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Public Act 92-0148
SB867 Enrolled LRB9203901JSpc
AN ACT concerning insurance.
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 351A-1, 351A-4, 351A-7, and 351A-8 and
adding Sections 351A-9.2 and 351A-9.3 as follows:
(215 ILCS 5/351A-1) (from Ch. 73, par. 963A-1)
Sec. 351A-1. Definitions. Unless the context requires
otherwise, in this Article:
(a) "Long-term care insurance" means any accident and
health insurance policy or rider advertised, marketed,
offered or designed to provide coverage for not less than 12
consecutive months for each covered person on an expense
incurred, indemnity, prepaid or other basis, for one or more
necessary or medically necessary diagnostic, preventive,
therapeutic, rehabilitative, maintenance, or personal care
services, provided in a setting other than an acute care unit
of a hospital. Such term includes group and individual
annuities and life insurance policies or riders which provide
directly or which supplement long-term care insurance. The
term also includes a policy or rider that provides for
payment of benefits based upon cognitive impairment or the
loss of functional capacity. The term shall also include
qualified long-term care insurance contracts. Long-term care
insurance may be issued by insurers, fraternal benefit
societies, nonprofit health, hospital, and medical service
corporations, prepaid health plans, health maintenance
organizations or any similar organization to the extent they
are otherwise authorized to issue life or health insurance.
Long-term care insurance shall not include any insurance
policy which is offered primarily to provide basic Medicare
supplement coverage, basic hospital expense coverage, basic
medical-surgical expense coverage, hospital confinement
indemnity coverage, major medical expense coverage,
disability income protection coverage, accident only
coverage, specified disease or specified accident coverage,
or limited benefit health coverage. Long-term care insurance
may include benefits for care and treatment in accordance
with the tenets and practices of any established church or
religious denomination which teaches reliance on spiritual
treatment through prayer for healing.
(b) "Applicant" means:
(1) In the case of an individual long-term care
insurance policy, the person who seeks to contract for
benefits.
(2) In the case of a group long-term care insurance
policy, the proposed certificate holder.
(c) "Certificate" means, for the purposes of this
Article, any certificate issued under a group long-term care
insurance policy, which policy has been delivered or issued
for delivery in this State.
(d) "Director" means the Director of Insurance of this
State.
(e) "Group long-term care insurance" means a long-term
care insurance policy which is delivered or issued for
delivery in this State and issued to one of the following:
(1) One or more employers or labor organizations,
or to a trust or to the trustee or trustees of a fund
established by one or more employers or labor
organizations, or a combination thereof, for employees or
former employees, or a combination thereof, or for
members or former members, or a combination thereof, of
the labor organizations.
(2) Any professional, trade or occupational
association for its members or former or retired members,
or combination thereof, if such association:
(A) is composed of individuals all of whom are
or were actively engaged in the same profession,
trade or occupation; and
(B) has been maintained in good faith for
purposes other than obtaining insurance.
(3) An association or a trust or the trustee or
trustees of a fund established, created or maintained for
the benefit of members of one or more associations.
Prior to advertising, marketing or offering such policy
within this State, the association or associations, or
the insurer of the association or associations, shall
file evidence with the Director that the association or
associations have at the outset a minimum of 100 members
and have been organized and maintained in good faith for
purposes other than that of obtaining insurance, have
been in active existence for at least one year, and have
a constitution and by-laws which provide that:
(A) the association or associations hold
regular meetings not less than annually to further
the purposes of the members;
(B) except for credit unions, the association
or associations collect dues or solicit
contributions from members; and
(C) the members have voting privileges and
representation on the governing board and
committees.
Thirty days after such filing the association or
associations will be deemed to satisfy such
organizational requirements, unless the Director makes a
finding that the association or associations do not
satisfy those organizational requirements.
(4) A group other than as described in paragraph
(1), (2) or (3) of this subsection (e), subject to a
finding by the Director that:
(A) the issuance of the group policy is not
contrary to the best interest of the public;
(B) the issuance of the group policy would
result in economies of acquisition or
administration; and
(C) the benefits are reasonable in relation to
the premiums charged.
(f) "Policy" means, for the purposes of this Article,
any policy, contract, subscriber agreement, rider or
endorsement delivered or issued for delivery in this State by
an insurer, fraternal benefit society, nonprofit health,
hospital, or medical service corporation, prepaid health
plan, health maintenance organization or any similar
organization.
(g) "Qualified long-term care insurance contract" or
"federally tax-qualified long-term care insurance contract"
means an individual or group insurance contract that meets
the requirements of Section 7702B(b) of the Internal Revenue
Code of 1986, as amended, as follows:
(1) The only insurance protection provided under
the contract is coverage of qualified long-term care
services. A contract shall not fail to satisfy the
requirements of this subparagraph by reason of payments
being made on a per diem or other periodic basis without
regard to the expenses incurred during the period to
which the payments relate.
(2) The contract does not pay or reimburse expenses
incurred for services or items to the extent that the
expenses are reimbursable under Title XVIII of the Social
Security Act, as amended, or would be so reimbursable but
for the application of a deductible or coinsurance
amount. The requirements of this subparagraph do not
apply to expenses that are reimbursable under Title XVIII
of the Social Security Act only as a secondary payor. A
contract shall not fail to satisfy the requirements of
this subparagraph by reason of payments being made on a
per diem or other periodic basis without regard to the
expenses incurred during the period to which the payments
relate.
