Public Act 103-0426
HB2089 EnrolledLRB103 05055 BMS 51381 b HB2089 Enrolled LRB103 05055 BMS 51381 b
HB2089 Enrolled LRB103 05055 BMS 51381 b
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Pension Code is amended by
changing Sections 1-110.6, 1-110.10, 1-110.15, 1-113.4,
1-113.4a, 1-113.5, 1-113.18, 2-162, 3-110, 4-108, 4-109.3,
18-169, and 22-1004 as follows:
(40 ILCS 5/1-110.6)
Sec. 1-110.6. Transactions prohibited by retirement
systems; Republic of the Sudan.
(a) The Government of the United States has determined
that Sudan is a nation that sponsors terrorism and genocide.
The General Assembly finds that acts of terrorism have caused
injury and death to Illinois and United States residents who
serve in the United States military, and pose a significant
threat to safety and health in Illinois. The General Assembly
finds that public employees and their families, including
police officers and firefighters, are more likely than others
to be affected by acts of terrorism. The General Assembly
finds that Sudan continues to solicit investment and
commercial activities by forbidden entities, including private
market funds. The General Assembly finds that investments in
forbidden entities are inherently and unduly risky, not in the
HB2089 Enrolled LRB103 05055 BMS 51381 b
interests of public pensioners and Illinois taxpayers, and
against public policy. The General Assembly finds that Sudan's
capacity to sponsor terrorism and genocide depends on or is
supported by the activities of forbidden entities. The General
Assembly further finds and re-affirms that the people of the
State, acting through their representatives, do not want to be
associated with forbidden entities, genocide, and terrorism.
(b) For purposes of this Section:
"Business operations" means maintaining, selling, or
leasing equipment, facilities, personnel, or any other
apparatus of business or commerce in the Republic of the
Sudan, including the ownership or possession of real or
personal property located in the Republic of the Sudan.
"Certifying company" means a company that (1) directly
provides asset management services or advice to a retirement
system or (2) as directly authorized or requested by a
retirement system (A) identifies particular investment options
for consideration or approval; (B) chooses particular
investment options; or (C) allocates particular amounts to be
invested. If no company meets the criteria set forth in this
paragraph, then "certifying company" shall mean the retirement
system officer who, as designated by the board, executes the
investment decisions made by the board, or, in the
alternative, the company that the board authorizes to complete
the certification as the agent of that officer.
"Company" is any entity capable of affecting commerce,
including but not limited to (i) a government, government
agency, natural person, legal person, sole proprietorship,
partnership, firm, corporation, subsidiary, affiliate,
franchisor, franchisee, joint venture, trade association,
financial institution, utility, public franchise, provider of
financial services, trust, or enterprise; and (ii) any
association thereof.
"Division Department" means the Public Pension Division of
the Department of Insurance Financial and Professional
Regulation.
"Forbidden entity" means any of the following:
(1) The government of the Republic of the Sudan and
any of its agencies, including but not limited to
political units and subdivisions;
(2) Any company that is wholly or partially managed or
controlled by the government of the Republic of the Sudan
and any of its agencies, including but not limited to
political units and subdivisions;
(3) Any company (i) that is established or organized
under the laws of the Republic of the Sudan or (ii) whose
principal place of business is in the Republic of the
Sudan;
(4) Any company (i) identified by the Office of
Foreign Assets Control in the United States Department of
the Treasury as sponsoring terrorist activities in the
Republic of the Sudan; or (ii) fined, penalized, or
sanctioned by the Office of Foreign Assets Control in the
United States Department of the Treasury for any violation
of any United States rules and restrictions relating to
the Republic of the Sudan that occurred at any time
following the effective date of this Act;
(5) Any publicly traded company that is individually
identified by an independent researching firm that
specializes in global security risk and that has been
retained by a certifying company as provided in subsection
(c) of this Section as being a company that owns or
controls property or assets located in, has employees or
facilities located in, provides goods or services to,
obtains goods or services from, has distribution
agreements with, issues credits or loans to, purchases
bonds or commercial paper issued by, or invests in (A) the
Republic of the Sudan; or (B) any company domiciled in the
Republic of the Sudan; and
(6) Any private market fund that fails to satisfy the
requirements set forth in subsections (d) and (e) of this
Section.
Notwithstanding the foregoing, the term "forbidden entity"
shall exclude (A) mutual funds that meet the requirements of
item (iii) of paragraph (13) of Section 1-113.2 and (B)
companies that transact business in the Republic of the Sudan
under the law, license, or permit of the United States,
including a license from the United States Department of the
Treasury, and companies, except agencies of the Republic of
the Sudan, who are certified as Non-Government Organizations
by the United Nations, or who engage solely in (i) the
provision of goods and services intended to relieve human
suffering or to promote welfare, health, religious and
spiritual activities, and education or humanitarian purposes;
or (ii) journalistic activities.
"Private market fund" means any private equity fund,
private equity fund of funds, venture capital fund, hedge
fund, hedge fund of funds, real estate fund, or other
investment vehicle that is not publicly traded.
"Republic of the Sudan" means those geographic areas of
the Republic of Sudan that are subject to sanction or other
restrictions placed on commercial activity imposed by the
United States Government due to an executive or congressional
declaration of genocide.
"Retirement system" means the State Employees' Retirement
System of Illinois, the Judges Retirement System of Illinois,
the General Assembly Retirement System, the State Universities
Retirement System, and the Teachers' Retirement System of the
State of Illinois.
(c) A retirement system shall not transfer or disburse
funds to, deposit into, acquire any bonds or commercial paper
from, or otherwise loan to or invest in any entity unless, as
provided in this Section, a certifying company certifies to
the retirement system that, (1) with respect to investments in
a publicly traded company, the certifying company has relied
on information provided by an independent researching firm
that specializes in global security risk and (2) 100% of the
retirement system's assets for which the certifying company
provides services or advice are not and have not been invested
or reinvested in any forbidden entity at any time after 4
months after the effective date of this Section.
The certifying company shall make the certification
required under this subsection (c) to a retirement system 6
months after the effective date of this Section and annually
thereafter. A retirement system shall submit the
certifications to the Division Department, and the Division
Department shall notify the Director of Insurance Secretary of
Financial and Professional Regulation if a retirement system
fails to do so.
(d) With respect to a commitment or investment made
pursuant to a written agreement executed prior to the
effective date of this Section, each private market fund shall
submit to the appropriate certifying company, at no additional
cost to the retirement system:
(1) an affidavit sworn under oath in which an
expressly authorized officer of the private market fund
avers that the private market fund (A) does not own or
control any property or asset located in the Republic of
the Sudan and (B) does not conduct business operations in
the Republic of the Sudan; or
(2) a certificate in which an expressly authorized
officer of the private market fund certifies that the
private market fund, based on reasonable due diligence,
has determined that, other than direct or indirect
investments in companies certified as Non-Government
Organizations by the United Nations, the private market
fund has no direct or indirect investment in any company
(A) organized under the laws of the Republic of the Sudan;
(B) whose principal place of business is in the Republic
of the Sudan; or (C) that conducts business operations in
the Republic of the Sudan. Such certificate shall be based
upon the periodic reports received by the private market
fund, and the private market fund shall agree that the
certifying company, directly or through an agent, or the
retirement system, as the case may be, may from time to
time review the private market fund's certification
process.
(e) With respect to a commitment or investment made
pursuant to a written agreement executed after the effective
date of this Section, each private market fund shall, at no
additional cost to the retirement system:
(1) submit to the appropriate certifying company an
affidavit or certificate consistent with the requirements
pursuant to subsection (d) of this Section; or
(2) enter into an enforceable written agreement with
the retirement system that provides for remedies
consistent with those set forth in subsection (g) of this
Section if any of the assets of the retirement system
shall be transferred, loaned, or otherwise invested in any
company that directly or indirectly (A) has facilities or
employees in the Republic of the Sudan or (B) conducts
business operations in the Republic of the Sudan.
(f) In addition to any other penalties and remedies
available under the law of Illinois and the United States, any
transaction, other than a transaction with a private market
fund that is governed by subsections (g) and (h) of this
Section, that violates the provisions of this Act shall be
against public policy and voidable, at the sole discretion of
the retirement system.
(g) If a private market fund fails to provide the
affidavit or certification required in subsections (d) and (e)
of this Section, then the retirement system shall, within 90
days, divest, or attempt in good faith to divest, the
retirement system's interest in the private market fund,
provided that the Board of the retirement system confirms
through resolution that the divestment does not have a
material and adverse impact on the retirement system. The
retirement system shall immediately notify the Division
Department, and the Division Department shall notify all other
retirement systems, as soon as practicable, by posting the
name of the private market fund on the Division's Department's
Internet website or through e-mail communications. No other
retirement system may enter into any agreement under which the
retirement system directly or indirectly invests in the
private market fund unless the private market fund provides
that retirement system with the affidavit or certification
required in subsections (d) and (e) of this Section and
complies with all other provisions of this Section.
