Bill Text: IL HB4699 | 2023-2024 | 103rd General Assembly | Introduced


Bill Title: Amends the General Assembly Article of the Illinois Pension Code. Requires the System to implement a Tier 3 plan by July 1, 2025 that aggregates State and employee contributions in individual participant accounts that are used for payouts after retirement. Provides that a person who becomes a participant of a System on or after July 1, 2025 shall participate in the Tier 3 plan instead of the defined benefit plan. Authorizes a Tier 1 or Tier 2 participant to elect to participate in the Tier 3 plan instead of the defined benefit plan and to also elect to terminate all participation in the defined benefit plan and to have a specified amount credited to his or her account. Makes related changes in the Retirement Systems Reciprocal Act (Article 20 of the Illinois Pension Code) and the State Employees Group Insurance Act of 1971. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-04-05 - Rule 19(a) / Re-referred to Rules Committee [HB4699 Detail]

Download: Illinois-2023-HB4699-Introduced.html

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4699

Introduced , by Rep. Tim Ozinga

SYNOPSIS AS INTRODUCED:
5 ILCS 375/3 from Ch. 127, par. 523
5 ILCS 375/10 from Ch. 127, par. 530
40 ILCS 5/2-105.3
40 ILCS 5/2-162
40 ILCS 5/2-165.5 new
40 ILCS 5/20-121 from Ch. 108 1/2, par. 20-121
40 ILCS 5/20-123 from Ch. 108 1/2, par. 20-123
40 ILCS 5/20-124 from Ch. 108 1/2, par. 20-124
40 ILCS 5/20-125 from Ch. 108 1/2, par. 20-125

Amends the General Assembly Article of the Illinois Pension Code. Requires the System to implement a Tier 3 plan by July 1, 2025 that aggregates State and employee contributions in individual participant accounts that are used for payouts after retirement. Provides that a person who becomes a participant of a System on or after July 1, 2025 shall participate in the Tier 3 plan instead of the defined benefit plan. Authorizes a Tier 1 or Tier 2 participant to elect to participate in the Tier 3 plan instead of the defined benefit plan and to also elect to terminate all participation in the defined benefit plan and to have a specified amount credited to his or her account. Makes related changes in the Retirement Systems Reciprocal Act (Article 20 of the Illinois Pension Code) and the State Employees Group Insurance Act of 1971. Effective immediately.
LRB103 38255 RPS 68390 b

A BILL FOR

HB4699LRB103 38255 RPS 68390 b
1 AN ACT concerning public employee benefits.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The State Employees Group Insurance Act of 1971
5is amended by changing Sections 3 and 10 as follows:
6 (5 ILCS 375/3) (from Ch. 127, par. 523)
7 Sec. 3. Definitions. Unless the context otherwise
8requires, the following words and phrases as used in this Act
9shall have the following meanings. The Department may define
10these and other words and phrases separately for the purpose
11of implementing specific programs providing benefits under
12this Act.
13 (a) "Administrative service organization" means any
14person, firm or corporation experienced in the handling of
15claims which is fully qualified, financially sound and capable
16of meeting the service requirements of a contract of
17administration executed with the Department.
18 (b) "Annuitant" means (1) an employee who retires, or has
19retired, on or after January 1, 1966 on an immediate annuity
20under the provisions of Article Articles 2 (including an
21employee who, in lieu of receiving an annuity under that
22Article, has retired under the Tier 3 plan established under
23Section 2-165.5 of that Article), 14 (including an employee

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1who has elected to receive an alternative retirement
2cancellation payment under Section 14-108.5 of the Illinois
3Pension Code in lieu of an annuity or who meets the criteria
4for retirement, but in lieu of receiving an annuity under that
5Article has elected to receive an accelerated pension benefit
6payment under Section 14-147.5 of that Article), 15 (including
7an employee who has retired under the optional retirement
8program established under Section 15-158.2 or who meets the
9criteria for retirement but in lieu of receiving an annuity
10under that Article has elected to receive an accelerated
11pension benefit payment under Section 15-185.5 of the
12Article), paragraph (2), (3), or (5) of Section 16-106
13(including an employee who meets the criteria for retirement,
14but in lieu of receiving an annuity under that Article has
15elected to receive an accelerated pension benefit payment
16under Section 16-190.5 of the Illinois Pension Code), or
17Article 18 of the Illinois Pension Code; (2) any person who was
18receiving group insurance coverage under this Act as of March
1931, 1978 by reason of his status as an annuitant, even though
20the annuity in relation to which such coverage was provided is
21a proportional annuity based on less than the minimum period
22of service required for a retirement annuity in the system
23involved; (3) any person not otherwise covered by this Act who
24has retired as a participating member under Article 2 of the
25Illinois Pension Code but is ineligible for the retirement
26annuity under Section 2-119 of the Illinois Pension Code; (4)

HB4699- 3 -LRB103 38255 RPS 68390 b
1the spouse of any person who is receiving a retirement annuity
2under Article 18 of the Illinois Pension Code and who is
3covered under a group health insurance program sponsored by a
4governmental employer other than the State of Illinois and who
5has irrevocably elected to waive his or her coverage under
6this Act and to have his or her spouse considered as the
7"annuitant" under this Act and not as a "dependent"; or (5) an
8employee who retires, or has retired, from a qualified
9position, as determined according to rules promulgated by the
10Director, under a qualified local government, a qualified
11rehabilitation facility, a qualified domestic violence shelter
12or service, or a qualified child advocacy center. (For
13definition of "retired employee", see (p) post).
14 (b-5) (Blank).
15 (b-6) (Blank).
16 (b-7) (Blank).
17 (c) "Carrier" means (1) an insurance company, a
18corporation organized under the Limited Health Service
19Organization Act or the Voluntary Health Services Plans Act, a
20partnership, or other nongovernmental organization, which is
21authorized to do group life or group health insurance business
22in Illinois, or (2) the State of Illinois as a self-insurer.
23 (d) "Compensation" means salary or wages payable on a
24regular payroll by the State Treasurer on a warrant of the
25State Comptroller out of any State, trust or federal fund, or
26by the Governor of the State through a disbursing officer of

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1the State out of a trust or out of federal funds, or by any
2Department out of State, trust, federal or other funds held by
3the State Treasurer or the Department, to any person for
4personal services currently performed, and ordinary or
5accidental disability benefits under Articles 2, 14, or 15
6(including ordinary or accidental disability benefits under
7the optional retirement program established under Section
815-158.2), paragraph (2), (3), or (5) of Section 16-106, or
9Article 18 of the Illinois Pension Code, for disability
10incurred after January 1, 1966, or benefits payable under the
11Workers' Compensation or Occupational Diseases Act or benefits
12payable under a sick pay plan established in accordance with
13Section 36 of the State Finance Act. "Compensation" also means
14salary or wages paid to an employee of any qualified local
15government, qualified rehabilitation facility, qualified
16domestic violence shelter or service, or qualified child
17advocacy center.
18 (e) "Commission" means the State Employees Group Insurance
19Advisory Commission authorized by this Act. Commencing July 1,
201984, "Commission" as used in this Act means the Commission on
21Government Forecasting and Accountability as established by
22the Legislative Commission Reorganization Act of 1984.
23 (f) "Contributory", when referred to as contributory
24coverage, shall mean optional coverages or benefits elected by
25the member toward the cost of which such member makes
26contribution, or which are funded in whole or in part through

HB4699- 5 -LRB103 38255 RPS 68390 b
1the acceptance of a reduction in earnings or the foregoing of
2an increase in earnings by an employee, as distinguished from
3noncontributory coverage or benefits which are paid entirely
4by the State of Illinois without reduction of the member's
5salary.
6 (g) "Department" means any department, institution, board,
7commission, officer, court or any agency of the State
8government receiving appropriations and having power to
9certify payrolls to the Comptroller authorizing payments of
10salary and wages against such appropriations as are made by
11the General Assembly from any State fund, or against trust
12funds held by the State Treasurer and includes boards of
13trustees of the retirement systems created by Articles 2, 14,
1415, 16, and 18 of the Illinois Pension Code. "Department" also
15includes the Illinois Comprehensive Health Insurance Board,
16the Board of Examiners established under the Illinois Public
17Accounting Act, and the Illinois Finance Authority.
18 (h) "Dependent", when the term is used in the context of
19the health and life plan, means a member's spouse and any child
20(1) from birth to age 26 including an adopted child, a child
21who lives with the member from the time of the placement for
22adoption until entry of an order of adoption, a stepchild or
23adjudicated child, or a child who lives with the member if such
24member is a court appointed guardian of the child or (2) age 19
25or over who has a mental or physical disability from a cause
26originating prior to the age of 19 (age 26 if enrolled as an

