96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB2449

 

Introduced 2/19/2009, by Rep. David E. Miller

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/22-101B
30 ILCS 805/8.33 new

    Amends provisions concerning health care benefits for the Chicago Transit Authority in the Illinois Pension Code. Provides that the Retiree Health Care Trust shall be solely responsible for providing health care benefits to eligible retirees and their dependents and survivors upon the exhaustion of the account established by the Retirement Plan for Chicago Transit Authority Employees pursuant to Section 401(h) of the Internal Revenue Code, but no earlier than January 1, 2009 and no later than July 1, 2009 (rather than by no later than July 1, 2009, but no earlier than January 1, 2009). Provides health care coverage through a health maintenance organization may be provided at 100% (while certain health care benefit programs established by the Board of Trustees are limited to 90% coverage for in-network services or 70% coverage for out-of-network services). Makes changes concerning the annual assessment of the funding levels of the Retiree Health Care Trust. Provides that any retiree hired on or before September 5, 2001 who retires with 25 years or more of continuous service, shall be eligible for retiree health care benefits upon retirement in accordance with any rules or regulations adopted by the Board of Trustees. Provides that the Board of Trustees may adopt rules and regulations providing for the refund of the total contributions made by employees who are not eligible for retiree health care benefits or who elect to waive retiree health care benefits. Makes other changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

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1     AN ACT concerning public employee benefits.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Pension Code is amended by changing
5 Section 22-101B as follows:
 
6     (40 ILCS 5/22-101B)
7     Sec. 22-101B. Health Care Benefits.
8     (a) The Chicago Transit Authority (hereinafter referred to
9 in this Section as the "Authority") shall take all actions
10 lawfully available to it to separate the funding of health care
11 benefits for retirees and their dependents and survivors from
12 the funding for its retirement system. The Authority shall
13 endeavor to achieve this separation as soon as possible, and in
14 any event no later than July 1, 2009.
15     (b) Effective 90 days after the effective date of this
16 amendatory Act of the 95th General Assembly, a Retiree Health
17 Care Trust is established for the purpose of providing health
18 care benefits to eligible retirees and their dependents and
19 survivors in accordance with the terms and conditions set forth
20 in this Section 22-101B. The Retiree Health Care Trust shall be
21 solely responsible for providing health care benefits to
22 eligible retirees and their dependents and survivors upon the
23 exhaustion of the account established by the Retirement Plan

 

 

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1 for Chicago Transit Authority Employees pursuant to Section
2 401(h) of the Internal Revenue Code, but no earlier than
3 January 1, 2009 and no later than July 1, 2009 by no later than
4 July 1, 2009, but no earlier than January 1, 2009.
5         (1) The Board of Trustees shall consist of 7 members
6     appointed as follows: (i) 3 trustees shall be appointed by
7     the Chicago Transit Board; (ii) one trustee shall be
8     appointed by an organization representing the highest
9     number of Chicago Transit Authority participants; (iii)
10     one trustee shall be appointed by an organization
11     representing the second-highest number of Chicago Transit
12     Authority participants; (iv) one trustee shall be
13     appointed by the recognized coalition representatives of
14     participants who are not represented by an organization
15     with the highest or second-highest number of Chicago
16     Transit Authority participants; and (v) one trustee shall
17     be selected by the Regional Transportation Authority Board
18     of Directors, and the trustee shall be a professional
19     fiduciary who has experience in the area of collectively
20     bargained retiree health plans. Trustees shall serve until
21     a successor has been appointed and qualified, or until
22     resignation, death, incapacity, or disqualification.
23         Any person appointed as a trustee of the board shall
24     qualify by taking an oath of office that he or she will
25     diligently and honestly administer the affairs of the
26     system, and will not knowingly violate or willfully permit

 

 

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1     the violation of any of the provisions of law applicable to
2     the Plan, including Sections 1-109, 1-109.1, 1-109.2,
3     1-110, 1-111, 1-114, and 1-115 of Article 1 of the Illinois
4     Pension Code.
5         Each trustee shall cast individual votes, and a
6     majority vote shall be final and binding upon all
7     interested parties, provided that the Board of Trustees may
8     require a supermajority vote with respect to the investment
9     of the assets of the Retiree Health Care Trust, and may set
10     forth that requirement in the trust agreement or by-laws of
11     the Board of Trustees. Each trustee shall have the rights,
12     privileges, authority and obligations as are usual and
13     customary for such fiduciaries.
14         (2) The Board of Trustees shall establish and
15     administer a health care benefit program for eligible
16     retirees and their dependents and survivors. Any The health
17     care benefit program established by the Board of Trustees
18     for eligible retirees and their dependents and survivors
19     effective on or after July 1, 2009 shall not contain any
20     plan which provides for more than 90% coverage for
21     in-network services or 70% coverage for out-of-network
22     services after any deductible has been paid, except that
23     coverage through a health maintenance organization ("HMO")
24     may be provided at 100%.
25         (3) The Retiree Health Care Trust shall be administered
26     by the Board of Trustees according to the following

