103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3504

 

Introduced 2/17/2023, 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.


LRB103 30649 DTM 57107 b

 

 

A BILL FOR

 

HB3504LRB103 30649 DTM 57107 b

1    AN ACT concerning State government.
 
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 6.5 and 6.6 as follows:
 
6    (5 ILCS 375/6.5)
7    Sec. 6.5. Health benefits for TRS benefit recipients and
8TRS dependent beneficiaries.
9    (a) Purpose. It is the purpose of this amendatory Act of
101995 to transfer the administration of the program of health
11benefits established for benefit recipients and their
12dependent beneficiaries under Article 16 of the Illinois
13Pension Code to the Department of Central Management Services.
14    (b) Transition provisions. The Board of Trustees of the
15Teachers' Retirement System shall continue to administer the
16health benefit program established under Article 16 of the
17Illinois Pension Code through December 31, 1995. Beginning
18January 1, 1996, the Department of Central Management Services
19shall be responsible for administering a program of health
20benefits for TRS benefit recipients and TRS dependent
21beneficiaries under this Section. The Department of Central
22Management Services and the Teachers' Retirement System shall
23cooperate in this endeavor and shall coordinate their

 

 

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1activities so as to ensure a smooth transition and
2uninterrupted health benefit coverage.
3    (c) Eligibility. All persons who were enrolled in the
4Article 16 program at the time of the transfer shall be
5eligible to participate in the program established under this
6Section without any interruption or delay in coverage or
7limitation as to pre-existing medical conditions. Eligibility
8to participate shall be determined by the Teachers' Retirement
9System. Eligibility information shall be communicated to the
10Department of Central Management Services in a format
11acceptable to the Department.
12    Eligible TRS benefit recipients may enroll or re-enroll in
13the program of health benefits established under this Section
14during any applicable annual open enrollment period and as
15otherwise permitted by the Department of Central Management
16Services. A TRS benefit recipient shall not be deemed
17ineligible to participate solely by reason of the TRS benefit
18recipient having made a previous election to disenroll or
19otherwise not participate in the program of health benefits.
20    A TRS dependent beneficiary who is a child age 19 or over
21and mentally or physically disabled does not become ineligible
22to participate by reason of (i) becoming ineligible to be
23claimed as a dependent for Illinois or federal income tax
24purposes or (ii) receiving earned income, so long as those
25earnings are insufficient for the child to be fully
26self-sufficient.

 

 

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1    (d) Coverage. The level of health benefits provided under
2this Section shall be similar to the level of benefits
3provided by the program previously established under Article
416 of the Illinois Pension Code.
5    Group life insurance benefits are not included in the
6benefits to be provided to TRS benefit recipients and TRS
7dependent beneficiaries under this Act.
8    The program of health benefits under this Section may
9include any or all of the benefit limitations, including but
10not limited to a reduction in benefits based on eligibility
11for federal Medicare benefits, that are provided under
12subsection (a) of Section 6 of this Act for other health
13benefit programs under this Act.
14    (e) Insurance rates and premiums. The Director shall
15determine the insurance rates and premiums for TRS benefit
16recipients and TRS dependent beneficiaries, and shall present
17to the Teachers' Retirement System of the State of Illinois,
18by April 15 of each calendar year, the rate-setting
19methodology (including but not limited to utilization levels
20and costs) used to determine the amount of the health care
21premiums.
22        For Fiscal Year 1996, the premium shall be equal to
23    the premium actually charged in Fiscal Year 1995; in
24    subsequent years, the premium shall never be lower than
25    the premium charged in Fiscal Year 1995.
26        For Fiscal Year 2003, the premium shall not exceed

 

 

