Bill Text: IL HB3504 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the State Employees Group Insurance Act of 1971. Provides that, at least 120 days prior to making any changes to the health benefits for TRS benefit recipients, the Department of Central Management Services shall post those changes on its website and shall submit the planned changes to the Commission on Government Forecasting and Accountability. Provides that at least 120 days prior to making any changes to funding for the Teacher Health Insurance Security Fund, the Department shall post those changes on its website and shall submit the planned changes to the Commission on Government Forecasting and Accountability.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2023-02-17 - Referred to Rules Committee [HB3504 Detail]

Download: Illinois-2023-HB3504-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3504 Introduced , by Rep. Michael T. Marron SYNOPSIS AS INTRODUCED:
5 ILCS 375/6.5
5 ILCS 375/6.6
Amends the State Employees Group Insurance Act of 1971. Provides that, at least 120 days prior to making any changes to the health benefits for TRS benefit recipients, the Department of Central Management Services shall post those changes on its website and shall submit the planned changes to the Commission on Government Forecasting and Accountability. Provides that at least 120 days prior to making any changes to funding for the Teacher Health Insurance Security Fund, the Department shall post those changes on its website and shall submit the planned changes to the Commission on Government Forecasting and Accountability.
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A BILL FOR
HB3504 LRB103 30649 DTM 57107 b
AN ACT concerning State government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Employees Group Insurance Act of 1971
is amended by changing Sections 6.5 and 6.6 as follows:
(5 ILCS 375/6.5)
Sec. 6.5. Health benefits for TRS benefit recipients and
TRS dependent beneficiaries.
(a) Purpose. It is the purpose of this amendatory Act of
1995 to transfer the administration of the program of health
benefits established for benefit recipients and their
dependent beneficiaries under Article 16 of the Illinois
Pension Code to the Department of Central Management Services.
(b) Transition provisions. The Board of Trustees of the
Teachers' Retirement System shall continue to administer the
health benefit program established under Article 16 of the
Illinois Pension Code through December 31, 1995. Beginning
January 1, 1996, the Department of Central Management Services
shall be responsible for administering a program of health
benefits for TRS benefit recipients and TRS dependent
beneficiaries under this Section. The Department of Central
Management Services and the Teachers' Retirement System shall
cooperate in this endeavor and shall coordinate their

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activities so as to ensure a smooth transition and
uninterrupted health benefit coverage.
(c) Eligibility. All persons who were enrolled in the
Article 16 program at the time of the transfer shall be
eligible to participate in the program established under this
Section without any interruption or delay in coverage or
limitation as to pre-existing medical conditions. Eligibility
to participate shall be determined by the Teachers' Retirement
System. Eligibility information shall be communicated to the
Department of Central Management Services in a format
acceptable to the Department.
Eligible TRS benefit recipients may enroll or re-enroll in
the program of health benefits established under this Section
during any applicable annual open enrollment period and as
otherwise permitted by the Department of Central Management
Services. A TRS benefit recipient shall not be deemed
ineligible to participate solely by reason of the TRS benefit
recipient having made a previous election to disenroll or
otherwise not participate in the program of health benefits.
A TRS dependent beneficiary who is a child age 19 or over
and mentally or physically disabled does not become ineligible
to participate by reason of (i) becoming ineligible to be
claimed as a dependent for Illinois or federal income tax
purposes or (ii) receiving earned income, so long as those
earnings are insufficient for the child to be fully
self-sufficient.

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(d) Coverage. The level of health benefits provided under
this Section shall be similar to the level of benefits
provided by the program previously established under Article
16 of the Illinois Pension Code.
Group life insurance benefits are not included in the
benefits to be provided to TRS benefit recipients and TRS
dependent beneficiaries under this Act.
The program of health benefits under this Section may
include any or all of the benefit limitations, including but
not limited to a reduction in benefits based on eligibility
for federal Medicare benefits, that are provided under
subsection (a) of Section 6 of this Act for other health
benefit programs under this Act.
(e) Insurance rates and premiums. The Director shall
determine the insurance rates and premiums for TRS benefit
recipients and TRS dependent beneficiaries, and shall present
to the Teachers' Retirement System of the State of Illinois,
by April 15 of each calendar year, the rate-setting
methodology (including but not limited to utilization levels
and costs) used to determine the amount of the health care
premiums.
For Fiscal Year 1996, the premium shall be equal to
the premium actually charged in Fiscal Year 1995; in
subsequent years, the premium shall never be lower than
the premium charged in Fiscal Year 1995.
For Fiscal Year 2003, the premium shall not exceed

