Rep. Natalie A. Manley
Filed: 4/15/2021
 
 


 




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1
AMENDMENT TO HOUSE BILL 295




2 AMENDMENT NO. ______. Amend House Bill 295, AS AMENDED, by 
3replacing everything after the enacting clause with the 
4following:


5 "Section 5. The Illinois Insurance Code is amended by 
6adding Section 245.3 as follows:

7 (215 ILCS 5/245.3 new)
8 Sec. 245.3. Irrevocable assignment of life insurance to a 
9funeral home. An insured or any other person who may be the 
10owner of rights under a policy of life insurance may make an 
11irrevocable assignment of all or a part of his or her rights 
12under the policy to a funeral home in accordance with Section 
132b of the Illinois Funeral or Burial Funds Act and have an 
14individual policy issued in accordance with paragraphs (G), 
15(H), and (K) of Section 231.1. Subject to the terms of the 
16policy or a contract relating to the policy, including, but 
 
 
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1not limited to, a prepaid funeral or burial contract, an 
2irrevocable assignment by an insured or other owner of rights 
3under a policy made before or after the effective date of this 
4amendatory Act of the 102nd General Assembly is valid for the 
5purpose of vesting in the assignee, in accordance with the 
6policy or contract as to the time at which it is effective, all 
7rights assigned. That irrevocable assignment is, however, 
8without prejudice to the company on account of any payment it 
9makes or individual policy it issues in accordance with 
10paragraphs (G), (H), and (K) of Section 231.1 before receipt 
11of notice of the assignment. The insurance company shall 
12within 15 business days notify the funeral home and owner of 
13the policy of its receipt of the form. A policy owner who 
14executes a designation of beneficiary form pursuant to Section 
152b of the Illinois Funeral or Burial Funds Act also 
16irrevocably waives and cannot exercise the following rights:
17  (1) The right to collect from the insurance company 
18 the net proceeds of the policy when it becomes a claim by 
19 death.
20  (2) The right to surrender the policy and receive the 
21 cash surrender value of the policy.
22  (3) The right to obtain a policy loan.
23  (4) The right to designate as primary beneficiary of 
24 the policy anyone other than as provided in that Act.
25  (5) The right to collect or receive income, 
26 distributions, or shares of surplus, dividend deposits, 
 
 
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1 refunds of premium, or additions to the policy.
2 This amendatory Act of the 102nd General Assembly 
3acknowledges, declares, and codifies the existing right of 
4assignment of interests under life insurance policies.

5 Section 10. The Illinois Funeral or Burial Funds Act is 
6amended by changing Sections 1a and 2a and by by adding Section 
72b as follows:




8 (225 ILCS 45/1a) (from Ch. 111 1/2, par. 73.101a)



9 Sec. 1a. 
For the purposes of this Act, the following terms 
10shall have
the meanings specified, unless the context clearly 
11requires another meaning:

12 "Beneficiary" means the person specified in the pre-need 
13contract upon
whose death funeral services or merchandise 
14shall be provided or delivered.

15 "Burial spaces" has the meaning ascribed to that term in 
1620 CFR 416.1231. 
17 "Licensee" means a seller of a pre-need contract who has

18been licensed by
the Comptroller under this Act.

19 "Outer burial container" means any container made of 
20concrete,
steel, wood, fiberglass or similar material, used 
21solely at the interment
site, and designed and used 
22exclusively to surround or enclose a separate
casket and to 
23support the earth above such casket, commonly known as a

24burial vault, grave box or grave liner, but not including a 
 
 
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1lawn
crypt as defined in the Illinois Pre-need Cemetery Sales 
2Act.

3 "Parent company" means a corporation owning more than 12 
4cemeteries or
funeral homes in more than one state.

5 "Person" means any person, partnership, association, 
6corporation, or
other entity.

7 "Pre-need contract" means any agreement or contract, or 
8any series or
combination of agreements or contracts, whether 
9funded by trust deposits or
life insurance policies or 
10annuities, which has for a purpose the furnishing
or 
11performance of funeral services or the furnishing or delivery 
12of any
personal property, merchandise, or services of any 
13nature in connection with
the final disposition of a dead 
14human body. Nothing in this Act is intended to
regulate the 
15content of a life insurance policy or a tax-deferred annuity.

16 "Provider" means a person who is obligated for furnishing 
17or performing
funeral services or the furnishing or delivery 
18of any personal property,
merchandise, or services of any 
19nature in connection with the final disposition
of a dead 
20human body.