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1    110% of the premium actually charged in Fiscal Year 2002.
2        For Fiscal Year 2004, the premium shall not exceed
3    112% of the premium actually charged in Fiscal Year 2003.
4        For Fiscal Year 2005, the premium shall not exceed a
5    weighted average of 106.6% of the premium actually charged
6    in Fiscal Year 2004.
7        For Fiscal Year 2006, the premium shall not exceed a
8    weighted average of 109.1% of the premium actually charged
9    in Fiscal Year 2005.
10        For Fiscal Year 2007, the premium shall not exceed a
11    weighted average of 103.9% of the premium actually charged
12    in Fiscal Year 2006.
13        For Fiscal Year 2008 and thereafter, the premium in
14    each fiscal year shall not exceed 105% of the premium
15    actually charged in the previous fiscal year.
16    Rates and premiums may be based in part on age and
17eligibility for federal medicare coverage. However, the cost
18of participation for a TRS dependent beneficiary who is an
19unmarried child age 19 or over and mentally or physically
20disabled shall not exceed the cost for a TRS dependent
21beneficiary who is an unmarried child under age 19 and
22participates in the same major medical or managed care
23program.
24    The cost of health benefits under the program shall be
25paid as follows:
26        (1) For a TRS benefit recipient selecting a managed

 

 

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1    care program, up to 75% of the total insurance rate shall
2    be paid from the Teacher Health Insurance Security Fund.
3    Effective with Fiscal Year 2007 and thereafter, for a TRS
4    benefit recipient selecting a managed care program, 75% of
5    the total insurance rate shall be paid from the Teacher
6    Health Insurance Security Fund.
7        (2) For a TRS benefit recipient selecting the major
8    medical coverage program, up to 50% of the total insurance
9    rate shall be paid from the Teacher Health Insurance
10    Security Fund if a managed care program is accessible, as
11    determined by the Teachers' Retirement System. Effective
12    with Fiscal Year 2007 and thereafter, for a TRS benefit
13    recipient selecting the major medical coverage program,
14    50% of the total insurance rate shall be paid from the
15    Teacher Health Insurance Security Fund if a managed care
16    program is accessible, as determined by the Department of
17    Central Management Services.
18        (3) For a TRS benefit recipient selecting the major
19    medical coverage program, up to 75% of the total insurance
20    rate shall be paid from the Teacher Health Insurance
21    Security Fund if a managed care program is not accessible,
22    as determined by the Teachers' Retirement System.
23    Effective with Fiscal Year 2007 and thereafter, for a TRS
24    benefit recipient selecting the major medical coverage
25    program, 75% of the total insurance rate shall be paid
26    from the Teacher Health Insurance Security Fund if a

 

 

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1    managed care program is not accessible, as determined by
2    the Department of Central Management Services.
3        (3.1) For a TRS dependent beneficiary who is Medicare
4    primary and enrolled in a managed care plan, or the major
5    medical coverage program if a managed care plan is not
6    available, 25% of the total insurance rate shall be paid
7    from the Teacher Health Security Fund as determined by the
8    Department of Central Management Services. For the purpose
9    of this item (3.1), the term "TRS dependent beneficiary
10    who is Medicare primary" means a TRS dependent beneficiary
11    who is participating in Medicare Parts A and B.
12        (4) Except as otherwise provided in item (3.1), the
13    balance of the rate of insurance, including the entire
14    premium of any coverage for TRS dependent beneficiaries
15    that has been elected, shall be paid by deductions
16    authorized by the TRS benefit recipient to be withheld
17    from his or her monthly annuity or benefit payment from
18    the Teachers' Retirement System; except that (i) if the
19    balance of the cost of coverage exceeds the amount of the
20    monthly annuity or benefit payment, the difference shall
21    be paid directly to the Teachers' Retirement System by the
22    TRS benefit recipient, and (ii) all or part of the balance
23    of the cost of coverage may, at the school board's option,
24    be paid to the Teachers' Retirement System by the school
25    board of the school district from which the TRS benefit
26    recipient retired, in accordance with Section 10-22.3b of

 

 