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1adult child dependent). For the health plan only, the term
2"dependent" also includes (1) any person enrolled prior to the
3effective date of this Section who is dependent upon the
4member to the extent that the member may claim such person as a
5dependent for income tax deduction purposes and (2) any person
6who has received after June 30, 2000 an organ transplant and
7who is financially dependent upon the member and eligible to
8be claimed as a dependent for income tax purposes. A member
9requesting to cover any dependent must provide documentation
10as requested by the Department of Central Management Services
11and file with the Department any and all forms required by the
12Department.
13 (i) "Director" means the Director of the Illinois
14Department of Central Management Services.
15 (j) "Eligibility period" means the period of time a member
16has to elect enrollment in programs or to select benefits
17without regard to age, sex or health.
18 (k) "Employee" means and includes each officer or employee
19in the service of a department who (1) receives his
20compensation for service rendered to the department on a
21warrant issued pursuant to a payroll certified by a department
22or on a warrant or check issued and drawn by a department upon
23a trust, federal or other fund or on a warrant issued pursuant
24to a payroll certified by an elected or duly appointed officer
25of the State or who receives payment of the performance of
26personal services on a warrant issued pursuant to a payroll

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1certified by a Department and drawn by the Comptroller upon
2the State Treasurer against appropriations made by the General
3Assembly from any fund or against trust funds held by the State
4Treasurer, and (2) is employed full-time or part-time in a
5position normally requiring actual performance of duty during
6not less than 1/2 of a normal work period, as established by
7the Director in cooperation with each department, except that
8persons elected by popular vote will be considered employees
9during the entire term for which they are elected regardless
10of hours devoted to the service of the State, and (3) except
11that "employee" does not include any person who is not
12eligible by reason of such person's employment to participate
13in one of the State retirement systems under Articles 2, 14, 15
14(either the regular Article 15 system or the optional
15retirement program established under Section 15-158.2), or 18,
16or under paragraph (2), (3), or (5) of Section 16-106, of the
17Illinois Pension Code, but such term does include persons who
18are employed during the 6-month qualifying period under
19Article 14 of the Illinois Pension Code. Such term also
20includes any person who (1) after January 1, 1966, is
21receiving ordinary or accidental disability benefits under
22Articles 2, 14, 15 (including ordinary or accidental
23disability benefits under the optional retirement program
24established under Section 15-158.2), paragraph (2), (3), or
25(5) of Section 16-106, or Article 18 of the Illinois Pension
26Code, for disability incurred after January 1, 1966, (2)

HB4699- 8 -LRB103 38255 RPS 68390 b
1receives total permanent or total temporary disability under
2the Workers' Compensation Act or Occupational Disease Act as a
3result of injuries sustained or illness contracted in the
4course of employment with the State of Illinois, or (3) is not
5otherwise covered under this Act and has retired as a
6participating member under Article 2 of the Illinois Pension
7Code but is ineligible for the retirement annuity under
8Section 2-119 of the Illinois Pension Code. However, a person
9who satisfies the criteria of the foregoing definition of
10"employee" except that such person is made ineligible to
11participate in the State Universities Retirement System by
12clause (4) of subsection (a) of Section 15-107 of the Illinois
13Pension Code is also an "employee" for the purposes of this
14Act. "Employee" also includes any person receiving or eligible
15for benefits under a sick pay plan established in accordance
16with Section 36 of the State Finance Act. "Employee" also
17includes (i) each officer or employee in the service of a
18qualified local government, including persons appointed as
19trustees of sanitary districts regardless of hours devoted to
20the service of the sanitary district, (ii) each employee in
21the service of a qualified rehabilitation facility, (iii) each
22full-time employee in the service of a qualified domestic
23violence shelter or service, and (iv) each full-time employee
24in the service of a qualified child advocacy center, as
25determined according to rules promulgated by the Director.
26 (l) "Member" means an employee, annuitant, retired

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1employee, or survivor. In the case of an annuitant or retired
2employee who first becomes an annuitant or retired employee on
3or after January 13, 2012 (the effective date of Public Act
497-668), the individual must meet the minimum vesting
5requirements of the applicable retirement system in order to
6be eligible for group insurance benefits under that system. In
7the case of a survivor who is not entitled to occupational
8death benefits pursuant to an applicable retirement system or
9death benefits pursuant to the Illinois Workers' Compensation
10Act, and who first becomes a survivor on or after January 13,
112012 (the effective date of Public Act 97-668), the deceased
12employee, annuitant, or retired employee upon whom the annuity
13is based must have been eligible to participate in the group
14insurance system under the applicable retirement system in
15order for the survivor to be eligible for group insurance
16benefits under that system.
17 In the case of a survivor who is entitled to occupational
18death benefits pursuant to the deceased employee's applicable
19retirement system or death benefits pursuant to the Illinois
20Workers' Compensation Act, and first becomes a survivor on or
21after January 1, 2022, the survivor is eligible for group
22health insurance benefits regardless of the deceased
23employee's minimum vesting requirements under the applicable
24retirement system, with a State contribution rate of 100%,
25until an unmarried child dependent reaches the age of 18, or
26the age of 22 if the dependent child is a full-time student, or

HB4699- 10 -LRB103 38255 RPS 68390 b
1until the adult survivor becomes eligible for benefits under
2the federal Medicare health insurance program (Title XVIII of
3the Social Security Act, as added by Public Law 89-97). In the
4case of a survivor currently receiving occupational death
5benefits pursuant to the deceased employee's applicable
6retirement system or has received death benefits pursuant to
7the Illinois Workers' Compensation Act, who first became a
8survivor prior to January 1, 2022, the survivor is eligible
9for group health insurance benefits regardless of the deceased
10employee's minimum vesting requirements under the applicable
11retirement system, with a State contribution rate of 100%,
12until an unmarried child dependent reaches the age of 18, or
13the age of 22 if the dependent child is a full-time student, or
14until the adult survivor becomes eligible for benefits under
15the federal Medicare health insurance program (Title XVIII of
16the Social Security Act, as added by Public Law 89-97). The
17changes made by this amendatory Act of the 102nd General
18Assembly with respect to survivors who first became survivors
19prior to January 1, 2022 shall apply upon request of the
20survivor on or after the effective date of this amendatory Act
21of the 102nd General Assembly.
22 (m) "Optional coverages or benefits" means those coverages
23or benefits available to the member on his or her voluntary
24election, and at his or her own expense.
25 (n) "Program" means the group life insurance, health
26benefits and other employee benefits designed and contracted

HB4699- 11 -LRB103 38255 RPS 68390 b
1for by the Director under this Act.
2 (o) "Health plan" means a health benefits program offered
3by the State of Illinois for persons eligible for the plan.
4 (p) "Retired employee" means any person who would be an
5annuitant as that term is defined herein but for the fact that
6such person retired prior to January 1, 1966. Such term also
7includes any person formerly employed by the University of
8Illinois in the Cooperative Extension Service who would be an
9annuitant but for the fact that such person was made
10ineligible to participate in the State Universities Retirement
11System by clause (4) of subsection (a) of Section 15-107 of the
12Illinois Pension Code.
13 (q) "Survivor" means a person receiving an annuity as a
14survivor of an employee or of an annuitant. "Survivor" also
15includes: (1) the surviving dependent of a person who
16satisfies the definition of "employee" except that such person
17is made ineligible to participate in the State Universities
18Retirement System by clause (4) of subsection (a) of Section
1915-107 of the Illinois Pension Code; (2) the surviving
20dependent of any person formerly employed by the University of
21Illinois in the Cooperative Extension Service who would be an
22annuitant except for the fact that such person was made
23ineligible to participate in the State Universities Retirement
24System by clause (4) of subsection (a) of Section 15-107 of the
25Illinois Pension Code; (3) the surviving dependent of a person
26who was an annuitant under this Act by virtue of receiving an