21 "Purchaser" means the person who originally paid the money 
22under or in
connection with a pre-need contract.

23 "Sales proceeds" means the entire amount paid to a seller, 
24exclusive
of sales taxes paid by the seller, finance charges 
25paid by the purchaser, and
credit life, accident or disability 
26insurance premiums, upon any agreement or
contract, or series 
 
 
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1or combination of agreements or contracts, for the purpose
of 
2performing funeral services or furnishing personal property, 
3merchandise, or
services of any nature in connection with the 
4final disposition of a dead human
body, including, but not 
5limited to, the retail price paid for such services
and 
6personal property and merchandise.

7 "Purchase price" means sales proceeds less finance charges 
8on
retail
installment contracts.

9 "Seller" means the person who sells or
offers to sell the 
10pre-need contract
to a purchaser, whether funded by a trust 
11agreement, life insurance policy,
or tax-deferred annuity.

12 "Trustee" means a person authorized to hold funds under 
13this Act.

14(Source: P.A. 92-419, eff. 1-1-02.)





15 (225 ILCS 45/2a)



16 Sec. 2a. Purchase of insurance or annuity. 

17 (a) If a purchaser selects the purchase of a life 
18insurance policy or
tax-deferred annuity contract to fund the 
19pre-need contract, the application
and collected premium shall 
20be mailed within 30 days of signing the pre-need
contract.

21 (b) If life insurance or an annuity is used to fund a

22pre-need contract,
the seller or provider shall not be named 
23as the owner or beneficiary of the
policy or annuity. No person 
24whose only insurable interest in the insured is
the receipt of 
25proceeds from the policy or in naming who shall receive the

 
 
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1proceeds nor any trust acting on behalf of such person or 
2seller or provider
shall be named as owner or beneficiary of 
3the policy or annuity.

4 (c) Nothing shall prohibit the purchaser from irrevocably 
5assigning
ownership of the policy or annuity used to fund a 
6guaranteed price pre-need
contract to a person or trust or 
7from irrevocably assigning the benefits of the policy or 
8annuity to a funeral home for the purpose of obtaining 
9favorable
consideration for Medicaid, Supplemental Security 
10Income, or another public
assistance program, as permitted 
11under federal law. The seller or contract
provider may be 
12named a
nominal owner of the life insurance policy only for 
13such
time as it takes to immediately transfer the policy into a

14trust. Except for this purpose, neither the
seller nor the 
15contract provider shall be named the owner
or the beneficiary 
16of the policy or annuity.

17 (d) If a life insurance policy or annuity contract is used 
18to fund a
pre-need contract, except for guaranteed price 
19contracts permitted in Section
4(a) of this Act, the pre-need 
20contract must be revocable, and any
assignment
provision in 
21the pre-need contract must contain the following disclosure in 
2212
point bold type:

23 THIS ASSIGNMENT MAY BE REVOKED BY THE ASSIGNOR OR 
24ASSIGNOR'S SUCCESSOR OR, IF
THE ASSIGNOR IS ALSO THE INSURED 
25AND DECEASED, BY THE REPRESENTATIVE OF THE
INSURED'S ESTATE 
26BEFORE THE RENDERING TO THE CEMETERY SERVICES OR GOODS OR

 
 
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1FUNERAL SERVICES OR GOODS. IF THE ASSIGNMENT IS REVOKED, THE 
2DEATH BENEFIT
UNDER THE LIFE INSURANCE POLICY OR ANNUITY 
3CONTRACT SHALL BE PAID IN ACCORDANCE
WITH THE BENEFICIARY 
4DESIGNATION UNDER THE INSURANCE POLICY OR ANNUITY
CONTRACT.

5 (e) Sales proceeds shall not be used to purchase life 
6insurance policies
or tax-deferred annuities unless the 
7company issuing the life insurance
policies or tax-deferred 
8annuities is licensed with the Illinois Department of

9Insurance, and the insurance producer or annuity seller is 
10licensed to do
business in the State of Illinois.

11(Source: P.A. 92-419, eff. 1-1-02.)