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1    the School Code. The Teachers' Retirement System shall
2    promptly deposit all moneys withheld by or paid to it
3    under this subdivision (e)(4) into the Teacher Health
4    Insurance Security Fund. These moneys shall not be
5    considered assets of the Retirement System.
6        (5) If, for any month beginning on or after January 1,
7    2013, a TRS benefit recipient or TRS dependent beneficiary
8    was enrolled in Medicare Parts A and B and such Medicare
9    coverage was primary to coverage under this Section but
10    payment for coverage under this Section was made at a rate
11    greater than the Medicare primary rate published by the
12    Department of Central Management Services, the TRS benefit
13    recipient or TRS dependent beneficiary shall be eligible
14    for a refund equal to the difference between the amount
15    paid by the TRS benefit recipient or TRS dependent
16    beneficiary and the published Medicare primary rate. To
17    receive a refund pursuant to this subsection, the TRS
18    benefit recipient or TRS dependent beneficiary must
19    provide documentation to the Department of Central
20    Management Services evidencing the TRS benefit recipient's
21    or TRS dependent beneficiary's Medicare coverage and the
22    amount paid by the TRS benefit recipient or TRS dependent
23    beneficiary during the applicable time period.
24    (f) Financing. Beginning July 1, 1995, all revenues
25arising from the administration of the health benefit programs
26established under Article 16 of the Illinois Pension Code or

 

 

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1this Section shall be deposited into the Teacher Health
2Insurance Security Fund, which is hereby created as a
3nonappropriated trust fund to be held outside the State
4Treasury, with the State Treasurer as custodian. Any interest
5earned on moneys in the Teacher Health Insurance Security Fund
6shall be deposited into the Fund.
7    Moneys in the Teacher Health Insurance Security Fund shall
8be used only to pay the costs of the health benefit program
9established under this Section, including associated
10administrative costs, and the costs associated with the health
11benefit program established under Article 16 of the Illinois
12Pension Code, as authorized in this Section. Beginning July 1,
131995, the Department of Central Management Services may make
14expenditures from the Teacher Health Insurance Security Fund
15for those costs.
16    After other funds authorized for the payment of the costs
17of the health benefit program established under Article 16 of
18the Illinois Pension Code are exhausted and until January 1,
191996 (or such later date as may be agreed upon by the Director
20of Central Management Services and the Secretary of the
21Teachers' Retirement System), the Secretary of the Teachers'
22Retirement System may make expenditures from the Teacher
23Health Insurance Security Fund as necessary to pay up to 75% of
24the cost of providing health coverage to eligible benefit
25recipients (as defined in Sections 16-153.1 and 16-153.3 of
26the Illinois Pension Code) who are enrolled in the Article 16

 

 

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1health benefit program and to facilitate the transfer of
2administration of the health benefit program to the Department
3of Central Management Services.
4    The Department of Central Management Services, or any
5successor agency designated to procure healthcare contracts
6pursuant to this Act, is authorized to establish funds,
7separate accounts provided by any bank or banks as defined by
8the Illinois Banking Act, or separate accounts provided by any
9savings and loan association or associations as defined by the
10Illinois Savings and Loan Act of 1985 to be held by the
11Director, outside the State treasury, for the purpose of
12receiving the transfer of moneys from the Teacher Health
13Insurance Security Fund. The Department may promulgate rules
14further defining the methodology for the transfers. Any
15interest earned by moneys in the funds or accounts shall inure
16to the Teacher Health Insurance Security Fund. The transferred
17moneys, and interest accrued thereon, shall be used
18exclusively for transfers to administrative service
19organizations or their financial institutions for payments of
20claims to claimants and providers under the self-insurance
21health plan. The transferred moneys, and interest accrued
22thereon, shall not be used for any other purpose including,
23but not limited to, reimbursement of administration fees due
24the administrative service organization pursuant to its
25contract or contracts with the Department.
26    (g) Contract for benefits. The Director shall by contract,

 

 