HB4699- 12 -LRB103 38255 RPS 68390 b
1alternative retirement cancellation payment under Section
214-108.5 of the Illinois Pension Code; and (4) a person who
3would be receiving an annuity as a survivor of an annuitant
4except that the annuitant elected on or after June 4, 2018 to
5receive an accelerated pension benefit payment under Section
614-147.5, 15-185.5, or 16-190.5 of the Illinois Pension Code
7in lieu of receiving an annuity.
8 (q-2) "SERS" means the State Employees' Retirement System
9of Illinois, created under Article 14 of the Illinois Pension
10Code.
11 (q-3) "SURS" means the State Universities Retirement
12System, created under Article 15 of the Illinois Pension Code.
13 (q-4) "TRS" means the Teachers' Retirement System of the
14State of Illinois, created under Article 16 of the Illinois
15Pension Code.
16 (q-5) (Blank).
17 (q-6) (Blank).
18 (q-7) (Blank).
19 (r) "Medical services" means the services provided within
20the scope of their licenses by practitioners in all categories
21licensed under the Medical Practice Act of 1987.
22 (s) "Unit of local government" means any county,
23municipality, township, school district (including a
24combination of school districts under the Intergovernmental
25Cooperation Act), special district or other unit, designated
26as a unit of local government by law, which exercises limited

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1governmental powers or powers in respect to limited
2governmental subjects, any not-for-profit association with a
3membership that primarily includes townships and township
4officials, that has duties that include provision of research
5service, dissemination of information, and other acts for the
6purpose of improving township government, and that is funded
7wholly or partly in accordance with Section 85-15 of the
8Township Code; any not-for-profit corporation or association,
9with a membership consisting primarily of municipalities, that
10operates its own utility system, and provides research,
11training, dissemination of information, or other acts to
12promote cooperation between and among municipalities that
13provide utility services and for the advancement of the goals
14and purposes of its membership; the Southern Illinois
15Collegiate Common Market, which is a consortium of higher
16education institutions in Southern Illinois; the Illinois
17Association of Park Districts; and any hospital provider that
18is owned by a county that has 100 or fewer hospital beds and
19has not already joined the program. "Qualified local
20government" means a unit of local government approved by the
21Director and participating in a program created under
22subsection (i) of Section 10 of this Act.
23 (t) "Qualified rehabilitation facility" means any
24not-for-profit organization that is accredited by the
25Commission on Accreditation of Rehabilitation Facilities or
26certified by the Department of Human Services (as successor to

HB4699- 14 -LRB103 38255 RPS 68390 b
1the Department of Mental Health and Developmental
2Disabilities) to provide services to persons with disabilities
3and which receives funds from the State of Illinois for
4providing those services, approved by the Director and
5participating in a program created under subsection (j) of
6Section 10 of this Act.
7 (u) "Qualified domestic violence shelter or service" means
8any Illinois domestic violence shelter or service and its
9administrative offices funded by the Department of Human
10Services (as successor to the Illinois Department of Public
11Aid), approved by the Director and participating in a program
12created under subsection (k) of Section 10.
13 (v) "TRS benefit recipient" means a person who:
14 (1) is not a "member" as defined in this Section; and
15 (2) is receiving a monthly benefit or retirement
16 annuity under Article 16 of the Illinois Pension Code or
17 would be receiving such monthly benefit or retirement
18 annuity except that the benefit recipient elected on or
19 after June 4, 2018 to receive an accelerated pension
20 benefit payment under Section 16-190.5 of the Illinois
21 Pension Code in lieu of receiving an annuity; and
22 (3) either (i) has at least 8 years of creditable
23 service under Article 16 of the Illinois Pension Code, or
24 (ii) was enrolled in the health insurance program offered
25 under that Article on January 1, 1996, or (iii) is the
26 survivor of a benefit recipient who had at least 8 years of

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1 creditable service under Article 16 of the Illinois
2 Pension Code or was enrolled in the health insurance
3 program offered under that Article on June 21, 1995 (the
4 effective date of Public Act 89-25), or (iv) is a
5 recipient or survivor of a recipient of a disability
6 benefit under Article 16 of the Illinois Pension Code.
7 (w) "TRS dependent beneficiary" means a person who:
8 (1) is not a "member" or "dependent" as defined in
9 this Section; and
10 (2) is a TRS benefit recipient's: (A) spouse, (B)
11 dependent parent who is receiving at least half of his or
12 her support from the TRS benefit recipient, or (C)
13 natural, step, adjudicated, or adopted child who is (i)
14 under age 26, (ii) was, on January 1, 1996, participating
15 as a dependent beneficiary in the health insurance program
16 offered under Article 16 of the Illinois Pension Code, or
17 (iii) age 19 or over who has a mental or physical
18 disability from a cause originating prior to the age of 19
19 (age 26 if enrolled as an adult child).
20 "TRS dependent beneficiary" does not include, as indicated
21under paragraph (2) of this subsection (w), a dependent of the
22survivor of a TRS benefit recipient who first becomes a
23dependent of a survivor of a TRS benefit recipient on or after
24January 13, 2012 (the effective date of Public Act 97-668)
25unless that dependent would have been eligible for coverage as
26a dependent of the deceased TRS benefit recipient upon whom

HB4699- 16 -LRB103 38255 RPS 68390 b
1the survivor benefit is based.
2 (x) "Military leave" refers to individuals in basic
3training for reserves, special/advanced training, annual
4training, emergency call up, activation by the President of
5the United States, or any other training or duty in service to
6the United States Armed Forces.
7 (y) (Blank).
8 (z) "Community college benefit recipient" means a person
9who:
10 (1) is not a "member" as defined in this Section; and
11 (2) is receiving a monthly survivor's annuity or
12 retirement annuity under Article 15 of the Illinois
13 Pension Code or would be receiving such monthly survivor's
14 annuity or retirement annuity except that the benefit
15 recipient elected on or after June 4, 2018 to receive an
16 accelerated pension benefit payment under Section 15-185.5
17 of the Illinois Pension Code in lieu of receiving an
18 annuity; and
19 (3) either (i) was a full-time employee of a community
20 college district or an association of community college
21 boards created under the Public Community College Act
22 (other than an employee whose last employer under Article
23 15 of the Illinois Pension Code was a community college
24 district subject to Article VII of the Public Community
25 College Act) and was eligible to participate in a group
26 health benefit plan as an employee during the time of

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1 employment with a community college district (other than a
2 community college district subject to Article VII of the
3 Public Community College Act) or an association of
4 community college boards, or (ii) is the survivor of a
5 person described in item (i).
6 (aa) "Community college dependent beneficiary" means a
7person who:
8 (1) is not a "member" or "dependent" as defined in
9 this Section; and
10 (2) is a community college benefit recipient's: (A)
11 spouse, (B) dependent parent who is receiving at least
12 half of his or her support from the community college
13 benefit recipient, or (C) natural, step, adjudicated, or
14 adopted child who is (i) under age 26, or (ii) age 19 or
15 over and has a mental or physical disability from a cause
16 originating prior to the age of 19 (age 26 if enrolled as
17 an adult child).
18 "Community college dependent beneficiary" does not
19include, as indicated under paragraph (2) of this subsection
20(aa), a dependent of the survivor of a community college
21benefit recipient who first becomes a dependent of a survivor
22of a community college benefit recipient on or after January
2313, 2012 (the effective date of Public Act 97-668) unless that
24dependent would have been eligible for coverage as a dependent
25of the deceased community college benefit recipient upon whom
26the survivor annuity is based.