(h) If a private market fund fails to fulfill its
obligations under any agreement provided for in paragraph (2)
of subsection (e) of this Section, the retirement system shall
immediately take legal and other action to obtain satisfaction
through all remedies and penalties available under the law and
the agreement itself. The retirement system shall immediately
notify the Division Department, and the Division Department
shall notify all other retirement systems, as soon as
practicable, by posting the name of the private market fund on
the Division's Department's Internet website or through e-mail
communications, and no other retirement system may enter into
any agreement under which the retirement system directly or
indirectly invests in the private market fund.
(i) This Section shall have full force and effect during
any period in which the Republic of the Sudan, or the officials
of the government of that Republic, are subject to sanctions
authorized under any statute or executive order of the United
States or until such time as the State Department of the United
States confirms in the federal register or through other means
that the Republic of the Sudan is no longer subject to
sanctions by the government of the United States.
(j) If any provision of this Section or its application to
any person or circumstance is held invalid, the invalidity of
that provision or application does not affect other provisions
or applications of this Section that can be given effect
without the invalid provision or application.
(Source: P.A. 95-521, eff. 8-28-07.)
(40 ILCS 5/1-110.10)
Sec. 1-110.10. Servicer certification.
(a) For the purposes of this Section:
"Illinois finance entity" means any entity chartered under
the Illinois Banking Act, the Savings Bank Act, the Illinois
Credit Union Act, or the Illinois Savings and Loan Act of 1985
and any person or entity licensed under the Residential
Mortgage License Act of 1987, the Consumer Installment Loan
Act, or the Sales Finance Agency Act.
"Retirement system or pension fund" means a retirement
system or pension fund established under this Code.
(b) In order for an Illinois finance entity to be eligible
for investment or deposit of retirement system or pension fund
assets, the Illinois finance entity must annually certify that
it complies with the requirements of the High Risk Home Loan
Act and the rules adopted pursuant to that Act that are
applicable to that Illinois finance entity. For Illinois
finance entities with whom the retirement system or pension
fund is investing or depositing assets on the effective date
of this Section, the initial certification required under this
Section shall be completed within 6 months after the effective
date of this Section. For Illinois finance entities with whom
the retirement system or pension fund is not investing or
depositing assets on the effective date of this Section, the
initial certification required under this Section must be
completed before the retirement system or pension fund may
invest or deposit assets with the Illinois finance entity.
(c) A retirement system or pension fund shall submit the
certifications to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation,
and the Division shall notify the Director of Insurance
Secretary of Financial and Professional Regulation if a
retirement system or pension fund fails to do so.
(d) If an Illinois finance entity fails to provide an
initial certification within 6 months after the effective date
of this Section or fails to submit an annual certification,
then the retirement system or pension fund shall notify the
Illinois finance entity. The Illinois finance entity shall,
within 30 days after the date of notification, either (i)
notify the retirement system or pension fund of its intention
to certify and complete certification or (ii) notify the
retirement system or pension fund of its intention to not
complete certification. If an Illinois finance entity fails to
provide certification, then the retirement system or pension
fund shall, within 90 days, divest, or attempt in good faith to
divest, the retirement system's or pension fund's assets with
that Illinois finance entity. The retirement system or pension
fund shall immediately notify the Public Pension Division of
the Department of Insurance Department of the Illinois finance
entity's failure to provide certification.
(e) If any provision of this Section or its application to
any person or circumstance is held invalid, the invalidity of
that provision or application does not affect other provisions
or applications of this Section that can be given effect
without the invalid provision or application.
(Source: P.A. 95-521, eff. 8-28-07; 95-876, eff. 8-21-08.)
(40 ILCS 5/1-110.15)
Sec. 1-110.15. Transactions prohibited by retirement
systems; Iran.
(a) As used in this Section:
"Active business operations" means all business operations
that are not inactive business operations.
"Business operations" means engaging in commerce in any
form in Iran, including, but not limited to, acquiring,
developing, maintaining, owning, selling, possessing, leasing,
or operating equipment, facilities, personnel, products,
services, personal property, real property, or any other
apparatus of business or commerce.
"Company" means any sole proprietorship, organization,
association, corporation, partnership, joint venture, limited
partnership, limited liability partnership, limited liability
company, or other entity or business association, including
all wholly owned subsidiaries, majority-owned subsidiaries,
parent companies, or affiliates of those entities or business
associations, that exists for the purpose of making profit.
"Direct holdings" in a company means all securities of
that company that are held directly by the retirement system
or in an account or fund in which the retirement system owns
all shares or interests.
"Inactive business operations" means the mere continued
holding or renewal of rights to property previously operated
for the purpose of generating revenues but not presently
deployed for that purpose.
"Indirect holdings" in a company means all securities of
that company which are held in an account or fund, such as a
mutual fund, managed by one or more persons not employed by the
retirement system, in which the retirement system owns shares
or interests together with other investors not subject to the
provisions of this Section.
"Mineral-extraction activities" include exploring,
extracting, processing, transporting, or wholesale selling or
trading of elemental minerals or associated metal alloys or
oxides (ore), including gold, copper, chromium, chromite,
diamonds, iron, iron ore, silver, tungsten, uranium, and zinc.
"Oil-related activities" include, but are not limited to,
owning rights to oil blocks; exporting, extracting, producing,
refining, processing, exploring for, transporting, selling, or
trading of oil; and constructing, maintaining, or operating a
pipeline, refinery, or other oil-field infrastructure. The
mere retail sale of gasoline and related consumer products is
not considered an oil-related activity.
"Petroleum resources" means petroleum, petroleum
byproducts, or natural gas.
"Private market fund" means any private equity fund,
private equity fund of funds, venture capital fund, hedge
fund, hedge fund of funds, real estate fund, or other
investment vehicle that is not publicly traded.
"Retirement system" means the State Employees' Retirement
System of Illinois, the Judges Retirement System of Illinois,
the General Assembly Retirement System, the State Universities
Retirement System, and the Teachers' Retirement System of the
State of Illinois.
"Scrutinized business operations" means business
operations that have caused a company to become a scrutinized
company.
"Scrutinized company" means the company has business
operations that involve contracts with or provision of
supplies or services to the Government of Iran, companies in
which the Government of Iran has any direct or indirect equity
share, consortiums or projects commissioned by the Government
of Iran, or companies involved in consortiums or projects
commissioned by the Government of Iran and:
(1) more than 10% of the company's revenues produced
in or assets located in Iran involve oil-related
activities or mineral-extraction activities; less than 75%
of the company's revenues produced in or assets located in
Iran involve contracts with or provision of oil-related or
mineral-extraction products or services to the Government
of Iran or a project or consortium created exclusively by
that government; and the company has failed to take
substantial action; or
(2) the company has, on or after August 5, 1996, made
an investment of $20 million or more, or any combination
of investments of at least $10 million each that in the
aggregate equals or exceeds $20 million in any 12-month
period, that directly or significantly contributes to the
enhancement of Iran's ability to develop petroleum
resources of Iran.
"Substantial action" means adopting, publicizing, and
implementing a formal plan to cease scrutinized business
operations within one year and to refrain from any such new
business operations.
(b) Within 90 days after the effective date of this
Section, a retirement system shall make its best efforts to
identify all scrutinized companies in which the retirement
system has direct or indirect holdings.
These efforts shall include the following, as appropriate
in the retirement system's judgment:
(1) reviewing and relying on publicly available
information regarding companies having business operations
in Iran, including information provided by nonprofit
organizations, research firms, international
organizations, and government entities;
(2) contacting asset managers contracted by the
retirement system that invest in companies having business
operations in Iran; and
(3) Contacting other institutional investors that have
divested from or engaged with companies that have business
operations in Iran.
The retirement system may retain an independent research
firm to identify scrutinized companies in which the retirement
system has direct or indirect holdings. By the first meeting
of the retirement system following the 90-day period described
in this subsection (b), the retirement system shall assemble
all scrutinized companies identified into a scrutinized
companies list.
The retirement system shall update the scrutinized
companies list annually based on evolving information from,
among other sources, those listed in this subsection (b).
(c) The retirement system shall adhere to the following
procedures for companies on the scrutinized companies list:
(1) The retirement system shall determine the
companies on the scrutinized companies list in which the
retirement system owns direct or indirect holdings.
(2) For each company identified in item (1) of this
subsection (c) that has only inactive business operations,
the retirement system shall send a written notice
informing the company of this Section and encouraging it
to continue to refrain from initiating active business
operations in Iran until it is able to avoid scrutinized
business operations. The retirement system shall continue
such correspondence semiannually.
(3) For each company newly identified in item (1) of
this subsection (c) that has active business operations,
the retirement system shall send a written notice
informing the company of its scrutinized company status
and that it may become subject to divestment by the
retirement system. The notice must inform the company of
the opportunity to clarify its Iran-related activities and
encourage the company, within 90 days, to cease its
scrutinized business operations or convert such operations
to inactive business operations in order to avoid
qualifying for divestment by the retirement system.