 

 

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1     requirements:
2             (i) The Board of Trustees may cause amounts on
3         deposit in the Retiree Health Care Trust to be invested
4         in those investments that are permitted investments
5         for the investment of moneys held under any one or more
6         of the pension or retirement systems of the State, any
7         unit of local government or school district, or any
8         agency or instrumentality thereof. The Board, by a vote
9         of at least two-thirds of the trustees, may transfer
10         investment management to the Illinois State Board of
11         Investment, which is hereby authorized to manage these
12         investments when so requested by the Board of Trustees.
13             (ii) The Board of Trustees shall establish and
14         maintain an appropriate funding reserve level which
15         shall not be less than the amount of incurred and
16         unreported claims plus 12 months of expected claims and
17         administrative expenses.
18             (iii) The Board of Trustees shall make an annual
19         assessment of the funding levels of the Retiree Health
20         Care Trust and shall submit a report to the Auditor
21         General at least 90 days prior to the end of the fiscal
22         year. The report shall provide the following:
23                 (A) the actuarial present value of projected
24             benefits expected to be paid to current and future
25             retirees and their dependents and survivors;
26                 (B) the actuarial present value of projected

 

 

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1             contributions and trust income plus assets;
2                 (C) the reserve required by subsection
3             (b)(3)(ii); and
4                 (D) an assessment of whether the actuarial
5             present value of projected benefits expected to be
6             paid to current and future retirees and their
7             dependents and survivors exceeds or is less than
8             the actuarial present value of projected
9             contributions and trust income plus assets in
10             excess of the reserve required by subsection
11             (b)(3)(ii).
12             If the actuarial present value of projected
13         benefits expected to be paid to current and future
14         retirees and their dependents and survivors exceeds
15         the actuarial present value of projected contributions
16         and trust income plus assets in excess of the reserve
17         required by subsection (b)(3)(ii), then the report
18         shall provide a plan, to be implemented over a period
19         of not more than 10 years from each valuation date,
20         which would make the actuarial present value of
21         projected contributions and trust income plus assets
22         equal to or exceed the actuarial present value of
23         projected benefits expected to be paid to current and
24         future retirees and their dependents and survivors.
25         The plan may consist of increases in employee, retiree,
26         dependent, or survivor contribution levels, decreases

 

 

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1         in benefit levels, or other plan changes or any
2         combination thereof both, which is projected to cure
3         the shortfall over a period of not more than 10 years.
4         If the actuarial present value of projected benefits
5         expected to be paid to current and future retirees and
6         their dependents and survivors is less than the
7         actuarial present value of projected contributions and
8         trust income plus assets in excess of the reserve
9         required by subsection (b)(3)(ii), then the report may
10         provide a plan of decreases in employee, retiree,
11         dependent, or survivor contribution levels, increases
12         in benefit levels, or other plan changes, or any
13         combination thereof both, to the extent of the surplus.
14             (iv) The Auditor General shall review the report
15         and plan provided in subsection (b)(3)(iii) and issue a
16         determination within 90 days after receiving the
17         report and plan, with a copy of such determination
18         provided to the General Assembly and the Regional
19         Transportation Authority, as follows:
20                 (A) In the event of a projected shortfall, if
21             the Auditor General determines that the
22             assumptions stated in the report are not
23             unreasonable in the aggregate and that the plan of
24             increases in employee, retiree, dependent, or
25             survivor contribution levels, decreases in benefit
26             levels, or other plan changes, or any combination

 

 

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1             thereof, to be implemented over a period of not
2             more than 10 years from each valuation date both,
3             is reasonably projected to make the actuarial
4             present value of projected contributions and trust
5             income plus assets equal to or in excess of the
6             actuarial present value of projected benefits
7             expected to be paid to current and future retirees
8             and their dependents and survivors cure the
9             shortfall over a period of not more than 10 years,
10             then the Board of Trustees shall implement the
11             plan. If the Auditor General determines that the
12             assumptions stated in the report are unreasonable
13             in the aggregate, or that the plan of increases in
14             employee, retiree, dependent, or survivor
15             contribution levels, decreases in benefit levels,
16             or other plan changes to be implemented over a
17             period of not more than 10 years from each
18             valuation date both, is not reasonably projected
19             to make the actuarial present value of projected
20             contributions and trust income plus assets equal
21             to or in excess of the actuarial present value of
22             projected benefits expected to be paid to current
23             and future retirees and their dependents and
24             survivors cure the shortfall over a period of not
25             more than 10 years, then the Board of Trustees
26             shall not implement the plan, the Auditor General