HB4699- 18 -LRB103 38255 RPS 68390 b
1 (bb) "Qualified child advocacy center" means any Illinois
2child advocacy center and its administrative offices funded by
3the Department of Children and Family Services, as defined by
4the Children's Advocacy Center Act (55 ILCS 80/), approved by
5the Director and participating in a program created under
6subsection (n) of Section 10.
7 (cc) "Placement for adoption" means the assumption and
8retention by a member of a legal obligation for total or
9partial support of a child in anticipation of adoption of the
10child. The child's placement with the member terminates upon
11the termination of such legal obligation.
12(Source: P.A. 101-242, eff. 8-9-19; 102-558, eff. 8-20-21;
13102-714, eff. 4-29-22; 102-813, eff 5-13-22.)
14 (5 ILCS 375/10) (from Ch. 127, par. 530)
15 Sec. 10. Contributions by the State and members.
16 (a) The State shall pay the cost of basic non-contributory
17group life insurance and, subject to member paid contributions
18set by the Department or required by this Section and except as
19provided in this Section, the basic program of group health
20benefits on each eligible member, except a member, not
21otherwise covered by this Act, who has retired as a
22participating member under Article 2 of the Illinois Pension
23Code but is ineligible for the retirement annuity under
24Section 2-119 of the Illinois Pension Code, and part of each
25eligible member's and retired member's premiums for health

HB4699- 19 -LRB103 38255 RPS 68390 b
1insurance coverage for enrolled dependents as provided by
2Section 9. The State shall pay the cost of the basic program of
3group health benefits only after benefits are reduced by the
4amount of benefits covered by Medicare for all members and
5dependents who are eligible for benefits under Social Security
6or the Railroad Retirement system or who had sufficient
7Medicare-covered government employment, except that such
8reduction in benefits shall apply only to those members and
9dependents who (1) first become eligible for such Medicare
10coverage on or after July 1, 1992; or (2) are
11Medicare-eligible members or dependents of a local government
12unit which began participation in the program on or after July
131, 1992; or (3) remain eligible for, but no longer receive
14Medicare coverage which they had been receiving on or after
15July 1, 1992. The Department may determine the aggregate level
16of the State's contribution on the basis of actual cost of
17medical services adjusted for age, sex or geographic or other
18demographic characteristics which affect the costs of such
19programs.
20 The cost of participation in the basic program of group
21health benefits for the dependent or survivor of a living or
22deceased retired employee who was formerly employed by the
23University of Illinois in the Cooperative Extension Service
24and would be an annuitant but for the fact that he or she was
25made ineligible to participate in the State Universities
26Retirement System by clause (4) of subsection (a) of Section

HB4699- 20 -LRB103 38255 RPS 68390 b
115-107 of the Illinois Pension Code shall not be greater than
2the cost of participation that would otherwise apply to that
3dependent or survivor if he or she were the dependent or
4survivor of an annuitant under the State Universities
5Retirement System.
6 (a-1) (Blank).
7 (a-2) (Blank).
8 (a-3) (Blank).
9 (a-4) (Blank).
10 (a-5) (Blank).
11 (a-6) (Blank).
12 (a-7) (Blank).
13 (a-8) Any annuitant, survivor, or retired employee may
14waive or terminate coverage in the program of group health
15benefits. Any such annuitant, survivor, or retired employee
16who has waived or terminated coverage may enroll or re-enroll
17in the program of group health benefits only during the annual
18benefit choice period, as determined by the Director; except
19that in the event of termination of coverage due to nonpayment
20of premiums, the annuitant, survivor, or retired employee may
21not re-enroll in the program.
22 (a-8.5) Beginning on the effective date of this amendatory
23Act of the 97th General Assembly, the Director of Central
24Management Services shall, on an annual basis, determine the
25amount that the State shall contribute toward the basic
26program of group health benefits on behalf of annuitants

HB4699- 21 -LRB103 38255 RPS 68390 b
1(including individuals who (i) participated in the General
2Assembly Retirement System, the State Employees' Retirement
3System of Illinois, the State Universities Retirement System,
4the Teachers' Retirement System of the State of Illinois, or
5the Judges Retirement System of Illinois and (ii) qualify as
6annuitants under subsection (b) of Section 3 of this Act),
7survivors (including individuals who (i) receive an annuity as
8a survivor of an individual who participated in the General
9Assembly Retirement System, the State Employees' Retirement
10System of Illinois, the State Universities Retirement System,
11the Teachers' Retirement System of the State of Illinois, or
12the Judges Retirement System of Illinois and (ii) qualify as
13survivors under subsection (q) of Section 3 of this Act), and
14retired employees (as defined in subsection (p) of Section 3
15of this Act). The remainder of the cost of coverage for each
16annuitant, survivor, or retired employee, as determined by the
17Director of Central Management Services, shall be the
18responsibility of that annuitant, survivor, or retired
19employee.
20 Contributions required of annuitants, survivors, and
21retired employees shall be the same for all retirement systems
22and shall also be based on whether an individual has made an
23election under Section 15-135.1 of the Illinois Pension Code.
24Contributions may be based on annuitants', survivors', or
25retired employees' Medicare eligibility, but may not be based
26on Social Security eligibility.

HB4699- 22 -LRB103 38255 RPS 68390 b
1 (a-9) No later than May 1 of each calendar year, the
2Director of Central Management Services shall certify in
3writing to the Executive Secretary of the State Employees'
4Retirement System of Illinois the amounts of the Medicare
5supplement health care premiums and the amounts of the health
6care premiums for all other retirees who are not Medicare
7eligible.
8 A separate calculation of the premiums based upon the
9actual cost of each health care plan shall be so certified.
10 The Director of Central Management Services shall provide
11to the Executive Secretary of the State Employees' Retirement
12System of Illinois such information, statistics, and other
13data as he or she may require to review the premium amounts
14certified by the Director of Central Management Services.
15 The Department of Central Management Services, or any
16successor agency designated to procure healthcare contracts
17pursuant to this Act, is authorized to establish funds,
18separate accounts provided by any bank or banks as defined by
19the Illinois Banking Act, or separate accounts provided by any
20savings and loan association or associations as defined by the
21Illinois Savings and Loan Act of 1985 to be held by the
22Director, outside the State treasury, for the purpose of
23receiving the transfer of moneys from the Local Government
24Health Insurance Reserve Fund. The Department may promulgate
25rules further defining the methodology for the transfers. Any
26interest earned by moneys in the funds or accounts shall inure

HB4699- 23 -LRB103 38255 RPS 68390 b
1to the Local Government Health Insurance Reserve Fund. The
2transferred moneys, and interest accrued thereon, shall be
3used exclusively for transfers to administrative service
4organizations or their financial institutions for payments of
5claims to claimants and providers under the self-insurance
6health plan. The transferred moneys, and interest accrued
7thereon, shall not be used for any other purpose including,
8but not limited to, reimbursement of administration fees due
9the administrative service organization pursuant to its
10contract or contracts with the Department.
11 (a-10) To the extent that participation, benefits, or
12premiums under this Act are based on a person's service credit
13under an Article of the Illinois Pension Code, service credit
14terminated in exchange for an accelerated pension benefit
15payment under Section 14-147.5, 15-185.5, or 16-190.5 of that
16Code shall be included in determining a person's service
17credit for the purposes of this Act.
18 (a-15) For purposes of determining State contributions
19under this Section, service established under a Tier 3 plan
20under Article 2 of the Illinois Pension Code shall be included
21in determining an employee's creditable service. Any credit
22terminated as part of a transfer of contributions to a Tier 3
23plan under Article 2 of the Illinois Pension Code shall also be
24included in determining an employee's creditable service.
25 (b) State employees who become eligible for this program
26on or after January 1, 1980 in positions normally requiring

HB4699- 24 -LRB103 38255 RPS 68390 b
1actual performance of duty not less than 1/2 of a normal work
2period but not equal to that of a normal work period, shall be
3given the option of participating in the available program. If
4the employee elects coverage, the State shall contribute on
5behalf of such employee to the cost of the employee's benefit
6and any applicable dependent supplement, that sum which bears
7the same percentage as that percentage of time the employee
8regularly works when compared to normal work period.
9 (c) The basic non-contributory coverage from the basic
10program of group health benefits shall be continued for each
11employee not in pay status or on active service by reason of
12(1) leave of absence due to illness or injury, (2) authorized
13educational leave of absence or sabbatical leave, or (3)
14military leave. This coverage shall continue until expiration
15of authorized leave and return to active service, but not to
16exceed 24 months for leaves under item (1) or (2). This
1724-month limitation and the requirement of returning to active
18service shall not apply to persons receiving ordinary or
19accidental disability benefits or retirement benefits through
20the appropriate State retirement system or benefits under the
21Workers' Compensation or Occupational Disease Act.
22 (d) The basic group life insurance coverage shall
23continue, with full State contribution, where such person is
24(1) absent from active service by reason of disability arising
25from any cause other than self-inflicted, (2) on authorized
26educational leave of absence or sabbatical leave, or (3) on