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1self-insurance, or otherwise make available the program of
2health benefits for TRS benefit recipients and their TRS
3dependent beneficiaries that is provided for in this Section.
4The contract or other arrangement for the provision of these
5health benefits shall be on terms deemed by the Director to be
6in the best interest of the State of Illinois and the TRS
7benefit recipients based on, but not limited to, such criteria
8as administrative cost, service capabilities of the carrier or
9other contractor, and the costs of the benefits.
10    (g-5) Committee. A Teacher Retirement Insurance Program
11Committee shall be established, to consist of 10 persons
12appointed by the Governor.
13    The Committee shall convene at least 4 times each year,
14and shall consider and make recommendations on issues
15affecting the program of health benefits provided under this
16Section. Recommendations of the Committee shall be based on a
17consensus of the members of the Committee.
18    If the Teacher Health Insurance Security Fund experiences
19a deficit balance based upon the contribution and subsidy
20rates established in this Section and Section 6.6 for Fiscal
21Year 2008 or thereafter, the Committee shall make
22recommendations for adjustments to the funding sources
23established under these Sections.
24    In addition, the Committee shall identify proposed
25solutions to the funding shortfalls that are affecting the
26Teacher Health Insurance Security Fund, and it shall report

 

 

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1those solutions to the Governor and the General Assembly
2within 6 months after August 15, 2011 (the effective date of
3Public Act 97-386).
4    (h) Continuation of program. It is the intention of the
5General Assembly that the program of health benefits provided
6under this Section be maintained on an ongoing, affordable
7basis.
8    The program of health benefits provided under this Section
9may be amended by the State and is not intended to be a pension
10or retirement benefit subject to protection under Article
11XIII, Section 5 of the Illinois Constitution.
12    (i) Repeal. (Blank).
13    (j) At least 120 days prior to making any changes to the
14benefits allowed under this Section the Department shall post
15those changes on its website and shall submit the planned
16changes to the Commission on Government Forecasting and
17Accountability.
18(Source: P.A. 101-483, eff. 1-1-20; 102-210, eff. 7-30-21.)
 
19    (5 ILCS 375/6.6)
20    Sec. 6.6. Contributions to the Teacher Health Insurance
21Security Fund.
22    (a) Beginning July 1, 1995, all active contributors of the
23Teachers' Retirement System (established under Article 16 of
24the Illinois Pension Code) who are not employees of a
25department as defined in Section 3 of this Act shall make

 

 

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1contributions toward the cost of annuitant and survivor health
2benefits. These contributions shall be at the following rates:
3until January 1, 2002, 0.5% of salary; beginning January 1,
42002, 0.65% of salary; beginning July 1, 2003, 0.75% of
5salary; beginning July 1, 2005, 0.80% of salary; beginning
6July 1, 2007, a percentage of salary to be determined by the
7Department of Central Management Services by rule, which in
8each fiscal year shall not exceed 105% of the percentage of
9salary actually required to be paid in the previous fiscal
10year.
11    These contributions shall be deducted by the employer and
12paid to the System as service agent for the Department of
13Central Management Services. The System may use the same
14processes for collecting the contributions required by this
15subsection that it uses to collect contributions received from
16school districts and other covered employers under Sections
1716-154 and 16-155 of the Illinois Pension Code.
18    An employer may agree to pick up or pay the contributions
19required under this subsection on behalf of the teacher; such
20contributions shall be deemed to have to have been paid by the
21teacher. Beginning January 1, 2002, if the employer does not
22directly pay the required member contribution, then the
23employer shall reduce the member's salary by an amount equal
24to the required contribution and shall then pay the
25contribution on behalf of the member. This reduction shall not
26change the amounts reported as creditable earnings to the

 

 