(4) If, within 90 days after the retirement system's
first engagement with a company pursuant to this
subsection (c), that company ceases scrutinized business
operations, the company shall be removed from the
scrutinized companies list and the provisions of this
Section shall cease to apply to it unless it resumes
scrutinized business operations. If, within 90 days after
the retirement system's first engagement, the company
converts its scrutinized active business operations to
inactive business operations, the company is subject to
all provisions relating thereto.
(d) If, after 90 days following the retirement system's
first engagement with a company pursuant to subsection (c),
the company continues to have scrutinized active business
operations, and only while such company continues to have
scrutinized active business operations, the retirement system
shall sell, redeem, divest, or withdraw all publicly traded
securities of the company, except as provided in paragraph
(f), from the retirement system's assets under management
within 12 months after the company's most recent appearance on
the scrutinized companies list.
If a company that ceased scrutinized active business
operations following engagement pursuant to subsection (c)
resumes such operations, this subsection (d) immediately
applies, and the retirement system shall send a written notice
to the company. The company shall also be immediately
reintroduced onto the scrutinized companies list.
(e) The retirement system may not acquire securities of
companies on the scrutinized companies list that have active
business operations, except as provided in subsection (f).
(f) A company that the United States Government
affirmatively declares to be excluded from its present or any
future federal sanctions regime relating to Iran is not
subject to divestment or the investment prohibition pursuant
to subsections (d) and (e).
(g) Notwithstanding the provisions of this Section,
paragraphs (d) and (e) do not apply to indirect holdings in a
private market fund. However, the retirement system shall
submit letters to the managers of those investment funds
containing companies that have scrutinized active business
operations requesting that they consider removing the
companies from the fund or create a similar actively managed
fund having indirect holdings devoid of the companies. If the
manager creates a similar fund, the retirement system shall
replace all applicable investments with investments in the
similar fund in an expedited timeframe consistent with prudent
investing standards.
(h) The retirement system shall file a report with the
Public Pension Division of the Department of Insurance
Financial and Professional Regulation that includes the
scrutinized companies list within 30 days after the list is
created. This report shall be made available to the public.
The retirement system shall file an annual report with the
Public Pension Division, which shall be made available to the
public, that includes all of the following:
(1) A summary of correspondence with companies engaged
by the retirement system under items (2) and (3) of
subsection (c).
(2) All investments sold, redeemed, divested, or
withdrawn in compliance with subsection (d).
(3) All prohibited investments under subsection (e).
(4) A summary of correspondence with private market
funds notified under subsection (g).
(i) This Section expires upon the occurrence of any of the
following:
(1) The United States revokes all sanctions imposed
against the Government of Iran.
(2) The Congress or President of the United States
declares that the Government of Iran has ceased to acquire
weapons of mass destruction and to support international
terrorism.
(3) The Congress or President of the United States,
through legislation or executive order, declares that
mandatory divestment of the type provided for in this
Section interferes with the conduct of United States
foreign policy.
(j) With respect to actions taken in compliance with this
Act, including all good-faith determinations regarding
companies as required by this Act, the retirement system is
exempt from any conflicting statutory or common law
obligations, including any fiduciary duties under this Article
and any obligations with respect to choice of asset managers,
investment funds, or investments for the retirement system's
securities portfolios.
(k) Notwithstanding any other provision of this Section to
the contrary, the retirement system may cease divesting from
scrutinized companies pursuant to subsection (d) or reinvest
in scrutinized companies from which it divested pursuant to
subsection (d) if clear and convincing evidence shows that the
value of investments in scrutinized companies with active
scrutinized business operations becomes equal to or less than
0.5% of the market value of all assets under management by the
retirement system. Cessation of divestment, reinvestment, or
any subsequent ongoing investment authorized by this Section
is limited to the minimum steps necessary to avoid the
contingency set forth in this subsection (k). For any
cessation of divestment, reinvestment, or subsequent ongoing
investment authorized by this Section, the retirement system
shall provide a written report to the Public Pension Division
in advance of initial reinvestment, updated semiannually
thereafter as applicable, setting forth the reasons and
justification, supported by clear and convincing evidence, for
its decisions to cease divestment, reinvest, or remain
invested in companies having scrutinized active business
operations. This Section does not apply to reinvestment in
companies on the grounds that they have ceased to have
scrutinized active business operations.
(l) If any provision of this Section or its application to
any person or circumstance is held invalid, the invalidity
does not affect other provisions or applications of the Act
which can be given effect without the invalid provision or
application, and to this end the provisions of this Section
are severable.
(Source: P.A. 95-616, eff. 1-1-08; 95-876, eff. 8-21-08.)
(40 ILCS 5/1-113.4)
Sec. 1-113.4. List of additional permitted investments for
pension funds with net assets of $5,000,000 or more.
(a) In addition to the items in Sections 1-113.2 and
1-113.3, a pension fund established under Article 3 or 4 that
has net assets of at least $5,000,000 and has appointed an
investment adviser under Section 1-113.5 may, through that
investment adviser, invest a portion of its assets in common
and preferred stocks authorized for investments of trust funds
under the laws of the State of Illinois. The stocks must meet
all of the following requirements:
(1) The common stocks are listed on a national
securities exchange or board of trade (as defined in the
federal Securities Exchange Act of 1934 and set forth in
subdivision G of Section 3 of the Illinois Securities Law
of 1953) or quoted in the National Association of
Securities Dealers Automated Quotation System National
Market System (NASDAQ NMS).
(2) The securities are of a corporation created or
existing under the laws of the United States or any state,
district, or territory thereof and the corporation has
been in existence for at least 5 years.
(3) The corporation has not been in arrears on payment
of dividends on its preferred stock during the preceding 5
years.
(4) The market value of stock in any one corporation
does not exceed 5% of the cash and invested assets of the
pension fund, and the investments in the stock of any one
corporation do not exceed 5% of the total outstanding
stock of that corporation.
(5) The straight preferred stocks or convertible
preferred stocks are issued or guaranteed by a corporation
whose common stock qualifies for investment by the board.
(6) The issuer of the stocks has been subject to the
requirements of Section 12 of the federal Securities
Exchange Act of 1934 and has been current with the filing
requirements of Sections 13 and 14 of that Act during the
preceding 3 years.
(b) A pension fund's total investment in the items
authorized under this Section and Section 1-113.3 shall not
exceed 35% of the market value of the pension fund's net
present assets stated in its most recent annual report on file
with the Public Pension Division of the Illinois Department of
Insurance.
(c) A pension fund that invests funds under this Section
shall electronically file with the Public Pension Division of
the Department of Insurance any reports of its investment
activities that the Division may require, at the times and in
the format required by the Division.
(Source: P.A. 100-201, eff. 8-18-17.)
(40 ILCS 5/1-113.4a)
Sec. 1-113.4a. List of additional permitted investments
for Article 3 and 4 pension funds with net assets of
$10,000,000 or more.
(a) In addition to the items in Sections 1-113.2 and
1-113.3, a pension fund established under Article 3 or 4 that
has net assets of at least $10,000,000 and has appointed an
investment adviser, as defined under Sections 1-101.4 and
1-113.5, may, through that investment adviser, invest an
additional portion of its assets in common and preferred
stocks and mutual funds.
(b) The stocks must meet all of the following
requirements:
(1) The common stocks must be listed on a national
securities exchange or board of trade (as defined in the
Federal Securities Exchange Act of 1934 and set forth in
paragraph G of Section 3 of the Illinois Securities Law of
1953) or quoted in the National Association of Securities
Dealers Automated Quotation System National Market System.
(2) The securities must be of a corporation in
existence for at least 5 years.
(3) The market value of stock in any one corporation
may not exceed 5% of the cash and invested assets of the
pension fund, and the investments in the stock of any one
corporation may not exceed 5% of the total outstanding
stock of that corporation.
(4) The straight preferred stocks or convertible
preferred stocks must be issued or guaranteed by a
corporation whose common stock qualifies for investment by
the board.
(c) The mutual funds must meet the following requirements:
(1) The mutual fund must be managed by an investment
company registered under the Federal Investment Company
Act of 1940 and registered under the Illinois Securities
Law of 1953.
(2) The mutual fund must have been in operation for at
least 5 years.
(3) The mutual fund must have total net assets of
$250,000,000 or more.
(4) The mutual fund must be comprised of a diversified
portfolio of common or preferred stocks, bonds, or money
market instruments.
(d) A pension fund's total investment in the items
authorized under this Section and Section 1-113.3 shall not
exceed 50% effective July 1, 2011 and 55% effective July 1,
2012 of the market value of the pension fund's net present
assets stated in its most recent annual report on file with the
Public Pension Division of the Department of Insurance.
(e) A pension fund that invests funds under this Section
shall electronically file with the Public Pension Division of
the Department of Insurance any reports of its investment
activities that the Division may require, at the time and in
the format required by the Division.