HB4699- 25 -LRB103 38255 RPS 68390 b
1military leave.
2 (e) Where the person is in non-pay status for a period in
3excess of 30 days or on leave of absence, other than by reason
4of disability, educational or sabbatical leave, or military
5leave, such person may continue coverage only by making
6personal payment equal to the amount normally contributed by
7the State on such person's behalf. Such payments and coverage
8may be continued: (1) until such time as the person returns to
9a status eligible for coverage at State expense, but not to
10exceed 24 months or (2) until such person's employment or
11annuitant status with the State is terminated (exclusive of
12any additional service imposed pursuant to law).
13 (f) The Department shall establish by rule the extent to
14which other employee benefits will continue for persons in
15non-pay status or who are not in active service.
16 (g) The State shall not pay the cost of the basic
17non-contributory group life insurance, program of health
18benefits and other employee benefits for members who are
19survivors as defined by paragraphs (1) and (2) of subsection
20(q) of Section 3 of this Act. The costs of benefits for these
21survivors shall be paid by the survivors or by the University
22of Illinois Cooperative Extension Service, or any combination
23thereof. However, the State shall pay the amount of the
24reduction in the cost of participation, if any, resulting from
25the amendment to subsection (a) made by this amendatory Act of
26the 91st General Assembly.

HB4699- 26 -LRB103 38255 RPS 68390 b
1 (h) Those persons occupying positions with any department
2as a result of emergency appointments pursuant to Section 8b.8
3of the Personnel Code who are not considered employees under
4this Act shall be given the option of participating in the
5programs of group life insurance, health benefits and other
6employee benefits. Such persons electing coverage may
7participate only by making payment equal to the amount
8normally contributed by the State for similarly situated
9employees. Such amounts shall be determined by the Director.
10Such payments and coverage may be continued until such time as
11the person becomes an employee pursuant to this Act or such
12person's appointment is terminated.
13 (i) Any unit of local government within the State of
14Illinois may apply to the Director to have its employees,
15annuitants, and their dependents provided group health
16coverage under this Act on a non-insured basis. To
17participate, a unit of local government must agree to enroll
18all of its employees, who may select coverage under any group
19health benefits plan made available by the Department under
20the health benefits program established under this Section or
21a health maintenance organization that has contracted with the
22State to be available as a health care provider for employees
23as defined in this Act. A unit of local government must remit
24the entire cost of providing coverage under the health
25benefits program established under this Section or, for
26coverage under a health maintenance organization, an amount

HB4699- 27 -LRB103 38255 RPS 68390 b
1determined by the Director based on an analysis of the sex,
2age, geographic location, or other relevant demographic
3variables for its employees, except that the unit of local
4government shall not be required to enroll those of its
5employees who are covered spouses or dependents under the
6State group health benefits plan or another group policy or
7plan providing health benefits as long as (1) an appropriate
8official from the unit of local government attests that each
9employee not enrolled is a covered spouse or dependent under
10this plan or another group policy or plan, and (2) at least 50%
11of the employees are enrolled and the unit of local government
12remits the entire cost of providing coverage to those
13employees, except that a participating school district must
14have enrolled at least 50% of its full-time employees who have
15not waived coverage under the district's group health plan by
16participating in a component of the district's cafeteria plan.
17A participating school district is not required to enroll a
18full-time employee who has waived coverage under the
19district's health plan, provided that an appropriate official
20from the participating school district attests that the
21full-time employee has waived coverage by participating in a
22component of the district's cafeteria plan. For the purposes
23of this subsection, "participating school district" includes a
24unit of local government whose primary purpose is education as
25defined by the Department's rules.
26 Employees of a participating unit of local government who

HB4699- 28 -LRB103 38255 RPS 68390 b
1are not enrolled due to coverage under another group health
2policy or plan may enroll in the event of a qualifying change
3in status, special enrollment, special circumstance as defined
4by the Director, or during the annual Benefit Choice Period. A
5participating unit of local government may also elect to cover
6its annuitants. Dependent coverage shall be offered on an
7optional basis, with the costs paid by the unit of local
8government, its employees, or some combination of the two as
9determined by the unit of local government. The unit of local
10government shall be responsible for timely collection and
11transmission of dependent premiums.
12 The Director shall annually determine monthly rates of
13payment, subject to the following constraints:
14 (1) In the first year of coverage, the rates shall be
15 equal to the amount normally charged to State employees
16 for elected optional coverages or for enrolled dependents
17 coverages or other contributory coverages, or contributed
18 by the State for basic insurance coverages on behalf of
19 its employees, adjusted for differences between State
20 employees and employees of the local government in age,
21 sex, geographic location or other relevant demographic
22 variables, plus an amount sufficient to pay for the
23 additional administrative costs of providing coverage to
24 employees of the unit of local government and their
25 dependents.
26 (2) In subsequent years, a further adjustment shall be

HB4699- 29 -LRB103 38255 RPS 68390 b
1 made to reflect the actual prior years' claims experience
2 of the employees of the unit of local government.
3 In the case of coverage of local government employees
4under a health maintenance organization, the Director shall
5annually determine for each participating unit of local
6government the maximum monthly amount the unit may contribute
7toward that coverage, based on an analysis of (i) the age, sex,
8geographic location, and other relevant demographic variables
9of the unit's employees and (ii) the cost to cover those
10employees under the State group health benefits plan. The
11Director may similarly determine the maximum monthly amount
12each unit of local government may contribute toward coverage
13of its employees' dependents under a health maintenance
14organization.
15 Monthly payments by the unit of local government or its
16employees for group health benefits plan or health maintenance
17organization coverage shall be deposited in the Local
18Government Health Insurance Reserve Fund.
19 The Local Government Health Insurance Reserve Fund is
20hereby created as a nonappropriated trust fund to be held
21outside the State Treasury, with the State Treasurer as
22custodian. The Local Government Health Insurance Reserve Fund
23shall be a continuing fund not subject to fiscal year
24limitations. The Local Government Health Insurance Reserve
25Fund is not subject to administrative charges or charge-backs,
26including but not limited to those authorized under Section 8h

HB4699- 30 -LRB103 38255 RPS 68390 b
1of the State Finance Act. All revenues arising from the
2administration of the health benefits program established
3under this Section shall be deposited into the Local
4Government Health Insurance Reserve Fund. Any interest earned
5on moneys in the Local Government Health Insurance Reserve
6Fund shall be deposited into the Fund. All expenditures from
7this Fund shall be used for payments for health care benefits
8for local government and rehabilitation facility employees,
9annuitants, and dependents, and to reimburse the Department or
10its administrative service organization for all expenses
11incurred in the administration of benefits. No other State
12funds may be used for these purposes.
13 A local government employer's participation or desire to
14participate in a program created under this subsection shall
15not limit that employer's duty to bargain with the
16representative of any collective bargaining unit of its
17employees.
18 (j) Any rehabilitation facility within the State of
19Illinois may apply to the Director to have its employees,
20annuitants, and their eligible dependents provided group
21health coverage under this Act on a non-insured basis. To
22participate, a rehabilitation facility must agree to enroll
23all of its employees and remit the entire cost of providing
24such coverage for its employees, except that the
25rehabilitation facility shall not be required to enroll those
26of its employees who are covered spouses or dependents under

HB4699- 31 -LRB103 38255 RPS 68390 b
1this plan or another group policy or plan providing health
2benefits as long as (1) an appropriate official from the
3rehabilitation facility attests that each employee not
4enrolled is a covered spouse or dependent under this plan or
5another group policy or plan, and (2) at least 50% of the
6employees are enrolled and the rehabilitation facility remits
7the entire cost of providing coverage to those employees.
8Employees of a participating rehabilitation facility who are
9not enrolled due to coverage under another group health policy
10or plan may enroll in the event of a qualifying change in
11status, special enrollment, special circumstance as defined by
12the Director, or during the annual Benefit Choice Period. A
13participating rehabilitation facility may also elect to cover
14its annuitants. Dependent coverage shall be offered on an
15optional basis, with the costs paid by the rehabilitation
16facility, its employees, or some combination of the 2 as
17determined by the rehabilitation facility. The rehabilitation
18facility shall be responsible for timely collection and
19transmission of dependent premiums.
20 The Director shall annually determine quarterly rates of
21payment, subject to the following constraints:
22 (1) In the first year of coverage, the rates shall be
23 equal to the amount normally charged to State employees
24 for elected optional coverages or for enrolled dependents
25 coverages or other contributory coverages on behalf of its
26 employees, adjusted for differences between State