12 (225 ILCS 45/2b new)
13 Sec. 2b. Irrevocable designation of beneficiary of 
14existing whole life insurance.
15 (a) In accordance with Section 245.3 of the Illinois 
16Insurance Code, an insured or any other person who may be the 
17owner of rights under an existing policy of whole life 
18insurance may make an irrevocable assignment of all or a part 
19of his or her rights under the policy to a provider in 
20consideration for signing a guaranteed pre-need contract for 
21the purpose of obtaining favorable consideration for Medicaid, 
22Supplemental Security Income, or another public assistance 
23program. The form prepared by the Department of Healthcare and 
24Family Services under paragraph (4) of subsection (c) of 
25Section 3-1.2 of the Illinois Public Aid Code or by the 
 
 
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1insurance company shall provide for an irrevocable designation 
2of beneficiary of one or more life insurance policies. The 
3insured or any other person who may be the owner of rights 
4under an existing policy of whole life insurance shall sign a 
5guaranteed pre-need contract with the provider that describes 
6the cost of the funeral goods and services to be provided upon 
7the person's death, up to $6,774, in addition to the purchase 
8of burial spaces. This amount shall be adjusted annually by 
9the Department of Human Services for any increase in the 
10Consumer Price Index. The guaranteed pre-need contract must 
11provide a complete description and cost of the funeral goods 
12and services including burial spaces. More than one policy may 
13be subject to this Section if the total face value of the 
14policies is necessary to pay the amount described in the 
15guaranteed pre-need contract with the provider. All policies 
16shall be listed on the form. The insured or any other person 
17who may be the owner of rights under an existing policy of 
18whole life insurance shall be given a copy of the executed 
19form. The licensee shall retain copies for inspection by the 
20Comptroller and shall report annually to the Comptroller the 
21following: the name of the insured, the insurance policy 
22number, the amount of the guaranteed pre-need contract, the 
23current value of the policy or benefits designated, and the 
24name of the insurance company issuing the policy. 
25 (b) The insured or any other person who may be the owner of 
26rights under an existing policy of whole life insurance shall 
 
 
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1acknowledge that by making this assignment irrevocable, the 
2policy cannot be cancelled, although it does not affect the 
3right of the policy owner to cancel the insurance policy 
4within the examination period provided under the policy.
5 (c) Upon the death of the insured, the proceeds of the life 
6insurance policies subject to this Section shall be paid to 
7the provider, who shall apply such proceeds in the following 
8order or priority:
9  (1) first, to the provider in an amount equal to the 
10 lesser of:
11   (A) the amount of the guaranteed pre-need 
12 contract; or
13   (B) the actual value of the funeral and burial or 
14 cemetery services and merchandise provided;
15  (2) second, to the State of Illinois, up to an amount 
16 equal to the total medical assistance paid on behalf of 
17 the insured; and
18  (3) third, payment of proceeds to a secondary 
19 beneficiary (if any) listed on the policy, or to the 
20 estate of the decedent if no secondary beneficiary is 
21 named on the policy in the event the proceeds exceed the 
22 lesser of the prearranged costs or actual value of the 
23 funeral and burial or cemetery merchandise and services 
24 provided and the total medical assistance paid on behalf 
25 of the insured.
26 (d) The provider shall receive and disburse these proceeds 
 
 
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1notwithstanding any other prohibition in law against serving 
2as a trustee.
3 (e) Further assignment. The rights and obligations of the 
4provider subject to the irrevocable designation of beneficiary 
5may be assigned to another provider upon the choice of the 
6insured or the approved representative or the power of 
7attorney for property of the insured, or upon the insolvency 
8or bankruptcy of the provider. The assignee provider shall: 
9(i) be bound to the terms of the irrevocable designation of 
10beneficiary; (ii) notify the insurance company or companies of 
11the assignment; (iii) notify the Department of Healthcare and 
12Family Services of the change in provider; and (iv) retain a 
13copy of the assignment for inspection by the Comptroller.

14 Section 15. The Illinois Public Aid Code is amended by 
15changing Section 3-1.2 as follows:




16 (305 ILCS 5/3-1.2) (from Ch. 23, par. 3-1.2)



17 Sec. 3-1.2. Need.  
18 (a) Income available to the person, when added to

19contributions in money, substance, or services from other 
20sources,
including contributions from legally responsible 
21relatives, must be
insufficient to equal the grant amount 
22established by Department regulation
for such person. In 
23determining earned income to be taken into account, 
24consideration
shall be given to any expenses reasonably 
 
 
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1attributable to the earning of
such income. If federal law or 
2regulations permit or require exemption
of earned or other 
3income and resources, the Illinois Department shall
provide by 
4rule and regulation that the amount of income to be