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110% of the premium actually charged in Fiscal Year 2002.
For Fiscal Year 2004, the premium shall not exceed
112% of the premium actually charged in Fiscal Year 2003.
For Fiscal Year 2005, the premium shall not exceed a
weighted average of 106.6% of the premium actually charged
in Fiscal Year 2004.
For Fiscal Year 2006, the premium shall not exceed a
weighted average of 109.1% of the premium actually charged
in Fiscal Year 2005.
For Fiscal Year 2007, the premium shall not exceed a
weighted average of 103.9% of the premium actually charged
in Fiscal Year 2006.
For Fiscal Year 2008 and thereafter, the premium in
each fiscal year shall not exceed 105% of the premium
actually charged in the previous fiscal year.
Rates and premiums may be based in part on age and
eligibility for federal medicare coverage. However, the cost
of participation for a TRS dependent beneficiary who is an
unmarried child age 19 or over and mentally or physically
disabled shall not exceed the cost for a TRS dependent
beneficiary who is an unmarried child under age 19 and
participates in the same major medical or managed care
program.
The cost of health benefits under the program shall be
paid as follows:
(1) For a TRS benefit recipient selecting a managed

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care program, up to 75% of the total insurance rate shall
be paid from the Teacher Health Insurance Security Fund.
Effective with Fiscal Year 2007 and thereafter, for a TRS
benefit recipient selecting a managed care program, 75% of
the total insurance rate shall be paid from the Teacher
Health Insurance Security Fund.
(2) For a TRS benefit recipient selecting the major
medical coverage program, up to 50% of the total insurance
rate shall be paid from the Teacher Health Insurance
Security Fund if a managed care program is accessible, as
determined by the Teachers' Retirement System. Effective
with Fiscal Year 2007 and thereafter, for a TRS benefit
recipient selecting the major medical coverage program,
50% of the total insurance rate shall be paid from the
Teacher Health Insurance Security Fund if a managed care
program is accessible, as determined by the Department of
Central Management Services.
(3) For a TRS benefit recipient selecting the major
medical coverage program, up to 75% of the total insurance
rate shall be paid from the Teacher Health Insurance
Security Fund if a managed care program is not accessible,
as determined by the Teachers' Retirement System.
Effective with Fiscal Year 2007 and thereafter, for a TRS
benefit recipient selecting the major medical coverage
program, 75% of the total insurance rate shall be paid
from the Teacher Health Insurance Security Fund if a

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managed care program is not accessible, as determined by
the Department of Central Management Services.
(3.1) For a TRS dependent beneficiary who is Medicare
primary and enrolled in a managed care plan, or the major
medical coverage program if a managed care plan is not
available, 25% of the total insurance rate shall be paid
from the Teacher Health Security Fund as determined by the
Department of Central Management Services. For the purpose
of this item (3.1), the term "TRS dependent beneficiary
who is Medicare primary" means a TRS dependent beneficiary
who is participating in Medicare Parts A and B.
(4) Except as otherwise provided in item (3.1), the
balance of the rate of insurance, including the entire
premium of any coverage for TRS dependent beneficiaries
that has been elected, shall be paid by deductions
authorized by the TRS benefit recipient to be withheld
from his or her monthly annuity or benefit payment from
the Teachers' Retirement System; except that (i) if the
balance of the cost of coverage exceeds the amount of the
monthly annuity or benefit payment, the difference shall
be paid directly to the Teachers' Retirement System by the
TRS benefit recipient, and (ii) all or part of the balance
of the cost of coverage may, at the school board's option,
be paid to the Teachers' Retirement System by the school
board of the school district from which the TRS benefit
recipient retired, in accordance with Section 10-22.3b of

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the School Code. The Teachers' Retirement System shall
promptly deposit all moneys withheld by or paid to it
under this subdivision (e)(4) into the Teacher Health
Insurance Security Fund. These moneys shall not be
considered assets of the Retirement System.
(5) If, for any month beginning on or after January 1,
2013, a TRS benefit recipient or TRS dependent beneficiary
was enrolled in Medicare Parts A and B and such Medicare
coverage was primary to coverage under this Section but
payment for coverage under this Section was made at a rate
greater than the Medicare primary rate published by the
Department of Central Management Services, the TRS benefit
recipient or TRS dependent beneficiary shall be eligible
for a refund equal to the difference between the amount
paid by the TRS benefit recipient or TRS dependent
beneficiary and the published Medicare primary rate. To
receive a refund pursuant to this subsection, the TRS
benefit recipient or TRS dependent beneficiary must
provide documentation to the Department of Central
Management Services evidencing the TRS benefit recipient's
or TRS dependent beneficiary's Medicare coverage and the
amount paid by the TRS benefit recipient or TRS dependent
beneficiary during the applicable time period.
(f) Financing. Beginning July 1, 1995, all revenues
arising from the administration of the health benefit programs
established under Article 16 of the Illinois Pension Code or