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1Teachers' Retirement System.
2    A person who purchases optional service credit under
3Article 16 of the Illinois Pension Code for a period after June
430, 1995 must also make a contribution under this subsection
5for that optional credit, at the rate provided in subsection
6(a), based on the salary used in computing the optional
7service credit, plus interest on this employee contribution.
8This contribution shall be collected by the System as service
9agent for the Department of Central Management Services. The
10contribution required under this subsection for the optional
11service credit must be paid in full before any annuity based on
12that credit begins.
13    (a-5) Beginning January 1, 2002, every employer of a
14teacher (other than an employer that is a department as
15defined in Section 3 of this Act) shall pay an employer
16contribution toward the cost of annuitant and survivor health
17benefits. These contributions shall be computed as follows:
18        (1) Beginning January 1, 2002 through June 30, 2003,
19    the employer contribution shall be equal to 0.4% of each
20    teacher's salary.
21        (2) Beginning July 1, 2003, the employer contribution
22    shall be equal to 0.5% of each teacher's salary.
23        (3) Beginning July 1, 2005, the employer contribution
24    shall be equal to 0.6% of each teacher's salary.
25        (4) Beginning July 1, 2007, the employer contribution
26    shall be a percentage of each teacher's salary to be

 

 

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1    determined by the Department of Central Management
2    Services by rule, which in each fiscal year shall not
3    exceed 105% of the percentage of each teacher's salary
4    actually required to be paid in the previous fiscal year.
5    These contributions shall be paid by the employer to the
6System as service agent for the Department of Central
7Management Services. The System may use the same processes for
8collecting the contributions required by this subsection that
9it uses to collect contributions received from school
10districts and other covered employers under the Illinois
11Pension Code.
12    The school district or other employing unit may pay these
13employer contributions out of any source of funding available
14for that purpose and shall forward the contributions to the
15System on the schedule established for the payment of member
16contributions.
17    (b) The Teachers' Retirement System shall promptly deposit
18all moneys collected under subsections (a) and (a-5) of this
19Section into the Teacher Health Insurance Security Fund
20created in Section 6.5 of this Act. The moneys collected under
21this Section shall be used only for the purposes authorized in
22Section 6.5 of this Act and shall not be considered to be
23assets of the Teachers' Retirement System. Contributions made
24under this Section are not transferable to other pension funds
25or retirement systems and are not refundable upon termination
26of service.

 

 

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1    (c) On or before November 15 of each year, the Board of
2Trustees of the Teachers' Retirement System shall certify to
3the Governor, the Director of Central Management Services, and
4the State Comptroller its estimate of the total amount of
5contributions to be paid under subsection (a) of this Section
66.6 for the next fiscal year. The amount certified shall be
7decreased or increased each year by the amount that the actual
8active teacher contributions either fell short of or exceeded
9the estimate used by the Board in making the certification for
10the previous fiscal year. The certification shall include a
11detailed explanation of the methods and information that the
12Board relied upon in preparing its estimate. As soon as
13possible after the effective date of this amendatory Act of
14the 92nd General Assembly, the Board shall recalculate and
15recertify its certifications for fiscal years 2002 and 2003.
16    (d) Beginning in fiscal year 1996, on the first day of each
17month, or as soon thereafter as may be practical, the State
18Treasurer and the State Comptroller shall transfer from the
19General Revenue Fund to the Teacher Health Insurance Security
20Fund 1/12 of the annual amount appropriated for that fiscal
21year to the State Comptroller for deposit into the Teacher
22Health Insurance Security Fund under Section 1.3 of the State
23Pension Funds Continuing Appropriation Act.
24    (e) Except where otherwise specified in this Section, the
25definitions that apply to Article 16 of the Illinois Pension
26Code apply to this Section.

 

 

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1    (f) (Blank).
2    (g) At least 120 days prior to making any changes to the
3funding under this Section the Department shall make those
4changes available on its website and shall submit the planned
5changes to the Commission on Government Forecasting and
6Accountability.
7(Source: P.A. 92-505, eff. 12-20-01; 93-679, eff. 6-30-04.)