 

 

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1             shall explain the basis for such determination to
2             the Board of Trustees, and the Auditor General may
3             make recommendations as to an alternative report
4             and plan.
5                 (B) In the event of a projected surplus, if the
6             Auditor General determines that the assumptions
7             stated in the report are not unreasonable in the
8             aggregate and that the plan of decreases in
9             employee, retiree, dependent, or survivor
10             contribution levels, increases in benefit levels,
11             or both, is not unreasonable in the aggregate, then
12             the Board of Trustees shall implement the plan. If
13             the Auditor General determines that the
14             assumptions stated in the report are unreasonable
15             in the aggregate, or that the plan of decreases in
16             employee, retiree, dependent, or survivor
17             contribution levels, increases in benefit levels,
18             or both, is unreasonable in the aggregate, then the
19             Board of Trustees shall not implement the plan, the
20             Auditor General shall explain the basis for such
21             determination to the Board of Trustees, and the
22             Auditor General may make recommendations as to an
23             alternative report and plan.
24                 (C) The Board of Trustees shall submit an
25             alternative report and plan within 45 days after
26             receiving a rejection determination by the Auditor

 

 

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1             General. A determination by the Auditor General on
2             any alternative report and plan submitted by the
3             Board of Trustees shall be made within 90 days
4             after receiving the alternative report and plan,
5             and shall be accepted or rejected according to the
6             requirements of this subsection (b)(3)(iv). The
7             Board of Trustees shall continue to submit
8             alternative reports and plans to the Auditor
9             General, as necessary, until a favorable
10             determination is made by the Auditor General.
11         (4) For any retiree who first retires effective on or
12     after January 18, 2008, to be eligible for retiree health
13     care benefits upon retirement, the retiree must be at least
14     55 years of age, retire with 10 or more years of continuous
15     service and satisfy the preconditions established by
16     Public Act 95-708 in addition to any rules or regulations
17     promulgated by the Board of Trustees. Notwithstanding the
18     foregoing, any retiree hired on or before September 5, 2001
19     who retires retired prior to the effective date of this
20     amendatory Act with 25 years or more of continuous service,
21     or who retires within 90 days after the effective date of
22     this amendatory Act or by January 1, 2009, whichever is
23     later, with 25 years or more of continuous service, shall
24     be eligible for retiree health care benefits upon
25     retirement in accordance with any rules or regulations
26     adopted by the Board of Trustees. This paragraph (4) shall

 

 

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1     not apply to a disability allowance.
2         (5) Effective January 1, 2009, the aggregate amount of
3     retiree, dependent and survivor contributions to the cost
4     of their health care benefits shall not exceed more than
5     45% of the total cost of such benefits. The Board of
6     Trustees shall have the discretion to provide different
7     contribution levels for retirees, dependents and survivors
8     based on their years of service, level of coverage or
9     Medicare eligibility, provided that the total contribution
10     from all retirees, dependents, and survivors shall be not
11     more than 45% of the total cost of such benefits. The term
12     "total cost of such benefits" for purposes of this
13     subsection shall be the total amount expended by the
14     retiree health benefit program in the prior plan year, as
15     calculated and certified in writing by the Retiree Health
16     Care Trust's enrolled actuary to be appointed and paid for
17     by the Board of Trustees.
18         (6) Effective January 18, 2008, all employees of the
19     Authority shall contribute to the Retiree Health Care Trust
20     in an amount not less than 3% of compensation. The Board of
21     Trustees may adopt rules and regulations providing for the
22     refund of the total contributions made by employees who are
23     not eligible for retiree health care benefits or who elect
24     to waive retiree health care benefits.
25         (7) No earlier than January 1, 2009 and no later than
26     July 1, 2009 as the Retiree Health Care Trust becomes

 

 

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1     solely responsible for providing health care benefits to
2     eligible retirees and their dependents and survivors in
3     accordance with subsection (b) of this Section 22-101B, the
4     Authority shall not have any obligation to provide health
5     care to current or future retirees and their dependents or
6     survivors. Employees, retirees, dependents, and survivors
7     who are required to make contributions to the Retiree
8     Health Care Trust shall make contributions at the level set
9     by the Board of Trustees pursuant to the requirements of
10     this Section 22-101B.
11 (Source: P.A. 95-708, eff. 1-18-08; 95-906, eff. 8-26-08.)
 
12     Section 90. The State Mandates Act is amended by adding
13 Section 8.33 as follows:
 
14     (30 ILCS 805/8.33 new)
15     Sec. 8.33. Exempt mandate. Notwithstanding Sections 6 and 8
16 of this Act, no reimbursement by the State is required for the
17 implementation of any mandate created by this amendatory Act of
18 the 96th General Assembly.
 
19     Section 99. Effective date. This Act takes effect upon
20 becoming law.