5disregarded be increased (1) to the maximum extent so required 
6and (2)
to the maximum extent permitted by federal law or 
7regulation in effect
as of the date this amendatory Act 
8becomes law. The Illinois Department
may also provide by rule 
9and regulation that the amount of resources to
be disregarded 
10be increased to the maximum extent so permitted or required.
11 (b) Subject to federal approval, resources (for example, 
12land, buildings, equipment, supplies, or tools), including 
13farmland property and personal property used in the 
14income-producing operations related to the farmland (for 
15example, equipment and supplies, motor vehicles, or tools), 
16necessary for self-support, up to $6,000 of the person's 
17equity in the income-producing property, provided that the 
18property produces a net annual income of at least 6% of the 
19excluded equity value of the property, are exempt. Equity 
20value in excess of $6,000 shall not be excluded. If the 
21activity produces income that is less than 6% of the exempt 
22equity due to reasons beyond the person's control (for 
23example, the person's illness or crop failure) and there is a 
24reasonable expectation that the property will again produce 
25income equal to or greater than 6% of the equity value (for 
26example, a medical prognosis that the person is expected to 
 
 
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1respond to treatment or that drought-resistant corn will be 
2planted), the equity value in the property up to $6,000 is 
3exempt. If the person owns more than one piece of property and 
4each produces income, each piece of property shall be looked 
5at to determine whether the 6% rule is met, and then the 
6amounts of the person's equity in all of those properties 
7shall be totaled to determine whether the total equity is 
8$6,000 or less. The total equity value of all properties that 
9is exempt shall be limited to $6,000. 

10 (c) In determining the resources of an individual or any 
11dependents, the
Department shall exclude from consideration 
12the value of funeral and burial
spaces, funeral and
burial 
13insurance the proceeds of which can only be used to pay the 
14funeral
and burial expenses of the insured and funds 
15specifically set aside for the
funeral and burial arrangements 
16of the individual or his or her dependents,
including prepaid 
17funeral and burial plans, to the same extent that such
items 
18are excluded from consideration under the federal Supplemental

19Security Income program (SSI). At any time after submitting an 
20application for medical assistance and before a final 
21determination of eligibility has been made by the Department, 
22an applicant may use available resources to purchase one of 
23the prepaid funeral or burial contracts exempted under this 
24Section. 
25 Prepaid funeral or burial contracts are exempt to the 
26following extent: 

 
 
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1  (1) Funds in a revocable prepaid funeral or burial 
2 contract are exempt up to $1,500, except that any portion 
3 of a contract that clearly represents the purchase of 
4 burial space, as that term is defined for purposes of the 
5 Supplemental Security Income program, is exempt regardless 
6 of value.
7  (2) Funds in an irrevocable prepaid funeral or burial 
8 contract are exempt up to $6,774 $5,874, except that any 
9 portion of a contract that clearly represents the purchase 
10 of burial space, as that term is defined for purposes of 
11 the Supplemental Security Income program, is exempt 
12 regardless of value. This amount shall be adjusted 
13 annually for any increase in the Consumer Price Index. The 
14 amount exempted shall be limited to the price of the 
15 funeral goods and services to be provided upon death. The 
16 contract must provide a complete description of the 
17 funeral goods and services to be provided and the price 
18 thereof. Any amount in the contract not so specified shall 
19 be treated as a transfer of assets for less than fair 
20 market value.
21  (3) A prepaid, guaranteed-price funeral or burial 
22 contract, funded by an irrevocable assignment of a 
23 person's life insurance policy to a trust or a funeral 
24 home, is exempt. The amount exempted shall be limited to 
25 the amount of the insurance benefit designated for the 
26 cost of the funeral goods and services to be provided upon 
 
 
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1 the person's death. The contract must provide a complete 
2 description of the funeral goods and services to be 
3 provided and the price thereof. Any amount in the contract 
4 not so specified shall be treated as a transfer of assets 
5 for less than fair market value. The trust must include a 
6 statement that, upon the death of the person, the State 
7 will receive all amounts remaining in the trust, including 
8 any remaining payable proceeds under the insurance policy 
9 up to an amount equal to the total medical assistance paid 
10 on behalf of the person. The trust is responsible for 
11 ensuring that the provider of funeral services under the 
12 contract receives the proceeds of the policy when it 
13 provides the funeral goods and services specified under 
14 the contract. The irrevocable assignment of ownership of 
15 the insurance policy must be acknowledged by the insurance 
16 company. 
17  (4) Existing life insurance policies are exempt if 
18 there has been an irrevocable declaration of proceeds at 
19 the death of the insured in compliance with this 
20 subsection. A person shall sign a contract with a funeral 
21 home that describes the cost of the funeral goods and 
22 services to be provided upon the person's death, up to 
23 $6,774, in addition to the purchase of burial spaces. This 
24 amount shall be adjusted annually for any increase in the 
25 Consumer Price Index. The contract must provide a complete 
26 description of the funeral goods and services and burial 
 
