HB2325 96TH GENERAL ASSEMBLY

LRB096 09782 RPM 19945 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB2325

Introduced 2/18/2009, by Rep. Karen May

SYNOPSIS AS INTRODUCED:

215 ILCS 5/367e	from Ch. 73, par. 979e
215 ILCS 125/4-9.2	from Ch. 111 1/2, par. 1409.2-2

Amends the Illinois Insurance Code. Provides that an employee or member is eligible for continuing coverage under a group insurance policy for up to 18 months (instead of 9 months) after the date the employee's or member's insurance under the policy would have terminated because of termination of employment or membership or reduction in employment hours. Provides that the employer must give written notice of the employee's option to elect continuation coverage to the employee within 10 days after the employee's termination or reduction in hours and to the insurer. Provides that an employee or member who wishes continuation of coverage must make the request in writing within a 30 day (instead of ten-day) period. Provides that in the event the employer fails or refuses to provide notice of continuation rights to the employee or member, the insurer is required to mail notice of the continuation rights to the employee or member at the employee's last known address. Provides that any employer who fails to provide the notice required by the Act is guilty of a petty offense and shall be fined $500. Amends the Health Maintenance Organization Act to incorporate the written notice, penalty, and condition of termination provisions as they relate to continuation of group HMO coverage after termination of employment or membership. Effective immediately.

A BILL FOR

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 Section 367e as follows:

(215 ILCS 5/367e) (from Ch. 73, par. 979e)

Sec. 367e. Continuation of Group Hospital, Surgical and Major Medical Coverage After Termination of Employment or Membership. A group policy delivered, issued for delivery, renewed or amended in this state which insures employees or members for hospital, surgical or major medical insurance on an expense incurred or service basis, other than for specific diseases or for accidental injuries only, shall provide that employees or members whose insurance under the group policy would otherwise terminate because of termination of employment or membership or because of a reduction in hours below the minimum required by the group plan shall be entitled to continue their hospital, surgical and major medical insurance under that group policy, for themselves and their eligible dependents, subject to all of the group policy's terms and conditions applicable to those forms of insurance and to the following conditions:

1. Continuation shall only be available to an employee or member who has been continuously insured under the group policy (and for similar benefits under any group policy which it replaced) during the entire 3 months period ending with such termination or reduction in hours below the minimum required by the group plan.

2. Continuation shall not be available for any person who is covered by Medicare, except for those individuals who have been covered under a group Medicare supplement policy. Neither shall continuation be available for any person who is covered by any other insured or uninsured plan which provides hospital, surgical or medical coverage for individuals in a group and under which the person was not covered immediately prior to such termination or reduction in hours below the minimum required by the group plan or who exercises his conversion privilege under the group policy.

3. Continuation need not include dental, vision care, prescription drug benefits, disability income, specified disease, or similar supplementary benefits which are provided under the group policy in addition to its hospital, surgical or major medical benefits.

4. Upon termination or reduction in hours below the minimum required by the group plan written notice of continuation shall be presented to the employee or member and the insurer by the employer or mailed by the employer to the last known address of the employee. This written notice must be given directly to the employee or sent via certified mail within 10 days after the employee's termination or reduction in hours below the minimum required by the group plan. An employee or member who wishes continuation of coverage must request such continuation in writing within the 30 day ten-day period following the later of: (i) the date of such termination or reduction in hours below the minimum required by the group plan, or (ii) the date the employee is given written notice of the right of continuation by either the employer, or the group policyholder, or insurer. The written notice provided to an employee must include an explanation that his or her option for continuation coverage will expire within the 30 day period following the later of (i) the date of such termination of employment or reduction in hours below the minimum required by the group plan, or (ii) the date the employee is given written notice of the right of continuation by either the employer, group policyholder, or insurer. In no event, however, may the employee or member elect continuation more than 60 days after the date of such termination or reduction in hours below the minimum required by the group plan. Written notice of continuation presented to the employee or member by the policyholder, or mailed by the policyholder to the last known address of the employee, shall constitute the giving of notice for the purpose of this provision.