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this Section shall be deposited into the Teacher Health
Insurance Security Fund, which is hereby created as a
nonappropriated trust fund to be held outside the State
Treasury, with the State Treasurer as custodian. Any interest
earned on moneys in the Teacher Health Insurance Security Fund
shall be deposited into the Fund.
Moneys in the Teacher Health Insurance Security Fund shall
be used only to pay the costs of the health benefit program
established under this Section, including associated
administrative costs, and the costs associated with the health
benefit program established under Article 16 of the Illinois
Pension Code, as authorized in this Section. Beginning July 1,
1995, the Department of Central Management Services may make
expenditures from the Teacher Health Insurance Security Fund
for those costs.
After other funds authorized for the payment of the costs
of the health benefit program established under Article 16 of
the Illinois Pension Code are exhausted and until January 1,
1996 (or such later date as may be agreed upon by the Director
of Central Management Services and the Secretary of the
Teachers' Retirement System), the Secretary of the Teachers'
Retirement System may make expenditures from the Teacher
Health Insurance Security Fund as necessary to pay up to 75% of
the cost of providing health coverage to eligible benefit
recipients (as defined in Sections 16-153.1 and 16-153.3 of
the Illinois Pension Code) who are enrolled in the Article 16

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health benefit program and to facilitate the transfer of
administration of the health benefit program to the Department
of Central Management Services.
The Department of Central Management Services, or any
successor agency designated to procure healthcare contracts
pursuant to this Act, is authorized to establish funds,
separate accounts provided by any bank or banks as defined by
the Illinois Banking Act, or separate accounts provided by any
savings and loan association or associations as defined by the
Illinois Savings and Loan Act of 1985 to be held by the
Director, outside the State treasury, for the purpose of
receiving the transfer of moneys from the Teacher Health
Insurance Security Fund. The Department may promulgate rules
further defining the methodology for the transfers. Any
interest earned by moneys in the funds or accounts shall inure
to the Teacher Health Insurance Security Fund. The transferred
moneys, and interest accrued thereon, shall be used
exclusively for transfers to administrative service
organizations or their financial institutions for payments of
claims to claimants and providers under the self-insurance
health plan. The transferred moneys, and interest accrued
thereon, shall not be used for any other purpose including,
but not limited to, reimbursement of administration fees due
the administrative service organization pursuant to its
contract or contracts with the Department.
(g) Contract for benefits. The Director shall by contract,

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self-insurance, or otherwise make available the program of
health benefits for TRS benefit recipients and their TRS
dependent beneficiaries that is provided for in this Section.
The contract or other arrangement for the provision of these
health benefits shall be on terms deemed by the Director to be
in the best interest of the State of Illinois and the TRS
benefit recipients based on, but not limited to, such criteria
as administrative cost, service capabilities of the carrier or
other contractor, and the costs of the benefits.
(g-5) Committee. A Teacher Retirement Insurance Program
Committee shall be established, to consist of 10 persons
appointed by the Governor.
The Committee shall convene at least 4 times each year,
and shall consider and make recommendations on issues
affecting the program of health benefits provided under this
Section. Recommendations of the Committee shall be based on a
consensus of the members of the Committee.
If the Teacher Health Insurance Security Fund experiences
a deficit balance based upon the contribution and subsidy
rates established in this Section and Section 6.6 for Fiscal
Year 2008 or thereafter, the Committee shall make
recommendations for adjustments to the funding sources
established under these Sections.
In addition, the Committee shall identify proposed
solutions to the funding shortfalls that are affecting the
Teacher Health Insurance Security Fund, and it shall report

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those solutions to the Governor and the General Assembly
within 6 months after August 15, 2011 (the effective date of
Public Act 97-386).
(h) Continuation of program. It is the intention of the
General Assembly that the program of health benefits provided
under this Section be maintained on an ongoing, affordable
basis.
The program of health benefits provided under this Section
may be amended by the State and is not intended to be a pension
or retirement benefit subject to protection under Article
XIII, Section 5 of the Illinois Constitution.
(i) Repeal. (Blank).
(j) At least 120 days prior to making any changes to the
benefits allowed under this Section the Department shall post
those changes on its website and shall submit the planned
changes to the Commission on Government Forecasting and
Accountability.
(Source: P.A. 101-483, eff. 1-1-20; 102-210, eff. 7-30-21.)
(5 ILCS 375/6.6)
Sec. 6.6. Contributions to the Teacher Health Insurance
Security Fund.
(a) Beginning July 1, 1995, all active contributors of the
Teachers' Retirement System (established under Article 16 of
the Illinois Pension Code) who are not employees of a
department as defined in Section 3 of this Act shall make