HB4699- 32 -LRB103 38255 RPS 68390 b
1 employees and employees of the rehabilitation facility in
2 age, sex, geographic location or other relevant
3 demographic variables, plus an amount sufficient to pay
4 for the additional administrative costs of providing
5 coverage to employees of the rehabilitation facility and
6 their dependents.
7 (2) In subsequent years, a further adjustment shall be
8 made to reflect the actual prior years' claims experience
9 of the employees of the rehabilitation facility.
10 Monthly payments by the rehabilitation facility or its
11employees for group health benefits shall be deposited in the
12Local Government Health Insurance Reserve Fund.
13 (k) Any domestic violence shelter or service within the
14State of Illinois may apply to the Director to have its
15employees, annuitants, and their dependents provided group
16health coverage under this Act on a non-insured basis. To
17participate, a domestic violence shelter or service must agree
18to enroll all of its employees and pay the entire cost of
19providing such coverage for its employees. The domestic
20violence shelter shall not be required to enroll those of its
21employees who are covered spouses or dependents under this
22plan or another group policy or plan providing health benefits
23as long as (1) an appropriate official from the domestic
24violence shelter attests that each employee not enrolled is a
25covered spouse or dependent under this plan or another group
26policy or plan and (2) at least 50% of the employees are

HB4699- 33 -LRB103 38255 RPS 68390 b
1enrolled and the domestic violence shelter remits the entire
2cost of providing coverage to those employees. Employees of a
3participating domestic violence shelter who are not enrolled
4due to coverage under another group health policy or plan may
5enroll in the event of a qualifying change in status, special
6enrollment, or special circumstance as defined by the Director
7or during the annual Benefit Choice Period. A participating
8domestic violence shelter may also elect to cover its
9annuitants. Dependent coverage shall be offered on an optional
10basis, with employees, or some combination of the 2 as
11determined by the domestic violence shelter or service. The
12domestic violence shelter or service shall be responsible for
13timely collection and transmission of dependent premiums.
14 The Director shall annually determine rates of payment,
15subject to the following constraints:
16 (1) In the first year of coverage, the rates shall be
17 equal to the amount normally charged to State employees
18 for elected optional coverages or for enrolled dependents
19 coverages or other contributory coverages on behalf of its
20 employees, adjusted for differences between State
21 employees and employees of the domestic violence shelter
22 or service in age, sex, geographic location or other
23 relevant demographic variables, plus an amount sufficient
24 to pay for the additional administrative costs of
25 providing coverage to employees of the domestic violence
26 shelter or service and their dependents.

HB4699- 34 -LRB103 38255 RPS 68390 b
1 (2) In subsequent years, a further adjustment shall be
2 made to reflect the actual prior years' claims experience
3 of the employees of the domestic violence shelter or
4 service.
5 Monthly payments by the domestic violence shelter or
6service or its employees for group health insurance shall be
7deposited in the Local Government Health Insurance Reserve
8Fund.
9 (l) A public community college or entity organized
10pursuant to the Public Community College Act may apply to the
11Director initially to have only annuitants not covered prior
12to July 1, 1992 by the district's health plan provided health
13coverage under this Act on a non-insured basis. The community
14college must execute a 2-year contract to participate in the
15Local Government Health Plan. Any annuitant may enroll in the
16event of a qualifying change in status, special enrollment,
17special circumstance as defined by the Director, or during the
18annual Benefit Choice Period.
19 The Director shall annually determine monthly rates of
20payment subject to the following constraints: for those
21community colleges with annuitants only enrolled, first year
22rates shall be equal to the average cost to cover claims for a
23State member adjusted for demographics, Medicare
24participation, and other factors; and in the second year, a
25further adjustment of rates shall be made to reflect the
26actual first year's claims experience of the covered

HB4699- 35 -LRB103 38255 RPS 68390 b
1annuitants.
2 (l-5) The provisions of subsection (l) become inoperative
3on July 1, 1999.
4 (m) The Director shall adopt any rules deemed necessary
5for implementation of this amendatory Act of 1989 (Public Act
686-978).
7 (n) Any child advocacy center within the State of Illinois
8may apply to the Director to have its employees, annuitants,
9and their dependents provided group health coverage under this
10Act on a non-insured basis. To participate, a child advocacy
11center must agree to enroll all of its employees and pay the
12entire cost of providing coverage for its employees. The child
13advocacy center shall not be required to enroll those of its
14employees who are covered spouses or dependents under this
15plan or another group policy or plan providing health benefits
16as long as (1) an appropriate official from the child advocacy
17center attests that each employee not enrolled is a covered
18spouse or dependent under this plan or another group policy or
19plan and (2) at least 50% of the employees are enrolled and the
20child advocacy center remits the entire cost of providing
21coverage to those employees. Employees of a participating
22child advocacy center who are not enrolled due to coverage
23under another group health policy or plan may enroll in the
24event of a qualifying change in status, special enrollment, or
25special circumstance as defined by the Director or during the
26annual Benefit Choice Period. A participating child advocacy

HB4699- 36 -LRB103 38255 RPS 68390 b
1center may also elect to cover its annuitants. Dependent
2coverage shall be offered on an optional basis, with the costs
3paid by the child advocacy center, its employees, or some
4combination of the 2 as determined by the child advocacy
5center. The child advocacy center shall be responsible for
6timely collection and transmission of dependent premiums.
7 The Director shall annually determine rates of payment,
8subject to the following constraints:
9 (1) In the first year of coverage, the rates shall be
10 equal to the amount normally charged to State employees
11 for elected optional coverages or for enrolled dependents
12 coverages or other contributory coverages on behalf of its
13 employees, adjusted for differences between State
14 employees and employees of the child advocacy center in
15 age, sex, geographic location, or other relevant
16 demographic variables, plus an amount sufficient to pay
17 for the additional administrative costs of providing
18 coverage to employees of the child advocacy center and
19 their dependents.
20 (2) In subsequent years, a further adjustment shall be
21 made to reflect the actual prior years' claims experience
22 of the employees of the child advocacy center.
23 Monthly payments by the child advocacy center or its
24employees for group health insurance shall be deposited into
25the Local Government Health Insurance Reserve Fund.
26(Source: P.A. 102-19, eff. 7-1-21.)

HB4699- 37 -LRB103 38255 RPS 68390 b
1 Section 10. The Illinois Pension Code is amended by
2changing Sections 2-105.3, 2-162, 20-121, 20-123, 20-124, and
320-125 and by adding Section 2-165.5 as follows:
4 (40 ILCS 5/2-105.3)
5 Sec. 2-105.3. Tier 1 participant; Tier 2 participant; Tier
63 participant.
7 "Tier 1 participant": A participant who first became a
8participant before January 1, 2011.
9 In the case of a Tier 1 participant who elects to
10participate in the Tier 3 plan under Section 2-165.5 of this
11Code, that participant shall be deemed a Tier 1 participant
12only with respect to service performed or established before
13the effective date of that election.
14 "Tier 2 participant": A participant who first became a
15participant on or after January 1, 2011.
16 In the case of a Tier 2 participant who elects to
17participate in the Tier 3 plan under Section 2-165.5 of this
18Code, that Tier 2 participant shall be deemed a Tier 2
19participant only with respect to service performed or
20established before the effective date of that election.
21 "Tier 3 participant": A participant who first becomes a
22participant on or after July 1, 2025 or a Tier 1 or Tier 2
23participant who elects to participate in the Tier 3 plan under
24Section 2-165.5 of this Code, but only with respect to service