(3) The contract is guaranteed renewable within the
meaning of Section 7702(B)(b)(1)(C) of the Internal
Revenue Code of 1986, as amended.
(4) The contract does not provide for a cash
surrender value or other money that can be paid,
assigned, pledged as collateral for a loan, or borrowed
except as provided in subparagraph (5).
(5) All refunds of premiums and all policyholder
dividends or similar amounts under the contract are to be
applied as a reduction in future premiums or to increase
future benefits, except that a refund on the event of
death of the insured or a complete surrender or
cancellation of the contract cannot exceed the aggregate
premiums paid under the contract.
(6) The contract meets the consumer protection
provisions set forth in Section 7702B(g) of the Internal
Revenue Code of 1986, as amended.
"Qualified long-term care insurance contract" or
"federally tax-qualified long-term care insurance contract"
also means the portion of a life insurance contract that
provides long-term care insurance coverage by rider or as
part of the contract and that satisfies the requirements of
Sections 7702B(b) and 7702B(e) of the Internal Revenue Code
of 1986, as amended.
(Source: P.A. 86-384.)
(215 ILCS 5/351A-4) (from Ch. 73, par. 963A-4)
Sec. 351A-4. Limitation. No long-term care insurance
policy may:
(1) Be cancelled, nonrenewed or otherwise terminated on
grounds of the age or the deterioration of the mental or
physical health of the insured individual or certificate
holder.
(2) Contain a provision establishing a new waiting
period in the event existing coverage is converted to or
replaced by a new or other form within the same company,
except with respect to an increase in benefits voluntarily
selected by the insured individual or group policyholder.
(3) Provide coverage for skilled nursing care only or
provide significantly more coverage for skilled care in a
facility than coverage for lower levels of care.
(Source: P.A. 85-1172; 85-1174; 85-1440.)
(215 ILCS 5/351A-7) (from Ch. 73, par. 963A-7)
Sec. 351A-7. Right to return.
(a) An individual long-term care insurance policyholder
shall have the right to return the policy within 30 days of
its delivery and to have the premium refunded directly to him
or her if, after examination of the policy, the policyholder
is not satisfied for any reason. Long-term care insurance
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 30 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) A person insured under a long-term care insurance
policy or certificate issued pursuant to a direct response
solicitation shall have the right to return the policy or
certificate within 30 days of its delivery and to have the
premium refunded directly to him or her if, after
examination, the insured person is not satisfied for any
reason. Long-term care insurance policies or certificates
issued pursuant to a direct response solicitation shall have
a notice prominently printed on the first page of the policy
or certificate attached thereto stating in substance that the
insured person shall have the right to return the policy or
certificate within 30 days of its delivery and to have the
premium refunded if, after examination of the policy or
certificate, the insured person is not satisfied for any
reason. This subsection also applies to denials of
applications, and any refund must be made within 30 days of
the return or denial.
(Source: P.A. 85-1440; 86-384.)
(215 ILCS 5/351A-8) (from Ch. 73, par. 963A-8)
Sec. 351A-8. Outline of coverage.
(a) An outline of coverage shall be delivered to a
prospective applicant for long-term care insurance at the
time of initial solicitation through means which prominently
direct the attention of the recipient to the document and its
purpose.
(1) The Director shall prescribe a standard format
including style, arrangement and overall appearance and
the content of an outline of coverage.
(2) In the case of agent solicitations, an agent
must deliver the outline of coverage prior to the
presentation of an application or enrollment form.
(3) In the case of direct response solicitations,
the outline of coverage must be presented in conjunction
with any application or enrollment form.
(b) The outline of coverage shall include:
(1) A description of the principal benefits and
coverage provided in the policy.
(2) A statement of the principal exclusions,
reductions and limitations contained in the policy.
(3) A statement of the terms under which the policy
or certificate, or both, may be continued in force or
discontinued, including any reservation in the policy of
a right to change premium. Continuation or conversion
provisions of group coverage shall be specifically
described.
(4) A statement that the outline of coverage is a
summary only, not a contract of insurance, and that the
policy or group master policy contain governing
contractual provisions.
(5) A description of the terms under which the
policy or certificate may be returned and premium
refunded.
(6) A brief description of the relationship of cost
of care and benefits.
(7) A statement that discloses to the policyholder
or certificate holder whether the policy is intended to
be a federally tax-qualified long-term care insurance
contract under 7702B(b) of the Internal Revenue Code of
1986, as amended.
(Source: P.A. 85-1440; 86-384.)
(215 ILCS 5/351A-9.2 new)
Sec. 351A-9.2. Delivery of policy. If an applicant for
a long-term care insurance contract or certificate is
approved, the issuer shall deliver the contract or
certificate of insurance to the applicant no later than 30
days after the date of approval.
(215 ILCS 5/351A-9.3 new)
Sec. 351A-9.3. Claim denial; explanation. If a claim
under a long-term care insurance contract is denied, the
issuer, within 60 days after receipt of a written request by
a policyholder or certificate holder or a policyholder's or
certificate holder's representative shall:
(1) provide a written explanation of the reasons
for the denial; and
(2) make available all information directly related
to the denial.
Section 99. Effective date. This Act takes effect upon
becoming law.
Passed in the General Assembly May 08, 2001.
Approved July 24, 2001.
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