(Source: P.A. 96-1495, eff. 1-1-11.)
(40 ILCS 5/1-113.5)
Sec. 1-113.5. Investment advisers and investment services
for all Article 3 or 4 pension funds.
(a) The board of trustees of a pension fund may appoint
investment advisers as defined in Section 1-101.4. The board
of any pension fund investing in common or preferred stock
under Section 1-113.4 shall appoint an investment adviser
before making such investments.
The investment adviser shall be a fiduciary, as defined in
Section 1-101.2, with respect to the pension fund and shall be
one of the following:
(1) an investment adviser registered under the federal
Investment Advisers Act of 1940 and the Illinois
Securities Law of 1953;
(2) a bank or trust company authorized to conduct a
trust business in Illinois;
(3) a life insurance company authorized to transact
business in Illinois; or
(4) an investment company as defined and registered
under the federal Investment Company Act of 1940 and
registered under the Illinois Securities Law of 1953.
(a-5) Notwithstanding any other provision of law, a person
or entity that provides consulting services (referred to as a
"consultant" in this Section) to a pension fund with respect
to the selection of fiduciaries may not be awarded a contract
to provide those consulting services that is more than 5 years
in duration. No contract to provide such consulting services
may be renewed or extended. At the end of the term of a
contract, however, the contractor is eligible to compete for a
new contract. No person shall attempt to avoid or contravene
the restrictions of this subsection by any means. All offers
from responsive offerors shall be accompanied by disclosure of
the names and addresses of the following:
(1) The offeror.
(2) Any entity that is a parent of, or owns a
controlling interest in, the offeror.
(3) Any entity that is a subsidiary of, or in which a
controlling interest is owned by, the offeror.
Beginning on July 1, 2008, a person, other than a trustee
or an employee of a pension fund or retirement system, may not
act as a consultant under this Section unless that person is at
least one of the following: (i) registered as an investment
adviser under the federal Investment Advisers Act of 1940 (15
U.S.C. 80b-1, et seq.); (ii) registered as an investment
adviser under the Illinois Securities Law of 1953; (iii) a
bank, as defined in the Investment Advisers Act of 1940; or
(iv) an insurance company authorized to transact business in
this State.
(b) All investment advice and services provided by an
investment adviser or a consultant appointed under this
Section shall be rendered pursuant to a written contract
between the investment adviser and the board, and in
accordance with the board's investment policy.
The contract shall include all of the following:
(1) acknowledgement in writing by the investment
adviser that he or she is a fiduciary with respect to the
pension fund;
(2) the board's investment policy;
(3) full disclosure of direct and indirect fees,
commissions, penalties, and any other compensation that
may be received by the investment adviser, including
reimbursement for expenses; and
(4) a requirement that the investment adviser submit
periodic written reports, on at least a quarterly basis,
for the board's review at its regularly scheduled
meetings. All returns on investment shall be reported as
net returns after payment of all fees, commissions, and
any other compensation.
(b-5) Each contract described in subsection (b) shall also
include (i) full disclosure of direct and indirect fees,
commissions, penalties, and other compensation, including
reimbursement for expenses, that may be paid by or on behalf of
the investment adviser or consultant in connection with the
provision of services to the pension fund and (ii) a
requirement that the investment adviser or consultant update
the disclosure promptly after a modification of those payments
or an additional payment.
Within 30 days after the effective date of this amendatory
Act of the 95th General Assembly, each investment adviser and
consultant providing services on the effective date or subject
to an existing contract for the provision of services must
disclose to the board of trustees all direct and indirect
fees, commissions, penalties, and other compensation paid by
or on behalf of the investment adviser or consultant in
connection with the provision of those services and shall
update that disclosure promptly after a modification of those
payments or an additional payment.
A person required to make a disclosure under subsection
(d) is also required to disclose direct and indirect fees,
commissions, penalties, or other compensation that shall or
may be paid by or on behalf of the person in connection with
the rendering of those services. The person shall update the
disclosure promptly after a modification of those payments or
an additional payment.
The disclosures required by this subsection shall be in
writing and shall include the date and amount of each payment
and the name and address of each recipient of a payment.
(c) Within 30 days after appointing an investment adviser
or consultant, the board shall submit a copy of the contract to
the Public Pension Division of the Department of Insurance of
the Department of Financial and Professional Regulation.
(d) Investment services provided by a person other than an
investment adviser appointed under this Section, including but
not limited to services provided by the kinds of persons
listed in items (1) through (4) of subsection (a), shall be
rendered only after full written disclosure of direct and
indirect fees, commissions, penalties, and any other
compensation that shall or may be received by the person
rendering those services.
(e) The board of trustees of each pension fund shall
retain records of investment transactions in accordance with
the rules of the Public Pension Division of the Department of
Insurance Financial and Professional Regulation.
(Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
(40 ILCS 5/1-113.18)
Sec. 1-113.18. Ethics training. All board members of a
retirement system, pension fund, or investment board created
under this Code must attend ethics training of at least 8 hours
per year. The training required under this Section shall
include training on ethics, fiduciary duty, and investment
issues and any other curriculum that the board of the
retirement system, pension fund, or investment board
establishes as being important for the administration of the
retirement system, pension fund, or investment board. The
Supreme Court of Illinois shall be responsible for ethics
training and curriculum for judges designated by the Court to
serve as members of a retirement system, pension fund, or
investment board. Each board shall annually certify its
members' compliance with this Section and submit an annual
certification to the Public Pension Division of the Department
of Insurance of the Department of Financial and Professional
Regulation. Judges shall annually certify compliance with the
ethics training requirement and shall submit an annual
certification to the Chief Justice of the Supreme Court of
Illinois. For an elected or appointed trustee under Article 3
or 4 of this Code, fulfillment of the requirements of Section
1-109.3 satisfies the requirements of this Section.
(Source: P.A. 100-904, eff. 8-17-18.)
(40 ILCS 5/2-162)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-162. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly.
(b) Notwithstanding any other provision of this Code or
any subsequent amendment to this Code, every new benefit
increase is subject to this Section and shall be deemed to be
granted only in conformance with and contingent upon
compliance with the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of
the Department of Insurance Financial and Professional
Regulation. A new benefit increase created by a Public Act
that does not include the additional funding required under
this subsection is null and void. If the Public Pension
Division determines that the additional funding provided for a
new benefit increase under this subsection is or has become
inadequate, it may so certify to the Governor and the State
Comptroller and, in the absence of corrective action by the
General Assembly, the new benefit increase shall expire at the
end of the fiscal year in which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/3-110) (from Ch. 108 1/2, par. 3-110)
Sec. 3-110. Creditable service.
(a) "Creditable service" is the time served by a police
officer as a member of a regularly constituted police force of
a municipality. In computing creditable service furloughs
without pay exceeding 30 days shall not be counted, but all
leaves of absence for illness or accident, regardless of
length, and all periods of disability retirement for which a
police officer has received no disability pension payments
under this Article shall be counted.
(a-5) Up to 3 years of time during which the police officer
receives a disability pension under Section 3-114.1, 3-114.2,
3-114.3, or 3-114.6 shall be counted as creditable service,
provided that (i) the police officer returns to active service
after the disability for a period at least equal to the period
for which credit is to be established and (ii) the police
officer makes contributions to the fund based on the rates
specified in Section 3-125.1 and the salary upon which the
disability pension is based. These contributions may be paid
at any time prior to the commencement of a retirement pension.
The police officer may, but need not, elect to have the
contributions deducted from the disability pension or to pay
them in installments on a schedule approved by the board. If
not deducted from the disability pension, the contributions
shall include interest at the rate of 6% per year, compounded
annually, from the date for which service credit is being
established to the date of payment. If contributions are paid
under this subsection (a-5) in excess of those needed to
establish the credit, the excess shall be refunded. This
subsection (a-5) applies to persons receiving a disability
pension under Section 3-114.1, 3-114.2, 3-114.3, or 3-114.6 on
the effective date of this amendatory Act of the 91st General
Assembly, as well as persons who begin to receive such a
disability pension after that date.
(b) Creditable service includes all periods of service in
the military, naval or air forces of the United States entered
upon while an active police officer of a municipality,
provided that upon applying for a permanent pension, and in
accordance with the rules of the board, the police officer
pays into the fund the amount the officer would have
contributed if he or she had been a regular contributor during
such period, to the extent that the municipality which the
police officer served has not made such contributions in the
officer's behalf. The total amount of such creditable service
shall not exceed 5 years, except that any police officer who on
July 1, 1973 had more than 5 years of such creditable service
shall receive the total amount thereof.
(b-5) Creditable service includes all periods of service
in the military, naval, or air forces of the United States
entered upon before beginning service as an active police
officer of a municipality, provided that, in accordance with
the rules of the board, the police officer pays into the fund
the amount the police officer would have contributed if he or
she had been a regular contributor during such period, plus an
amount determined by the Board to be equal to the
municipality's normal cost of the benefit, plus interest at
the actuarially assumed rate calculated from the date the
employee last became a police officer under this Article. The
total amount of such creditable service shall not exceed 2
years.