HB4699- 38 -LRB103 38255 RPS 68390 b
1performed on or after the effective date of that election.
2(Source: P.A. 103-8, eff. 6-7-23.)
3 (40 ILCS 5/2-162)
4 Sec. 2-162. Application and expiration of new benefit
5increases.
6 (a) As used in this Section, "new benefit increase" means
7an increase in the amount of any benefit provided under this
8Article, or an expansion of the conditions of eligibility for
9any benefit under this Article, that results from an amendment
10to this Code that takes effect after the effective date of this
11amendatory Act of the 94th General Assembly. "New benefit
12increase", however, does not include any benefit increase
13resulting from the changes made to this Article by this
14amendatory Act of the 103rd General Assembly.
15 (b) Notwithstanding any other provision of this Code or
16any subsequent amendment to this Code, every new benefit
17increase is subject to this Section and shall be deemed to be
18granted only in conformance with and contingent upon
19compliance with the provisions of this Section.
20 (c) The Public Act enacting a new benefit increase must
21identify and provide for payment to the System of additional
22funding at least sufficient to fund the resulting annual
23increase in cost to the System as it accrues.
24 Every new benefit increase is contingent upon the General
25Assembly providing the additional funding required under this

HB4699- 39 -LRB103 38255 RPS 68390 b
1subsection. The Commission on Government Forecasting and
2Accountability shall analyze whether adequate additional
3funding has been provided for the new benefit increase and
4shall report its analysis to the Public Pension Division of
5the Department of Insurance. A new benefit increase created by
6a Public Act that does not include the additional funding
7required under this subsection is null and void. If the Public
8Pension Division determines that the additional funding
9provided for a new benefit increase under this subsection is
10or has become inadequate, it may so certify to the Governor and
11the State Comptroller and, in the absence of corrective action
12by the General Assembly, the new benefit increase shall expire
13at the end of the fiscal year in which the certification is
14made.
15 (d) Every new benefit increase shall expire 5 years after
16its effective date or on such earlier date as may be specified
17in the language enacting the new benefit increase or provided
18under subsection (c). This does not prevent the General
19Assembly from extending or re-creating a new benefit increase
20by law.
21 (e) Except as otherwise provided in the language creating
22the new benefit increase, a new benefit increase that expires
23under this Section continues to apply to persons who applied
24and qualified for the affected benefit while the new benefit
25increase was in effect and to the affected beneficiaries and
26alternate payees of such persons, but does not apply to any

HB4699- 40 -LRB103 38255 RPS 68390 b
1other person, including without limitation a person who
2continues in service after the expiration date and did not
3apply and qualify for the affected benefit while the new
4benefit increase was in effect.
5(Source: P.A. 103-426, eff. 8-4-23.)
6 (40 ILCS 5/2-165.5 new)
7 Sec. 2-165.5. Tier 3 plan.
8 (a) By July 1, 2025, the System shall prepare and
9implement a Tier 3 plan. The Tier 3 plan developed under this
10Section shall be a plan that aggregates State and employee
11contributions in individual participant accounts that, after
12meeting any other requirements, are used for payouts after
13retirement in accordance with this Section and any other
14applicable laws. In developing, preparing, and implementing
15the Tier 3 plan and adopting rules concerning the Tier 3 plan,
16the System shall utilize the framework of the self-managed
17plan offered under Article 15 and shall endeavor to adapt the
18benefits and structure of the self-managed plan. The System
19shall consult with the State Universities Retirement System in
20developing the Tier 3 plan.
21 As used in this Section, "defined benefit plan" means the
22retirement plan available under this Article to Tier 1 or Tier
232 participants who have not made the election authorized under
24this Section.
25 (1) All persons who begin to participate in this

HB4699- 41 -LRB103 38255 RPS 68390 b
1 System on or after July 1, 2025 shall participate in the
2 Tier 3 plan rather than the defined benefit plan.
3 (2) A participant in the Tier 3 plan shall pay
4 employee contributions at a rate of 8% of salary.
5 (3) State contributions shall be paid into the
6 accounts of all participants in the Tier 3 plan at a rate
7 of 7.6% of salary.
8 (4) The Tier 3 plan shall require 5 years of
9 participation in the Tier 3 plan before vesting in State
10 contributions. If the participant fails to vest in them,
11 the State contributions, and the earnings thereon, shall
12 be forfeited.
13 (5) The Tier 3 plan shall provide a variety of options
14 for investments. These options shall include investments
15 handled by the Illinois State Board of Investment as well
16 as private sector investment options.
17 (6) The Tier 3 plan shall provide a variety of options
18 for payouts to participants in the Tier 3 plan who are no
19 longer active in the System and their survivors.
20 (7) To the extent authorized under federal law and as
21 authorized by the System, the plan shall allow former
22 participants in the plan to transfer or roll over employee
23 and vested State contributions, and the earnings thereon,
24 from the Tier 3 plan into other qualified retirement
25 plans.
26 (8) The System shall reduce the employee contributions

HB4699- 42 -LRB103 38255 RPS 68390 b
1 credited to the participant's Tier 3 plan account by an
2 amount determined by the System to cover the cost of
3 offering these benefits and any applicable administrative
4 fees.
5 (b) Under the Tier 3 plan, an active Tier 1 or Tier 2
6participant of this System may elect, in writing, to cease
7accruing benefits in the defined benefit plan and begin
8accruing benefits for future service in the Tier 3 plan. The
9election to participate in the Tier 3 plan is voluntary and
10irrevocable.
11 (1) Service credit under the Tier 3 plan may be used
12 for determining retirement eligibility under the defined
13 benefit plan.
14 (2) The System shall make a good faith effort to
15 contact all active Tier 1 and Tier 2 participants who are
16 eligible to participate in the Tier 3 plan. The System
17 shall mail information describing the option to join the
18 Tier 3 plan to each of these employees to his or her last
19 known address on file with the System. If the employee is
20 not responsive to other means of contact, it is sufficient
21 for the System to publish the details of the option on its
22 website.
23 (3) Upon request for further information describing
24 the option, the System shall provide employees with
25 information from the System before exercising the option
26 to join the plan, including information on the impact to

HB4699- 43 -LRB103 38255 RPS 68390 b
1 their benefits and service. The individual consultation
2 shall include projections of the participant's defined
3 benefits at retirement or earlier termination of service
4 and the value of the participant's account at retirement
5 or earlier termination of service. The System shall not
6 provide advice or counseling with respect to whether the
7 employee should exercise the option. The System shall
8 inform Tier 1 and Tier 2 participants who are eligible to
9 participate in the Tier 3 plan that they may also wish to
10 obtain information and counsel relating to their option
11 from any other available source, including, but not
12 limited to, private counsel and financial advisors.
13 (b-5) A Tier 1 or Tier 2 participant who elects to
14participate in the Tier 3 plan may irrevocably elect to
15terminate all participation in the defined benefit plan. Upon
16that election, the System shall transfer to the participant's
17individual account an amount equal to the amount of
18contribution refund that the participant would be eligible to
19receive if the member terminated employment on that date and
20elected a refund of contributions, including the prescribed
21rate of interest for the respective years. The System shall
22make the transfer as a tax-free transfer in accordance with
23Internal Revenue Service guidelines, for purposes of funding
24the amount credited to the participant's individual account.
25 (c) In no event shall the System, its staff, its
26authorized representatives, or the Board be liable for any

HB4699- 44 -LRB103 38255 RPS 68390 b
1information given to an employee under this Section. The
2System may coordinate with the Illinois Department of Central
3Management Services to provide information concerning the
4impact of the Tier 3 plan set forth in this Section.
5 (c-5) The System shall solicit proposals to provide
6administrative services and funding vehicles for the Tier 3
7plan from insurance and annuity companies and mutual fund
8companies, banks, trust companies, or other financial
9institutions authorized to do business in this State. In
10reviewing the proposals received and approving and contracting
11with no fewer than 2 and no more than 7 companies, the Board of
12Trustees of the System shall consider, among other things, the
13following criteria:
14 (1) the nature and extent of the benefits that would
15 be provided to the participants;
16 (2) the reasonableness of the benefits in relation to
17 the premium charged;
18 (3) the suitability of the benefits to the needs and
19 interests of the participating employees and the employer;
20 (4) the ability of the company to provide benefits
21 under the contract and the financial stability of the
22 company; and
23 (5) the efficacy of the contract in the recruitment
24 and retention of employees.
25 The System shall periodically review each approved
26company. A company may continue to provide administrative

