coverage, exclusive of any
applicable waiting period.
(3) If a risk-bearer offers coverage to an
employer, the risk-bearer shall offer coverage to all of
the employees of an employer and their dependents. A
risk-bearer shall not offer coverage to only certain
individuals of an employer group, except in the case of
late enrollees.
(4) As to employees to whom portability provisions
do not apply, a risk-bearer shall not modify a health
insurance contract or certificate thereunder with respect
to an employer or any employee or dependent, except a
risk-bearer may restrict or exclude coverage or benefits
for a specific condition for a maximum period of 12
months from the effective date of the employee's or
dependant's coverage by way of rider or endorsement. As
to employees to whom the portability of coverage
provisions apply, no riders or endorsements may reduce or
limit benefits to be provided under the portability of
coverage provisions.
(Source: P.A. 90-337, eff. 1-1-98.)
(215 ILCS 123/40)
Sec. 40. Renewability. All health insurance contracts
issued under this Act are subject to the renewability
provisions of the Illinois Health Insurance Portability and
Accountability Act.
(a) A health insurance contract subject to this Act
shall be renewable with respect to all insured employees or
dependents, at the option of the HPG or employer, whichever
is a party to the master health insurance contract, except in
any of the following cases:
(1) nonpayment of required premiums;
(2) fraud or misrepresentation of the employer or,
with respect to coverage of individual insureds, the
insureds or their representatives;
(3) noncompliance with the risk-bearer's minimum
participation requirements;
(4) noncompliance with the risk-bearer's employer
contribution requirements;
(5) noncompliance with contract provisions;
(6) repeated misuse of a provider network
provision;
(7) the risk-bearer elects to non-renew all of its
health insurance contracts delivered or issued for
delivery to HPGs or employers under this Act; or
(8) the Director finds that the continuation of the
coverage would:
(A) Not be in the best interests of the policy
holders or certificate holders; or
(B) Impair the risk-bearer's ability to meet
its contractual obligations.
(b) A risk-bearer that elects not to renew a health
insurance contract under item (7) of subsection (a) shall
provide notice of the decision not to renew coverage to all
affected employers and to the official in charge of insurance
regulation in each state in which an affected insured
individual is known to reside at least 180 days prior to the
nonrenewal of any health insurance contract by the
risk-bearer. Notice to an official in charge of insurance
regulation under this subsection shall be provided at least
3 working days before the notice to the affected employers.
Further, the risk-bearer shall be prohibited from writing new
business under this Act for a period of 5 years from the date
of notice to the Director.
(Source: P.A. 90-337, eff. 1-1-98.)
(215 ILCS 123/45)
Sec. 45. Disclosure requirements. In connection with the
offering for sale of any health insurance contract or
certificate under the contract to an HPG sponsor, HPG,
employer, and employee, a risk-bearer shall make a reasonable
disclosure, as part of its solicitation and sales materials
of all of the following:
(1) the provisions of the health insurance contracts
concerning the risk-bearer's right to change premium rates
and the factors, other than claim experience, that affect
changes in premium rates;
(2) that the rating restrictions contained in Section 30
of the Small Employer Rating, Renewability and Portability
Health Insurance Act are not applicable to the health
insurance contract being offered;
(2)(3) the provisions relating to renewability of
policies and contracts;
(3)(4) the provisions relating to any preexisting
condition provision; and
(4)(5) the provisions relating to portability
provisions.
(Source: P.A. 90-337, eff. 1-1-98.)
(215 ILCS 123/65)
Sec. 65. Fees.
(a) The Director shall charge, collect, and give proper
acquittance for the payment all fees provided for by this
Act, except that any Illinois corporations licensed by the
Department of Insurance pursuant to the provisions of the
Illinois Insurance Code, the Dental Service Plan Act, the
Health Maintenance Organization Act, the Limited Health
Service Organization Act, the Vision Service Plan Act and the
Voluntary Health Services Plans Act or licensed as a third
party administrator or as a managing general agent is exempt
from the registration fee imposed under this Act.
(b) Any funds collected under provisions of this Act
shall be deposited in the Insurance Producer Administration
Fund treated in the manner provided in subsection (11) of
Section 408 of the Illinois Insurance Code.
(Source: P.A. 90-337, eff. 1-1-98.)
(215 ILCS 123/50 rep.)
Section 20. The Health Care Purchasing Group Act is
amended by repealing Section 50.
Section 99. Effective date. This Act takes effect upon
becoming law.