(c) Creditable service also includes service rendered by a
police officer while on leave of absence from a police
department to serve as an executive of an organization whose
membership consists of members of a police department, subject
to the following conditions: (i) the police officer is a
participant of a fund established under this Article with at
least 10 years of service as a police officer; (ii) the police
officer received no credit for such service under any other
retirement system, pension fund, or annuity and benefit fund
included in this Code; (iii) pursuant to the rules of the board
the police officer pays to the fund the amount he or she would
have contributed had the officer been an active member of the
police department; (iv) the organization pays a contribution
equal to the municipality's normal cost for that period of
service; and (v) for all leaves of absence under this
subsection (c), including those beginning before the effective
date of this amendatory Act of the 97th General Assembly, the
police officer continues to remain in sworn status, subject to
the professional standards of the public employer or those
terms established in statute.
(d)(1) Creditable service also includes periods of
service originally established in another police pension
fund under this Article or in the Fund established under
Article 7 of this Code for which (i) the contributions
have been transferred under Section 3-110.7 or Section
7-139.9 and (ii) any additional contribution required
under paragraph (2) of this subsection has been paid in
full in accordance with the requirements of this
subsection (d).
(2) If the board of the pension fund to which
creditable service and related contributions are
transferred under Section 7-139.9 determines that the
amount transferred is less than the true cost to the
pension fund of allowing that creditable service to be
established, then in order to establish that creditable
service the police officer must pay to the pension fund,
within the payment period specified in paragraph (3) of
this subsection, an additional contribution equal to the
difference, as determined by the board in accordance with
the rules and procedures adopted under paragraph (6) of
this subsection. If the board of the pension fund to which
creditable service and related contributions are
transferred under Section 3-110.7 determines that the
amount transferred is less than the true cost to the
pension fund of allowing that creditable service to be
established, then the police officer may elect (A) to
establish that creditable service by paying to the pension
fund, within the payment period specified in paragraph (3)
of this subsection (d), an additional contribution equal
to the difference, as determined by the board in
accordance with the rules and procedures adopted under
paragraph (6) of this subsection (d) or (B) to have his or
her creditable service reduced by an amount equal to the
difference between the amount transferred under Section
3-110.7 and the true cost to the pension fund of allowing
that creditable service to be established, as determined
by the board in accordance with the rules and procedures
adopted under paragraph (6) of this subsection (d).
(3) Except as provided in paragraph (4), the
additional contribution that is required or elected under
paragraph (2) of this subsection (d) must be paid to the
board (i) within 5 years from the date of the transfer of
contributions under Section 3-110.7 or 7-139.9 and (ii)
before the police officer terminates service with the
fund. The additional contribution may be paid in a lump
sum or in accordance with a schedule of installment
payments authorized by the board.
(4) If the police officer dies in service before
payment in full has been made and before the expiration of
the 5-year payment period, the surviving spouse of the
officer may elect to pay the unpaid amount on the
officer's behalf within 6 months after the date of death,
in which case the creditable service shall be granted as
though the deceased police officer had paid the remaining
balance on the day before the date of death.
(5) If the additional contribution that is required or
elected under paragraph (2) of this subsection (d) is not
paid in full within the required time, the creditable
service shall not be granted and the police officer (or
the officer's surviving spouse or estate) shall be
entitled to receive a refund of (i) any partial payment of
the additional contribution that has been made by the
police officer and (ii) those portions of the amounts
transferred under subdivision (a)(1) of Section 3-110.7 or
subdivisions (a)(1) and (a)(3) of Section 7-139.9 that
represent employee contributions paid by the police
officer (but not the accumulated interest on those
contributions) and interest paid by the police officer to
the prior pension fund in order to reinstate service
terminated by acceptance of a refund.
At the time of paying a refund under this item (5), the
pension fund shall also repay to the pension fund from
which the contributions were transferred under Section
3-110.7 or 7-139.9 the amount originally transferred under
subdivision (a)(2) of that Section, plus interest at the
rate of 6% per year, compounded annually, from the date of
the original transfer to the date of repayment. Amounts
repaid to the Article 7 fund under this provision shall be
credited to the appropriate municipality.
Transferred credit that is not granted due to failure
to pay the additional contribution within the required
time is lost; it may not be transferred to another pension
fund and may not be reinstated in the pension fund from
which it was transferred.
(6) The Public Employee Pension Fund Division of the
Department of Insurance shall establish by rule the manner
of making the calculation required under paragraph (2) of
this subsection, taking into account the appropriate
actuarial assumptions; the police officer's service, age,
and salary history; the level of funding of the pension
fund to which the credits are being transferred; and any
other factors that the Division determines to be relevant.
The rules may require that all calculations made under
paragraph (2) be reported to the Division by the board
performing the calculation, together with documentation of
the creditable service to be transferred, the amounts of
contributions and interest to be transferred, the manner
in which the calculation was performed, the numbers relied
upon in making the calculation, the results of the
calculation, and any other information the Division may
deem useful.
(e)(1) Creditable service also includes periods of
service originally established in the Fund established
under Article 7 of this Code for which the contributions
have been transferred under Section 7-139.11.
(2) If the board of the pension fund to which
creditable service and related contributions are
transferred under Section 7-139.11 determines that the
amount transferred is less than the true cost to the
pension fund of allowing that creditable service to be
established, then the amount of creditable service the
police officer may establish under this subsection (e)
shall be reduced by an amount equal to the difference, as
determined by the board in accordance with the rules and
procedures adopted under paragraph (3) of this subsection.
(3) The Public Pension Division of the Department of
Insurance Financial and Professional Regulation shall
establish by rule the manner of making the calculation
required under paragraph (2) of this subsection, taking
into account the appropriate actuarial assumptions; the
police officer's service, age, and salary history; the
level of funding of the pension fund to which the credits
are being transferred; and any other factors that the
Division determines to be relevant. The rules may require
that all calculations made under paragraph (2) be reported
to the Division by the board performing the calculation,
together with documentation of the creditable service to
be transferred, the amounts of contributions and interest
to be transferred, the manner in which the calculation was
performed, the numbers relied upon in making the
calculation, the results of the calculation, and any other
information the Division may deem useful.
(4) Until January 1, 2010, a police officer who
transferred service from the Fund established under
Article 7 of this Code under the provisions of Public Act
94-356 may establish additional credit, but only for the
amount of the service credit reduction in that transfer,
as calculated under paragraph (3) of this subsection (e).
This credit may be established upon payment by the police
officer of an amount to be determined by the board, equal
to (1) the amount that would have been contributed as
employee and employer contributions had all of the service
been as an employee under this Article, plus interest
thereon at the rate of 6% per year, compounded annually
from the date of service to the date of transfer, less (2)
the total amount transferred from the Article 7 Fund, plus
(3) interest on the difference at the rate of 6% per year,
compounded annually, from the date of the transfer to the
date of payment. The additional service credit is allowed
under this amendatory Act of the 95th General Assembly
notwithstanding the provisions of Article 7 terminating
all transferred credits on the date of transfer.
(Source: P.A. 96-297, eff. 8-11-09; 96-1260, eff. 7-23-10;
97-651, eff. 1-5-12.)
(40 ILCS 5/4-108) (from Ch. 108 1/2, par. 4-108)
Sec. 4-108. Creditable service.
(a) Creditable service is the time served as a firefighter
of a municipality. In computing creditable service, furloughs
and leaves of absence without pay exceeding 30 days in any one
year shall not be counted, but leaves of absence for illness or
accident regardless of length, and periods of disability for
which a firefighter received no disability pension payments
under this Article, shall be counted.
(b) Furloughs and leaves of absence of 30 days or less in
any one year may be counted as creditable service, if the
firefighter makes the contribution to the fund that would have
been required had he or she not been on furlough or leave of
absence. To qualify for this creditable service, the
firefighter must pay the required contributions to the fund
not more than 90 days subsequent to the termination of the
furlough or leave of absence, to the extent that the
municipality has not made such contribution on his or her
behalf.
(c) Creditable service includes:
(1) Service in the military, naval or air forces of
the United States entered upon when the person was an
active firefighter, provided that, upon applying for a
permanent pension, and in accordance with the rules of the
board the firefighter pays into the fund the amount that
would have been contributed had he or she been a regular
contributor during such period of service, if and to the
extent that the municipality which the firefighter served
made no such contributions in his or her behalf. The total
amount of such creditable service shall not exceed 5
years, except that any firefighter who on July 1, 1973 had
more than 5 years of such creditable service shall receive
the total amount thereof as of that date.