HB4699- 45 -LRB103 38255 RPS 68390 b
1services and funding vehicles for the Tier 3 plan only so long
2as it continues to be an approved company under contract with
3the Board.
4 (d) Notwithstanding any other provision of this Section,
5no person shall begin participating in the Tier 3 plan until it
6has attained qualified plan status and received all necessary
7approvals from the U.S. Internal Revenue Service.
8 (e) The System shall report on its progress under this
9Section, including the available details of the Tier 3 plan
10and the System's plans for informing eligible Tier 1 and Tier 2
11participants about the plan, to the Governor and the General
12Assembly on or before January 15, 2025.
13 (f) The Illinois State Board of Investment shall be the
14plan sponsor for the Tier 3 plan established under this
15Section.
16 (40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)
17 (Text of Section WITHOUT the changes made by P.A. 98-599,
18which has been held unconstitutional)
19 Sec. 20-121. Calculation of proportional retirement
20annuities.
21 (a) Upon retirement of the employee, a proportional
22retirement annuity shall be computed by each participating
23system in which pension credit has been established on the
24basis of pension credits under each system. The computation
25shall be in accordance with the formula or method prescribed

HB4699- 46 -LRB103 38255 RPS 68390 b
1by each participating system which is in effect at the date of
2the employee's latest withdrawal from service covered by any
3of the systems in which he has pension credits which he elects
4to have considered under this Article. However, the amount of
5any retirement annuity payable under the self-managed plan
6established under Section 15-158.2 of this Code depends solely
7on the value of the participant's vested account balances and
8is not subject to any proportional adjustment under this
9Section.
10 (a-5) For persons who participate in a Tier 3 plan
11established under Article 2 of this Code to whom the
12provisions of this Article apply, the pension credits
13established under the Tier 3 plan may be considered in
14determining eligibility for or the amount of the defined
15benefit retirement annuity that is payable by any other
16participating system.
17 (b) Combined pension credit under all retirement systems
18subject to this Article shall be considered in determining
19whether the minimum qualification has been met and the formula
20or method of computation which shall be applied, except as may
21be otherwise provided with respect to vesting in State or
22employer contributions in a Tier 3 plan. If a system has a
23step-rate formula for calculation of the retirement annuity,
24pension credits covering previous service which have been
25established under another system shall be considered in
26determining which range or ranges of the step-rate formula are

HB4699- 47 -LRB103 38255 RPS 68390 b
1to be applicable to the employee.
2 (c) Interest on pension credit shall continue to
3accumulate in accordance with the provisions of the law
4governing the retirement system in which the same has been
5established during the time an employee is in the service of
6another employer, on the assumption such employee, for
7interest purposes for pension credit, is continuing in the
8service covered by such retirement system.
9(Source: P.A. 91-887, eff. 7-6-00.)
10 (40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)
11 (Text of Section WITHOUT the changes made by P.A. 98-599,
12which has been held unconstitutional)
13 Sec. 20-123. Survivor's annuity. The provisions governing
14a retirement annuity shall be applicable to a survivor's
15annuity. Appropriate credits shall be established for
16survivor's annuity purposes in those participating systems
17which provide survivor's annuities, according to the same
18conditions and subject to the same limitations and
19restrictions herein prescribed for a retirement annuity. If a
20participating system has no survivor's annuity benefit, or if
21the survivor's annuity benefit under that system is waived,
22pension credit established in that system shall not be
23considered in determining eligibility for or the amount of the
24survivor's annuity which may be payable by any other
25participating system.

HB4699- 48 -LRB103 38255 RPS 68390 b
1 For persons who participate in the self-managed plan
2established under Section 15-158.2 or the portable benefit
3package established under Section 15-136.4, pension credit
4established under Article 15 may be considered in determining
5eligibility for or the amount of the survivor's annuity that
6is payable by any other participating system, but pension
7credit established in any other system shall not result in any
8right to a survivor's annuity under the Article 15 system.
9 For persons who participate in a Tier 3 plan established
10under Article 2 of this Code to whom the provisions of this
11Article apply, the pension credits established under the Tier
123 plan may be considered in determining eligibility for or the
13amount of the defined benefit survivor's annuity that is
14payable by any other participating system, but pension credits
15established in any other system shall not result in any right
16to or increase in the value of a survivor's annuity under the
17Tier 3 plan, which depends solely on the options chosen and the
18value of the participant's vested account balances and is not
19subject to any proportional adjustment under this Section.
20(Source: P.A. 91-887, eff. 7-6-00.)
21 (40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)
22 (Text of Section WITHOUT the changes made by P.A. 98-599,
23which has been held unconstitutional)
24 Sec. 20-124. Maximum benefits.
25 (a) In no event shall the combined retirement or survivors

HB4699- 49 -LRB103 38255 RPS 68390 b
1annuities exceed the highest annuity which would have been
2payable by any participating system in which the employee has
3pension credits, if all of his pension credits had been
4validated in that system.
5 If the combined annuities should exceed the highest
6maximum as determined in accordance with this Section, the
7respective annuities shall be reduced proportionately
8according to the ratio which the amount of each proportional
9annuity bears to the aggregate of all such annuities.
10 (b) In the case of a participant in the self-managed plan
11established under Section 15-158.2 of this Code to whom the
12provisions of this Article apply:
13 (i) For purposes of calculating the combined
14 retirement annuity and the proportionate reduction, if
15 any, in a retirement annuity other than one payable under
16 the self-managed plan, the amount of the Article 15
17 retirement annuity shall be deemed to be the highest
18 annuity to which the annuitant would have been entitled if
19 he or she had participated in the traditional benefit
20 package as defined in Section 15-103.1 rather than the
21 self-managed plan.
22 (ii) For purposes of calculating the combined
23 survivor's annuity and the proportionate reduction, if
24 any, in a survivor's annuity other than one payable under
25 the self-managed plan, the amount of the Article 15
26 survivor's annuity shall be deemed to be the highest

HB4699- 50 -LRB103 38255 RPS 68390 b
1 survivor's annuity to which the survivor would have been
2 entitled if the deceased employee had participated in the
3 traditional benefit package as defined in Section 15-103.1
4 rather than the self-managed plan.
5 (iii) Benefits payable under the self-managed plan are
6 not subject to proportionate reduction under this Section.
7 (c) In the case of a participant in a Tier 3 plan
8established under Article 2 of this Code to whom the
9provisions of this Article apply:
10 (i) For purposes of calculating the combined
11 retirement annuity and the proportionate reduction, if
12 any, in a defined benefit retirement annuity, any benefit
13 payable under the Tier 3 plan shall not be considered.
14 (ii) For purposes of calculating the combined
15 survivor's annuity and the proportionate reduction, if
16 any, in a defined benefit survivor's annuity, any benefit
17 payable under the Tier 3 plan shall not be considered.
18 (iii) Benefits payable under a Tier 3 plan established
19 under Article 2 of this Code are not subject to
20 proportionate reduction under this Section.
21(Source: P.A. 91-887, eff. 7-6-00.)
22 (40 ILCS 5/20-125) (from Ch. 108 1/2, par. 20-125)
23 (Text of Section WITHOUT the changes made by P.A. 98-599,
24which has been held unconstitutional)
25 Sec. 20-125. Return to employment; suspension employment -

HB4699- 51 -LRB103 38255 RPS 68390 b
1suspension of benefits. If a retired employee returns to
2employment which is covered by a system from which he is
3receiving a proportional annuity under this Article, his
4proportional annuity from all participating systems shall be
5suspended during the period of re-employment, except that this
6suspension does not apply to any distributions payable under
7the self-managed plan established under Section 15-158.2 of
8this Code or under a Tier 3 plan established under Article 2 of
9this Code.
10 The provisions of the Article under which such employment
11would be covered shall govern the determination of whether the
12employee has returned to employment, and if applicable the
13exemption of temporary employment or employment not exceeding
14a specified duration or frequency, for all participating
15systems from which the retired employee is receiving a
16proportional annuity under this Article, notwithstanding any
17contrary provisions in the other Articles governing such
18systems.
19(Source: P.A. 91-887, eff. 7-6-00.)
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