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contributions toward the cost of annuitant and survivor health
benefits. These contributions shall be at the following rates:
until January 1, 2002, 0.5% of salary; beginning January 1,
2002, 0.65% of salary; beginning July 1, 2003, 0.75% of
salary; beginning July 1, 2005, 0.80% of salary; beginning
July 1, 2007, a percentage of salary to be determined by the
Department of Central Management Services by rule, which in
each fiscal year shall not exceed 105% of the percentage of
salary actually required to be paid in the previous fiscal
year.
These contributions shall be deducted by the employer and
paid to the System as service agent for the Department of
Central Management Services. The System may use the same
processes for collecting the contributions required by this
subsection that it uses to collect contributions received from
school districts and other covered employers under Sections
16-154 and 16-155 of the Illinois Pension Code.
An employer may agree to pick up or pay the contributions
required under this subsection on behalf of the teacher; such
contributions shall be deemed to have to have been paid by the
teacher. Beginning January 1, 2002, if the employer does not
directly pay the required member contribution, then the
employer shall reduce the member's salary by an amount equal
to the required contribution and shall then pay the
contribution on behalf of the member. This reduction shall not
change the amounts reported as creditable earnings to the

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Teachers' Retirement System.
A person who purchases optional service credit under
Article 16 of the Illinois Pension Code for a period after June
30, 1995 must also make a contribution under this subsection
for that optional credit, at the rate provided in subsection
(a), based on the salary used in computing the optional
service credit, plus interest on this employee contribution.
This contribution shall be collected by the System as service
agent for the Department of Central Management Services. The
contribution required under this subsection for the optional
service credit must be paid in full before any annuity based on
that credit begins.
(a-5) Beginning January 1, 2002, every employer of a
teacher (other than an employer that is a department as
defined in Section 3 of this Act) shall pay an employer
contribution toward the cost of annuitant and survivor health
benefits. These contributions shall be computed as follows:
(1) Beginning January 1, 2002 through June 30, 2003,
the employer contribution shall be equal to 0.4% of each
teacher's salary.
(2) Beginning July 1, 2003, the employer contribution
shall be equal to 0.5% of each teacher's salary.
(3) Beginning July 1, 2005, the employer contribution
shall be equal to 0.6% of each teacher's salary.
(4) Beginning July 1, 2007, the employer contribution
shall be a percentage of each teacher's salary to be

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determined by the Department of Central Management
Services by rule, which in each fiscal year shall not
exceed 105% of the percentage of each teacher's salary
actually required to be paid in the previous fiscal year.
These contributions shall be paid by the employer to the
System as service agent for the Department of Central
Management Services. The System may use the same processes for
collecting the contributions required by this subsection that
it uses to collect contributions received from school
districts and other covered employers under the Illinois
Pension Code.
The school district or other employing unit may pay these
employer contributions out of any source of funding available
for that purpose and shall forward the contributions to the
System on the schedule established for the payment of member
contributions.
(b) The Teachers' Retirement System shall promptly deposit
all moneys collected under subsections (a) and (a-5) of this
Section into the Teacher Health Insurance Security Fund
created in Section 6.5 of this Act. The moneys collected under
this Section shall be used only for the purposes authorized in
Section 6.5 of this Act and shall not be considered to be
assets of the Teachers' Retirement System. Contributions made
under this Section are not transferable to other pension funds
or retirement systems and are not refundable upon termination
of service.

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(c) On or before November 15 of each year, the Board of
Trustees of the Teachers' Retirement System shall certify to
the Governor, the Director of Central Management Services, and
the State Comptroller its estimate of the total amount of
contributions to be paid under subsection (a) of this Section
6.6 for the next fiscal year. The amount certified shall be
decreased or increased each year by the amount that the actual
active teacher contributions either fell short of or exceeded
the estimate used by the Board in making the certification for
the previous fiscal year. The certification shall include a
detailed explanation of the methods and information that the
Board relied upon in preparing its estimate. As soon as
possible after the effective date of this amendatory Act of
the 92nd General Assembly, the Board shall recalculate and
recertify its certifications for fiscal years 2002 and 2003.
(d) Beginning in fiscal year 1996, on the first day of each
month, or as soon thereafter as may be practical, the State
Treasurer and the State Comptroller shall transfer from the
General Revenue Fund to the Teacher Health Insurance Security
Fund 1/12 of the annual amount appropriated for that fiscal
year to the State Comptroller for deposit into the Teacher
Health Insurance Security Fund under Section 1.3 of the State
Pension Funds Continuing Appropriation Act.
(e) Except where otherwise specified in this Section, the
definitions that apply to Article 16 of the Illinois Pension
Code apply to this Section.

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(f) (Blank).
(g) At least 120 days prior to making any changes to the
funding under this Section the Department shall make those
changes available on its website and shall submit the planned
changes to the Commission on Government Forecasting and
Accountability.
(Source: P.A. 92-505, eff. 12-20-01; 93-679, eff. 6-30-04.)