(1.5) Up to 24 months of service in the military,
naval, or air forces of the United States that was served
prior to employment by a municipality or fire protection
district as a firefighter. To receive the credit for the
military service prior to the employment as a firefighter,
the firefighter must apply in writing to the fund and must
make contributions to the fund equal to (i) the employee
contributions that would have been required had the
service been rendered as a member, plus (ii) an amount
determined by the fund to be equal to the employer's
normal cost of the benefits accrued for that military
service, plus (iii) interest at the actuarially assumed
rate provided by the Public Pension Division of the
Department of Insurance Financial and Professional
Regulation, compounded annually from the first date of
membership in the fund to the date of payment on items (i)
and (ii). The changes to this paragraph (1.5) by this
amendatory Act of the 95th General Assembly apply only to
participating employees in service on or after its
effective date.
(2) Service prior to July 1, 1976 by a firefighter
initially excluded from participation by reason of age who
elected to participate and paid the required contributions
for such service.
(3) Up to 8 years of service by a firefighter as an
officer in a statewide firefighters' association when he
is on a leave of absence from a municipality's payroll,
provided that (i) the firefighter has at least 10 years of
creditable service as an active firefighter, (ii) the
firefighter contributes to the fund the amount that he
would have contributed had he remained an active member of
the fund, (iii) the employee or statewide firefighter
association contributes to the fund an amount equal to the
employer's required contribution as determined by the
board, and (iv) for all leaves of absence under this
subdivision (3), including those beginning before the
effective date of this amendatory Act of the 97th General
Assembly, the firefighter continues to remain in sworn
status, subject to the professional standards of the
public employer or those terms established in statute.
(4) Time spent as an on-call fireman for a
municipality, calculated at the rate of one year of
creditable service for each 5 years of time spent as an
on-call fireman, provided that (i) the firefighter has at
least 18 years of creditable service as an active
firefighter, (ii) the firefighter spent at least 14 years
as an on-call firefighter for the municipality, (iii) the
firefighter applies for such creditable service within 30
days after the effective date of this amendatory Act of
1989, (iv) the firefighter contributes to the Fund an
amount representing employee contributions for the number
of years of creditable service granted under this
subdivision (4), based on the salary and contribution rate
in effect for the firefighter at the date of entry into the
Fund, to be determined by the board, and (v) not more than
3 years of creditable service may be granted under this
subdivision (4).
Except as provided in Section 4-108.5, creditable
service shall not include time spent as a volunteer
firefighter, whether or not any compensation was received
therefor. The change made in this Section by Public Act
83-0463 is intended to be a restatement and clarification
of existing law, and does not imply that creditable
service was previously allowed under this Article for time
spent as a volunteer firefighter.
(5) Time served between July 1, 1976 and July 1, 1988
in the position of protective inspection officer or
administrative assistant for fire services, for a
municipality with a population under 10,000 that is
located in a county with a population over 3,000,000 and
that maintains a firefighters' pension fund under this
Article, if the position included firefighting duties,
notwithstanding that the person may not have held an
appointment as a firefighter, provided that application is
made to the pension fund within 30 days after the
effective date of this amendatory Act of 1991, and the
corresponding contributions are paid for the number of
years of service granted, based upon the salary and
contribution rate in effect for the firefighter at the
date of entry into the pension fund, as determined by the
Board.
(6) Service before becoming a participant by a
firefighter initially excluded from participation by
reason of age who becomes a participant under the
amendment to Section 4-107 made by this amendatory Act of
1993 and pays the required contributions for such service.
(7) Up to 3 years of time during which the firefighter
receives a disability pension under Section 4-110,
4-110.1, or 4-111, provided that (i) the firefighter
returns to active service after the disability for a
period at least equal to the period for which credit is to
be established and (ii) the firefighter makes
contributions to the fund based on the rates specified in
Section 4-118.1 and the salary upon which the disability
pension is based. These contributions may be paid at any
time prior to the commencement of a retirement pension.
The firefighter may, but need not, elect to have the
contributions deducted from the disability pension or to
pay them in installments on a schedule approved by the
board. If not deducted from the disability pension, the
contributions shall include interest at the rate of 6% per
year, compounded annually, from the date for which service
credit is being established to the date of payment. If
contributions are paid under this subdivision (c)(7) in
excess of those needed to establish the credit, the excess
shall be refunded. This subdivision (c)(7) applies to
persons receiving a disability pension under Section
4-110, 4-110.1, or 4-111 on the effective date of this
amendatory Act of the 91st General Assembly, as well as
persons who begin to receive such a disability pension
after that date.
(8) Up to 6 years of service as a police officer and
participant in an Article 3 police pension fund
administered by the unit of local government that employs
the firefighter under this Article, provided that the
service has been transferred to, and the required payment
received by, the Article 4 fund in accordance with
subsection (a) of Section 3-110.12 of this Code.
(9) Up to 8 years of service as a police officer and
participant in an Article 3 police pension fund
administered by a unit of local government, provided that
the service has been transferred to, and the required
payment received by, the Article 4 fund in accordance with
subsection (a-5) of Section 3-110.12 of this Code.
(Source: P.A. 102-63, eff. 7-9-21.)
(40 ILCS 5/4-109.3)
Sec. 4-109.3. Employee creditable service.
(a) As used in this Section:
"Final monthly salary" means the monthly salary attached
to the rank held by the firefighter at the time of his or her
last withdrawal from service under a particular pension fund.
"Last pension fund" means the pension fund in which the
firefighter was participating at the time of his or her last
withdrawal from service.
(b) The benefits provided under this Section are available
only to a firefighter who:
(1) is a firefighter at the time of withdrawal from
the last pension fund and for at least the final 3 years of
employment prior to that withdrawal;
(2) has established service credit with at least one
pension fund established under this Article other than the
last pension fund;
(3) has a total of at least 20 years of service under
the various pension funds established under this Article
and has attained age 50; and
(4) is in service on or after the effective date of
this amendatory Act of the 93rd General Assembly.
(c) A firefighter who is eligible for benefits under this
Section may elect to receive a retirement pension from each
pension fund under this Article in which the firefighter has
at least one year of service credit but has not received a
refund under Section 4-116 (unless the firefighter repays that
refund under subsection (g)) or subsection (c) of Section
4-118.1, by applying in writing and paying the contribution
required under subsection (i).
(d) From each such pension fund other than the last
pension fund, in lieu of any retirement pension otherwise
payable under this Article, a firefighter to whom this Section
applies may elect to receive a monthly pension of 1/12th of
2.5% of his or her final monthly salary under that fund for
each month of service in that fund, subject to a maximum of 75%
of that final monthly salary.
(e) From the last pension fund, in lieu of any retirement
pension otherwise payable under this Article, a firefighter to
whom this Section applies may elect to receive a monthly
pension calculated as follows:
The last pension fund shall calculate the retirement
pension that would be payable to the firefighter under Section
4-109 as if he or she had participated in that last pension
fund during his or her entire period of service under all
pension funds established under this Article (excluding any
period of service for which the firefighter has received a
refund under Section 4-116, unless the firefighter repays that
refund under subsection (g), or for which the firefighter has
received a refund under subsection (c) of Section 4-118.1).
From this hypothetical pension there shall be subtracted the
original amounts of the retirement pensions payable to the
firefighter by all other pension funds under subsection (d).
The remainder is the retirement pension payable to the
firefighter by the last pension fund under this subsection
(e).
(f) Pensions elected under this Section shall be subject
to increases as provided in Section 4-109.1.
(g) A current firefighter may reinstate creditable service
in a pension fund established under this Article that was
terminated upon receipt of a refund, by payment to that
pension fund of the amount of the refund together with
interest thereon at the rate of 6% per year, compounded
annually, from the date of the refund to the date of payment. A
repayment of a refund under this Section may be made in equal
installments over a period of up to 10 years, but must be paid
in full prior to retirement.
(h) As a condition of being eligible for the benefits
provided in this Section, a person who is hired to a position
as a firefighter on or after July 1, 2004 must, within 21
months after being hired, notify the new employer, all of his
or her previous employers under this Article, and the Public
Pension Division of the Department Division of Insurance of
the Department of Financial and Professional Regulation of his
or her intent to receive the benefits provided under this
Section.
As a condition of being eligible for the benefits provided
in this Section, a person who first becomes a firefighter
under this Article after December 31, 2010 must (1) within 21
months after being hired or within 21 months after the
effective date of this amendatory Act of the 102nd General
Assembly, whichever is later, notify the new employer, all of
his or her previous employers under this Article, and the
Public Pension Division of the Department of Insurance of his
or her intent to receive the benefits provided under this
Section; and (2) make the required contributions with
applicable interest. A person who first becomes a firefighter
under this Article after December 31, 2010 and who, before the
effective date of this amendatory Act of the 102nd General
Assembly, notified the new employer, all of his or her
previous employers under this Article, and the Public Pension
Division of the Department of Insurance of his or her intent to
receive the benefits provided under this Section shall be
deemed to have met the notice requirement under item (1) of the
preceding sentence. The changes made to this Section by this
amendatory Act of the 102nd General Assembly apply
retroactively, notwithstanding Section 1-103.1.