In the event the employer fails or refuses to provide notice of continuation rights to the employee or member, the insurer is required to mail notice of the continuation rights to the employee or member at the last known address of the employee. In the event the employee or member contacts the insurer regarding continuation rights and advises that notice has not been provided by the employer or group policyholder, the insurer shall mail out notice to that individual. An employee or member shall have 30 days from receipt of the notice to elect continuation.

Any employer who fails to provide the notice required in this subsection 4. is guilty of a petty offense and shall be fined $500.

5. An employee or member electing continuation must pay to the group policyholder or his employer, on a monthly basis in advance, the total amount of premium required by the insurer, including that portion of the premium contributed by the policyholder or employer, if any, but not more than the group rate for the insurance being continued with appropriate reduction in premium for any supplementary benefits which have been discontinued under paragraph (3) of this Section. The premium rate required by the insurer shall be the applicable premium required on the due date of each payment.

6. Continuation of insurance under the group policy for any person shall terminate when he becomes eligible for Medicare or is covered by any other insured or uninsured plan which provides hospital, surgical or medical coverage for individuals in a group and under which the person was not covered immediately prior to such termination or reduction in hours below the minimum required by the group plan as provided in condition 2 above or, if earlier, at the first to occur of the following:

(a) The date 18 9 months after the date the employee's or member's insurance under the policy would otherwise have terminated because of termination of employment or membership or reduction in hours below the minimum required by the group plan.

(b) If the employee or member fails to make timely payment of a required contribution, the end of the period for which contributions were made.

(c) The date on which the group policy is terminated or, in the case of an employee, the date his employer terminates participation under the group policy. However, if this (c) applies and the coverage ceasing by reason of such termination is replaced by similar coverage under another group policy, the following shall apply:

(i) The employee or member shall have the right to become covered under that other group policy, for the balance of the period that he would have remained covered under the prior group policy in accordance with condition 6 had a termination described in this (c) not occurred.

(ii) The prior group policy shall continue to provide benefits to the extent of its accrued liabilities and extensions of benefits as if the replacement had not occurred.

7. A notification of the continuation privilege shall be included in each certificate of coverage.

8. Continuation shall not be available for any employee who was discharged because of the commission of a felony in connection with his work, or because of theft in connection with his work, for which the employer was in no way responsible; provided the employee admitted his commission of the felony or theft or such act has resulted in a conviction or order of supervision by a court of competent jurisdiction.

The requirements of this amendatory Act of 1983 shall apply to any group policy as defined in this Section, delivered or issued for delivery on or after 180 days following the effective date of this amendatory Act of 1983.

The requirements of this amendatory Act of 1985 shall apply to any group policy as defined in this Section, delivered, issued for delivery, renewed or amended on or after 180 days following the effective date of this amendatory Act of 1985.

(Source: P.A. 93-477, eff. 1-1-04.)

Section 10. The Health Maintenance Organization Act is amended by changing Section 4-9.2 as follows:

(215 ILCS 125/4-9.2) (from Ch. 111 1/2, par. 1409.2-2)

Sec. 4-9.2. Continuation of group HMO coverage after termination of employee or membership. A group contract delivered, issued for delivery, renewed, or amended in this State that covers employees or members for health care services shall provide that employees or members whose coverage under the group contract would otherwise terminate because of termination of employment or membership or because of a reduction in hours below the minimum required by the group contract shall be entitled to continue their coverage under that group contract, for themselves and their eligible dependents, subject to all of the group contract's terms and conditions applicable to those forms of coverage and to the following conditions:

(1) Continuation shall only be available to an employee or member who has been continuously covered under the group contract (and for similar benefits under any group contract that it replaced) during the entire 3 month period ending with the termination of employment or membership or reduction in hours below the minimum required by the group contract.

(2) Continuation shall not be available for any enrollee who is covered by Medicare, except for those individuals who have been covered under a group Medicare supplement policy. Continuation shall not be available for any enrollee who is covered by any other insured or uninsured plan that provides hospital, surgical, or medical coverage for individuals in a group and under which the enrollee was not covered immediately before termination or reduction in hours below the minimum required by the group contract or who exercises his or her conversion privilege under the group policy.

