215 ILCS 125/2-4
2021 Illinois Compiled Statutes|Chapter 215 - INSURANCE|215 ILCS 125/ - Health Maintenance Organization Act.|Article II - Certificate Of Authority, General Corporate And Financial Requirements

 (from Ch. 111 1/2, par. 1406)Sec. 2-4.         Required minimum net worth; special contingent  reserve; deficiency; impairment.(a) A health maintenance  organization issued a certificate of authority on or after the  effective date of this amendatory Act of 1987  shall have and at all times maintain net worth of not  less than $1,500,000.  As an allocation of net worth, organizations  certified prior to the effective date of this amendatory Act of 1987  shall maintain a special contingent reserve. The special contingent  reserve for an organization certified between January 1, 1986 and the  effective date of this amendatory Act of 1987 shall be equal to 5% of its  net earned subscription revenue for health care services through December  31st of the year in which certified.  In subsequent years such organization  shall accumulate additions to the  contingent reserve in an amount which is equal to 2% of  its net earned subscription revenue for each calendar year.  For purposes  of this Section, net earned subscription  revenue means premium minus reinsurance expenses.  Maintenance of the  contingent reserve requires that net worth equals or exceeds the contingent  reserve at any balance sheet date.(b) Additional accumulations under subsection (a) will no longer be  required at such time that the total special contingent reserve required  by subsection (a) is equal to $1,500,000.(c) A deficiency in meeting amounts required in  subsections (a),  (b), and (d) will require (1)  filing with the Director a plan for  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 5-5.(d) All health maintenance organizations issued a certificate of  authority on or prior to December 31, 1985 and regulated under this Act  must have and at all times maintain, prior to December 31, 1988, the net  worth and special contingent  reserve that was required for that particular organization at the time it  was certified.  All such organizations must have by December 31, 1988 and  thereafter maintain at all times, net worth of not less than $300,000 and a  special contingent reserve calculated and accumulated in the same manner as  required of a health maintenance organization issued a certificate of  authority on or between January 1, 1986 and the effective date of this  amendatory Act of 1987.  Such calculation shall commence with  the financial reporting period first following certification.All organizations issued a certificate of authority between January 1,  1986 and the effective date of this amendatory Act of 1987 must have and at  all times maintain the net worth and special contingent reserve that was  required for that particular organization at the time it was certified.(d-5) A health maintenance organization that offers a point-of-service  product  must  maintain minimum net worth of not less than:(1) the greater of 300% of the "authorized control     level" as defined by Article IIA of the Illinois Insurance Code; or(2) $3,500,000 if the health maintenance     organization's annual projected out-of-plan claims are less than $500,000; or(3) $4,500,000 if the health maintenance     organization's annual projected out-of-plan claims are equal to or greater than $500,000 but less than $1,000,000; or(4) $6,000,000 if the health maintenance     organization's annual projected out-of-plan claims are $1,000,000 or greater.(e) Unless allowed by the Director, no health maintenance  organization, officer, director, trustee, producer, or employee of such  organization may renew, issue, or deliver, or cause to be renewed, issued  or delivered, any certificate, agreement, or contract 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,  trustee, producer, or employee of such organization.  An organization is  impaired when a deficiency exists in meeting the amounts required in  subsections (a), (b), and (d) of Section 2-4.However, the existence of an impairment does not prevent the issuance or  renewal of a certificate, agreement or contract when the enrollee exercises  an option granted under the plan to obtain new, renewed or converted coverage.Any organization, officer, director, trustee, producer, or employee of  such organization violating this subsection shall be guilty of a  Class A misdemeanor.    (Source: P.A. 92-135, eff. 1-1-02.)