(i) In order to receive a pension under this Section or an
occupational disease disability pension for which he or she
becomes eligible due to the application of subsection (m) of
this Section, a firefighter must pay to each pension fund from
which he or she has elected to receive a pension under this
Section a contribution equal to 1% of monthly salary for each
month of service credit that the firefighter has in that fund
(other than service credit for which the firefighter has
already paid the additional contribution required under
subsection (c) of Section 4-118.1), together with interest
thereon at the rate of 6% per annum, compounded annually, from
the firefighter's first day of employment with that fund or
the first day of the fiscal year of that fund that immediately
precedes the firefighter's first day of employment with that
fund, whichever is earlier.
In order for a firefighter who, as of the effective date of
this amendatory Act of the 93rd General Assembly, has not
begun to receive a pension under this Section or an
occupational disease disability pension under subsection (m)
of this Section and who has contributed 1/12th of 1% of monthly
salary for each month of service credit that the firefighter
has in that fund (other than service credit for which the
firefighter has already paid the additional contribution
required under subsection (c) of Section 4-118.1), together
with the required interest thereon, to receive a pension under
this Section or an occupational disease disability pension for
which he or she becomes eligible due to the application of
subsection (m) of this Section, the firefighter must, within
one year after the effective date of this amendatory Act of the
93rd General Assembly, make an additional contribution equal
to 11/12ths of 1% of monthly salary for each month of service
credit that the firefighter has in that fund (other than
service credit for which the firefighter has already paid the
additional contribution required under subsection (c) of
Section 4-118.1), together with interest thereon at the rate
of 6% per annum, compounded annually, from the firefighter's
first day of employment with that fund or the first day of the
fiscal year of that fund that immediately precedes the
firefighter's first day of employment with the fund, whichever
is earlier. A firefighter who, as of the effective date of this
amendatory Act of the 93rd General Assembly, has not begun to
receive a pension under this Section or an occupational
disease disability pension under subsection (m) of this
Section and who has contributed 1/12th of 1% of monthly salary
for each month of service credit that the firefighter has in
that fund (other than service credit for which the firefighter
has already paid the additional contribution required under
subsection (c) of Section 4-118.1), together with the required
interest thereon, in order to receive a pension under this
Section or an occupational disease disability pension under
subsection (m) of this Section, may elect, within one year
after the effective date of this amendatory Act of the 93rd
General Assembly to forfeit the benefits provided under this
Section and receive a refund of that contribution.
(j) A retired firefighter who is receiving pension
payments under Section 4-109 may reenter active service under
this Article. Subject to the provisions of Section 4-117, the
firefighter may receive credit for service performed after the
reentry if the firefighter (1) applies to receive credit for
that service, (2) suspends his or her pensions under this
Section, and (3) makes the contributions required under
subsection (i).
(k) A firefighter who is newly hired or promoted to a
position as a firefighter shall not be denied participation in
a fund under this Article based on his or her age.
(l) If a firefighter who elects to make contributions
under subsection (c) of Section 4-118.1 for the pension
benefits provided under this Section becomes entitled to a
disability pension under Section 4-110, the last pension fund
is responsible to pay that disability pension and the amount
of that disability pension shall be based only on the
firefighter's service with the last pension fund.
(m) Notwithstanding any provision in Section 4-110.1 to
the contrary, if a firefighter who elects to make
contributions under subsection (c) of Section 4-118.1 for the
pension benefits provided under this Section becomes entitled
to an occupational disease disability pension under Section
4-110.1, each pension fund to which the firefighter has made
contributions under subsection (c) of Section 4-118.1 must pay
a portion of that occupational disease disability pension
equal to the proportion that the firefighter's service credit
with that pension fund for which the contributions under
subsection (c) of Section 4-118.1 have been made bears to the
firefighter's total service credit with all of the pension
funds for which the contributions under subsection (c) of
Section 4-118.1 have been made. A firefighter who has made
contributions under subsection (c) of Section 4-118.1 for at
least 5 years of creditable service shall be deemed to have met
the 5-year creditable service requirement under Section
4-110.1, regardless of whether the firefighter has 5 years of
creditable service with the last pension fund.
(n) If a firefighter who elects to make contributions
under subsection (c) of Section 4-118.1 for the pension
benefits provided under this Section becomes entitled to a
disability pension under Section 4-111, the last pension fund
is responsible to pay that disability pension, provided that
the firefighter has at least 7 years of creditable service
with the last pension fund. In the event a firefighter began
employment with a new employer as a result of an
intergovernmental agreement that resulted in the elimination
of the previous employer's fire department, the firefighter
shall not be required to have 7 years of creditable service
with the last pension fund to qualify for a disability pension
under Section 4-111. Under this circumstance, a firefighter
shall be required to have 7 years of total combined creditable
service time to qualify for a disability pension under Section
4-111. The disability pension received pursuant to this
Section shall be paid by the previous employer and new
employer in proportion to the firefighter's years of service
with each employer.
(Source: P.A. 102-81, eff. 7-9-21.)
(40 ILCS 5/18-169)
Sec. 18-169. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly.
(b) Notwithstanding any other provision of this Code or
any subsequent amendment to this Code, every new benefit
increase is subject to this Section and shall be deemed to be
granted only in conformance with and contingent upon
compliance with the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of
the Department of Insurance Financial and Professional
Regulation. A new benefit increase created by a Public Act
that does not include the additional funding required under
this subsection is null and void. If the Public Pension
Division determines that the additional funding provided for a
new benefit increase under this subsection is or has become
inadequate, it may so certify to the Governor and the State
Comptroller and, in the absence of corrective action by the
General Assembly, the new benefit increase shall expire at the
end of the fiscal year in which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/22-1004)
Sec. 22-1004. Commission on Government Forecasting and
Accountability report on Articles 3 and 4 funds. Each odd
numbered year, the Commission on Government Forecasting and
Accountability shall analyze data submitted by the Public
Pension Division of the Illinois Department of Insurance
Financial and Professional Regulation pertaining to the
pension systems established under Article 3 and Article 4 of
this Code. The Commission shall issue a formal report during
such years, the content of which is, to the extent
practicable, to be similar in nature to that required under
Section 22-1003. In addition to providing aggregate analyses
of both systems, the report shall analyze the fiscal status
and provide forecasting projections for selected individual
funds in each system. To the fullest extent practicable, the
report shall analyze factors that affect each selected
individual fund's unfunded liability and any actuarial gains
and losses caused by salary increases, investment returns,
employer contributions, benefit increases, change in
assumptions, the difference in employer contributions and the
normal cost plus interest, and any other applicable factors.
In analyzing net investment returns, the report shall analyze
the assumed investment return compared to the actual
investment return over the preceding 10 fiscal years. The
Public Pension Division of the Department of Insurance
Financial and Professional Regulation shall provide to the
Commission any assistance that the Commission may request with
respect to its report under this Section.
(Source: P.A. 95-950, eff. 8-29-08.)
Section 10. The Illinois Insurance Code is amended by
changing Sections 143.20a, 155.18, 155.19, 155.36, 155.49,
370c, 412, 500-140, and 1204 as follows:
(215 ILCS 5/143.20a) (from Ch. 73, par. 755.20a)
Sec. 143.20a. Cancellation of Fire and Marine Policies.
(1) Policies covering property, except policies described in
subsection (b) of Section 143.13 143.13b, of this Code, issued
for the kinds of business enumerated in Class 3 of Section 4 of
this Code may be cancelled 10 days following receipt of
written notice by the named insureds if the insured property
is found to consist of one or more of the following:
(a) Buildings to which, following a fire loss, permanent
repairs have not commenced within 60 days after satisfactory
adjustment of loss, unless such delay is a direct result of a
labor dispute or weather conditions.
(b) Buildings which have been unoccupied 60 consecutive
days, except buildings which have a seasonal occupancy and
buildings which are undergoing construction, repair or
reconstruction and are properly secured against unauthorized
entry.
(c) Buildings on which, because of their physical
condition, there is an outstanding order to vacate, an
outstanding demolition order, or which have been declared
unsafe in accordance with applicable law.
(d) Buildings on which heat, water, sewer service or
public lighting have not been connected for 30 consecutive
days or more.
(2) All notices of cancellation under this Section shall
be sent by certified mail and regular mail to the address of
record of the named insureds.
(3) All cancellations made pursuant to this Section shall
be on a pro rata basis.
(Source: P.A. 86-437.)
(215 ILCS 5/155.18) (from Ch. 73, par. 767.18)
(Text of Section WITHOUT the changes made by P.A. 94-677,
which has been held unconstitutional)
Sec. 155.18. (a) This Section shall apply to insurance on
risks based upon negligence by a physician, hospital or other
health care provider, referred to herein as medical liability
insurance. This Section shall not apply to contracts of
reinsurance, nor to any farm, county, district or township
mutual insurance company transacting business under an Act
entitled "An Act relating to local mutual district, county and
township insurance companies", approved March 13, 1936, as now
or hereafter amended, nor to any such company operating under
a special charter.