(3) Continuation need not include dental, vision care, prescription drug, or similar supplementary benefits that are provided under the group contract in addition to its basic health care services.

(4) Upon termination or reduction in hours below the minimum required by the group contract, written notice of continuation shall be presented to the employee or member and the HMO by the employer or mailed by the employer to the last known address of the employee. This written notice must be given directly to the employee or sent via certified mail within 10 days after the employee's termination or reduction in hours below the minimum required by the group plan. An employee or member who wishes continuation of coverage must request continuation in writing within the 30 10 day period following the later of (i) the date of termination or reduction in hours below the minimum required by the group contract or (ii) the date the employee is given written notice of the right of continuation by either the employer, or the group policyholder, or HMO. In no event, however, shall the employee or member elect continuation more than 60 days after the date of termination or reduction in hours below the minimum required by the group contract. Written notice of continuation presented to the employee or member by the policyholder or HMO, or mailed by the policyholder or HMO to the last known address of the employee, shall constitute the giving of notice for the purpose of this paragraph.

The written notice provided to an employee must include an explanation that his or her option for continuation coverage will expire within the 30 day period following the later of (i) the date of such termination of employment or reduction in hours below the minimum required by the group plan, or (ii) the date the employee is given written notice of the right of continuation by either the employer, group policyholder, or HMO.

In the event the employer fails or refuses to provide notice of continuation rights to the employee or member, the HMO is required to mail notice of the continuation rights to the employee or member at the last known address of the employee. In the event the employee or member contacts the HMO regarding continuation rights and advises that notice has not been provided by the employer or group policyholder, the HMO shall mail out notice to that individual. An employee or member shall have 30 days from receipt of the notice to elect continuation.

Any employer who fails to provide the notice required in this subsection (4) is guilty of a petty offense and shall be fined $500.

(5) An employee or member electing continuation must pay to the group policyholder or his employer, on a monthly basis in advance, the total amount of premium required by the HMO, including that portion of the premium contributed by the policyholder or employer, if any, but not more than the group rate for the coverage being continued with appropriate reduction in premium for any supplementary benefits that have been discontinued under paragraph (3) of this Section. The premium rate required by the HMO shall be the applicable premium required on the due date of each payment.

(6) Continuation of coverage under the group contract for any person shall terminate when the person becomes eligible for Medicare or is covered by any other insured or uninsured plan that provides hospital, surgical, or medical coverage for individuals in a group and under which the person was not covered immediately before termination or reduction in hours below the minimum required by the group contract as provided in paragraph (2) of this Section or, if earlier, at the first to occur of the following:

(a) The expiration of 18 9 months after the employee's or member's coverage because of termination of employment or membership or reduction in hours below the minimum required by the group contract.

(b) If the employee or member fails to make timely payment of a required contribution, the end of the period for which contributions were made.

(c) The date on which the group contract is terminated or, in the case of an employee, the date his or her employer terminates participation under the group contract. If, however, this paragraph applies and the coverage ceasing by reason of termination is replaced by similar coverage under another group contract, then (i) the employee or member shall have the right to become covered under the replacement group contract for the balance of the period that he or she would have remained covered under the prior group contract in accordance with paragraph (6) had a termination described in this item (c) not occurred and (ii) the prior group contract shall continue to provide benefits to the extent of its accrued liabilities and extensions of benefits as if the replacement had not occurred.

(7) A notification of the continuation privilege shall be included in each evidence of coverage.

(8) Continuation shall not be available for any employee who was discharged because of the commission of a felony in connection with his or her work, or because of theft in connection with his or her work, for which the employer was in no way responsible if the employee (i) admitted to committing the felony or theft or (ii) was convicted or placed under supervision by a court of competent jurisdiction.

The requirements of this amendatory Act of 1992 shall apply to any group contract, as defined in this Section, delivered or issued for delivery on or after 180 days following the effective date of this amendatory Act of 1992.

(Source: P.A. 93-477, eff. 1-1-04.)

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