§ 2004 — Required minimum net worth; impairment

Illinois § 2004

• Jurisdiction: Illinois
• Topic: REGULATION
• Ch. 215: INSURANCE
• Act 215 ILCS 130/: Limited Health Service Organization Act.
• Art.: Article 2 - Certificate Of Authority; General Corporate And Financial Requirements

Text

(a) A limited health service organization issued a certificate of authority shall have and at all times maintain net worth of not less than the greater of: (1) $50,000; or (2) 2% of the organization's annual gross premium income, up to a maximum of $500,000. (b) A limited health service organization that has annual uncovered expenses in excess of $50,000, as reported on the most recent annual financial statement filed with the Director, shall maintain additional net worth equal to 25% of such uncovered expenses in excess of $50,000 in addition to the net worth required by subsection (a), subject to the maximum net worth set forth in item (2) of subsection (a). (c) A limited health service organization that has been approved by the Director to offer a POS contract shall have and at all times maintain net worth of not less than the greater of: (1) $100,000 if the LHSO's expenditures for out-of-plan covered services do not exceed 10% of its total limited health expenditure in any calendar quarter; or (2) $100,000 plus an additional $10,000 for each percentage point that the LHSO's expenditures for out-of-plan covered services exceeds 10% of its total limited health service expenditure in any calendar quarter up to $200,000; or (3) the amount set forth in item (2) of subsection (a). (d) A deficiency in meeting amounts required in subsection (a), (b), or (c) shall require (1) filing with the Director a plan of correction of the deficiency, acceptable to the Director and (2) correction of the deficiency within a reasonable time, not to exceed 60 days unless an extension of time, not to exceed 60 additional days, is granted by the Director. Such a deficiency will be deemed an impairment, and failure to correct the deficiency in the prescribed time shall be grounds for suspension or revocation pursuant to subsection (h) of Section 4005 of this Act. (e) Unless allowed by the Director, no limited health service organization, officer, director, trustee, producer or employee of such organization may renew, issue, or deliver, or cause to be renewed, issued or delivered, any evidence of coverage in this State, for which a premium is charged or collected, when the organization writing such coverage is insolvent or impaired, and the fact of such insolvency or impairment is known to the organization, officer, director, producer or employee of such organization. An organization is impaired when a deficiency exists in meeting the amounts required in subsection (a), (b), or (c) of this Section. However, the existence of an impairment does not prevent the issuance or renewal of any evidence of coverage when the enrollee exercises an option granted under the plan to obtain new, renewed or converted coverage. Any organization, officer, director, producer or employee of such organization violating this subsection shall be guilty of a Class A misdemeanor.

Legislative History

(Source: P.A. 87-1079; 88-667, eff. 9-16-94.)