 
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1 spaces to be provided and the price thereof. The person 
2 shall sign an irrevocable designation of beneficiary form 
3 declaring that any amounts payable from the policies not 
4 used for funeral goods and services or burial spaces as 
5 set forth in the contract shall be received by the State, 
6 up to an amount equal to the total medical assistance paid 
7 on behalf of the person; any funds remaining after payment 
8 to the State shall be paid to a secondary beneficiary (if 
9 any) listed on the policy, or to the estate of the 
10 purchaser if no secondary beneficiary is named on the 
11 policy in the event the proceeds exceed the prearranged 
12 costs of the funeral home or cemetery merchandise and 
13 services and the total medical assistance paid on behalf 
14 of the insured. More than one policy may be subject to this 
15 subsection if the total face value of the policies is 
16 necessary to pay the amount described in the contract with 
17 the funeral home; policies that are not necessary to pay 
18 the amount described in the contract are not exempt. The 
19 Department of Healthcare and Family Services shall adopt 
20 rules and forms to implement this Section. 
21 (d) Notwithstanding any other provision of this Code to 
22the contrary, an irrevocable trust containing the resources of 
23a person who is determined to have a disability shall be 
24considered exempt from consideration. A pooled trust must be 
25established and managed by a non-profit association that pools 
26funds but maintains a separate account for each beneficiary. 
 
 
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1The trust may be established by the person, a parent, 
2grandparent, legal guardian, or court. It must be established 
3for the sole benefit of the person and language contained in 
4the trust shall stipulate that any amount remaining in the 
5trust (up to the amount expended by the Department on medical 
6assistance) that is not retained by the trust for reasonable 
7administrative costs related to wrapping up the affairs of the 
8subaccount shall be paid to the Department upon the death of 
9the person. After a person reaches age 65, any funding by or on 
10behalf of the person to the trust shall be treated as a 
11transfer of assets for less than fair market value unless the 
12person is a ward of a county public guardian or the State 
13Guardian pursuant to Section 13-5 of the Probate Act of 1975 or 
14Section 30 of the Guardianship and Advocacy Act and lives in 
15the community, or the person is a ward of a county public 
16guardian or the State Guardian pursuant to Section 13-5 of the 
17Probate Act of 1975 or Section 30 of the Guardianship and 
18Advocacy Act and a court has found that any expenditures from 
19the trust will maintain or enhance the person's quality of 
20life. If the trust contains proceeds from a personal injury 
21settlement, any Department charge must be satisfied in order 
22for the transfer to the trust to be treated as a transfer for 
23fair market value. 
24 (e) The homestead shall be exempt from consideration 
25except to the extent
that it meets the income and shelter needs 
26of the person. "Homestead"
means the dwelling house and 
 
 
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1contiguous real estate owned and occupied
by the person, 
2regardless of its value. Subject to federal approval, a person 
3shall not be eligible for long-term care services, however, if 
4the person's equity interest in his or her homestead exceeds 
5the minimum home equity as allowed and increased annually 
6under federal law. Subject to federal approval, on and after 
7the effective date of this amendatory Act of the 97th General 
8Assembly, homestead property transferred to a trust shall no 
9longer be considered homestead property.

10 (f) Occasional or irregular gifts in cash, goods or 
11services from persons
who are not legally responsible 
12relatives which are of nominal value or
which do not have 
13significant effect in meeting essential requirements
shall be 
14disregarded.
15 (g) The eligibility of any applicant for or recipient
of 
16public aid under this Article is not affected by the payment of 
17any
grant under the "Senior Citizens and Disabled Persons 
18Property Tax
Relief Act" or any distributions or items of

19income described under subparagraph (X) of paragraph (2) of 
20subsection (a) of
Section 203 of the Illinois Income Tax Act.

21 (h) The Illinois Department may, after appropriate 
22investigation, establish
and implement a consolidated standard 
23to determine need and eligibility
for and amount of benefits 
24under this Article or a uniform cash supplement
to the federal 
25Supplemental Security Income program for all or any part
of 
26the then current recipients under this Article; provided, 
 
 
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1however, that
the establishment or implementation of such a 
2standard or supplement shall
not result in reductions in 
3benefits under this Article for the then current
recipients of 
4such benefits.

5(Source: P.A. 97-689, eff. 6-14-12; 98-104, eff. 7-22-13.)".