(b) The following standards shall apply to the making and
use of rates pertaining to all classes of medical liability
insurance:
(1) Rates shall not be excessive or inadequate, as
herein defined, nor shall they be unfairly discriminatory.
No rate shall be held to be excessive unless such rate is
unreasonably high for the insurance provided, and a
reasonable degree of competition does not exist in the
area with respect to the classification to which such rate
is applicable.
No rate shall be held inadequate unless it is
unreasonably low for the insurance provided and continued
use of it would endanger solvency of the company.
(2) Consideration shall be given, to the extent
applicable, to past and prospective loss experience within
and outside this State, to a reasonable margin for
underwriting profit and contingencies, to past and
prospective expenses both countrywide and those especially
applicable to this State, and to all other factors,
including judgment factors, deemed relevant within and
outside this State.
Consideration may also be given in the making and use
of rates to dividends, savings or unabsorbed premium
deposits allowed or returned by companies to their
policyholders, members or subscribers.
(3) The systems of expense provisions included in the
rates for use by any company or group of companies may
differ from those of other companies or groups of
companies to reflect the operating methods of any such
company or group with respect to any kind of insurance, or
with respect to any subdivision or combination thereof.
(4) Risks may be grouped by classifications for the
establishment of rates and minimum premiums.
Classification rates may be modified to produce rates for
individual risks in accordance with rating plans which
establish standards for measuring variations in hazards or
expense provisions, or both. Such standards may measure
any difference among risks that have a probable effect
upon losses or expenses. Such classifications or
modifications of classifications of risks may be
established based upon size, expense, management,
individual experience, location or dispersion of hazard,
or any other reasonable considerations and shall apply to
all risks under the same or substantially the same
circumstances or conditions. The rate for an established
classification should be related generally to the
anticipated loss and expense factors of the class.
(c) Every company writing medical liability insurance
shall file with the Director of Insurance the rates and rating
schedules it uses for medical liability insurance.
(1) This filing shall occur at least annually and as
often as the rates are changed or amended.
(2) For the purposes of this Section any change in
premium to the company's insureds as a result of a change
in the company's base rates or a change in its increased
limits factors shall constitute a change in rates and
shall require a filing with the Director.
(3) It shall be certified in such filing by an officer of
the company and a qualified actuary that the company's rates
are based on sound actuarial principles and are not
inconsistent with the company's experience.
(d) If after a hearing the Director finds:
(1) that any rate, rating plan or rating system
violates the provisions of this Section applicable to it,
he may issue an order to the company which has been the
subject of the hearing specifying in what respects such
violation exists and stating when, within a reasonable
period of time, the further use of such rate or rating
system by such company in contracts of insurance made
thereafter shall be prohibited;
(2) that the violation of any of the provisions of
this Section applicable to it by any company which has
been the subject of hearing was wilful, he may suspend or
revoke, in whole or in part, the certificate of authority
of such company with respect to the class of insurance
which has been the subject of the hearing.
(Source: P.A. 79-1434.)
(215 ILCS 5/155.19) (from Ch. 73, par. 767.19)
(Text of Section WITHOUT the changes made by P.A. 94-677,
which has been held unconstitutional)
Sec. 155.19. All claims filed after December 31, 1976 with
any insurer and all suits filed after December 31, 1976 in any
court in this State, alleging liability on the part of any
physician, hospital or other health care provider for
medically related injuries, shall be reported to the Director
of Insurance in such form and under such terms and conditions
as may be prescribed by the Director. The Director shall
maintain complete and accurate records of all such claims and
suits including their nature, amount, disposition and other
information as he may deem useful or desirable in observing
and reporting on health care provider liability trends in this
State. The Director shall release to appropriate disciplinary
and licensing agencies any such data or information which may
assist such agencies in improving the quality of health care
or which may be useful to such agencies for the purpose of
professional discipline.
With due regard for appropriate maintenance of the
confidentiality thereof, the Director may release from time to
time to the Governor, the General Assembly and the general
public statistical reports based on such data and information.
The Director may promulgate such rules and regulations as
may be necessary to carry out the provisions of this Section.
(Source: P.A. 79-1434.)
(215 ILCS 5/155.36)
Sec. 155.36. Managed Care Reform and Patient Rights Act.
Insurance companies that transact the kinds of insurance
authorized under Class 1(b) or Class 2(a) of Section 4 of this
Code shall comply with Sections 25, 45, 45.1, 45.2, 45.3, 65,
70, and 85, subsection (d) of Section 30, and the definition of
the term "emergency medical condition" in Section 10 of the
Managed Care Reform and Patient Rights Act.
(Source: P.A. 101-608, eff. 1-1-20; 102-409, eff. 1-1-22.)
(215 ILCS 5/155.49 new)
Sec. 155.49. Insurance company supplier diversity report.
(a) Every company authorized to do business in this State
or accredited by this State with assets of at least
$50,000,000 shall submit a 2-page report on its voluntary
supplier diversity program, or the company's procurement
program if there is no supplier diversity program, to the
Department. The report shall set forth all of the following:
(1) The name, address, phone number, and email address
of the point of contact for the supplier diversity program
for vendors to register with the program.
(2) Local and State certifications the company accepts
or recognizes for minority-owned, women-owned, LGBT-owned,
or veteran-owned business status.
(3) On the second page, a narrative explaining the
results of the program and the tactics to be employed to
achieve the goals of its voluntary supplier diversity
program.
(4) The voluntary goals for the calendar year for
which the report is made in each category for the entire
budget of the company and the commodity codes or a
description of particular goods and services for the area
of procurement in which the company expects most of those
goals to focus on in that year.
Each company is required to submit a searchable report, in
Portable Document Format (PDF), to the Department on or before
April 1, 2024 and on or before April 1 every year thereafter.
(b) For each report submitted under subsection (a), the
Department shall publish the results on its Internet website
for 5 years after submission. The Department is not
responsible for collecting the reports or for the content of
the reports.
(c) The Department shall hold an annual insurance company
supplier diversity workshop in July of 2024 and every July
thereafter to discuss the reports with representatives of the
companies and vendors.
(d) The Department shall prepare a one-page template, not
including the narrative section, for the voluntary supplier
diversity reports.
(e) The Department may adopt such rules as it deems
necessary to implement this Section.
(215 ILCS 5/370c) (from Ch. 73, par. 982c)
Sec. 370c. Mental and emotional disorders.
(a)(1) On and after January 1, 2022 (the effective date of
Public Act 102-579), every insurer that amends, delivers,
issues, or renews group accident and health policies providing
coverage for hospital or medical treatment or services for
illness on an expense-incurred basis shall provide coverage
for the medically necessary treatment of mental, emotional,
nervous, or substance use disorders or conditions consistent
with the parity requirements of Section 370c.1 of this Code.
(2) Each insured that is covered for mental, emotional,
nervous, or substance use disorders or conditions shall be
free to select the physician licensed to practice medicine in
all its branches, licensed clinical psychologist, licensed
clinical social worker, licensed clinical professional
counselor, licensed marriage and family therapist, licensed
speech-language pathologist, or other licensed or certified
professional at a program licensed pursuant to the Substance
Use Disorder Act of his or her choice to treat such disorders,
and the insurer shall pay the covered charges of such
physician licensed to practice medicine in all its branches,
licensed clinical psychologist, licensed clinical social
worker, licensed clinical professional counselor, licensed
marriage and family therapist, licensed speech-language
pathologist, or other licensed or certified professional at a
program licensed pursuant to the Substance Use Disorder Act up
to the limits of coverage, provided (i) the disorder or
condition treated is covered by the policy, and (ii) the
physician, licensed psychologist, licensed clinical social
worker, licensed clinical professional counselor, licensed
marriage and family therapist, licensed speech-language
pathologist, or other licensed or certified professional at a
program licensed pursuant to the Substance Use Disorder Act is
authorized to provide said services under the statutes of this
State and in accordance with accepted principles of his or her
profession.
(3) Insofar as this Section applies solely to licensed
clinical social workers, licensed clinical professional
counselors, licensed marriage and family therapists, licensed
speech-language pathologists, and other licensed or certified
professionals at programs licensed pursuant to the Substance
Use Disorder Act, those persons who may provide services to
individuals shall do so after the licensed clinical social
worker, licensed clinical professional counselor, licensed
marriage and family therapist, licensed speech-language
pathologist, or other licensed or certified professional at a
program licensed pursuant to the Substance Use Disorder Act
has informed the patient of the desirability of the patient
conferring with the patient's primary care physician.
(4) "Mental, emotional, nervous, or substance use disorder
or condition" means a condition or disorder that involves a
mental health condition or substance use disorder that falls
under any of the diagnostic categories listed in the mental
and behavioral disorders chapter of the current edition of the
World Health Organization's International Classification of
Disease or that is listed in the most recent version of the
American Psychiatric Association's Diagnostic and Statistical
Manual of Mental Disorders. "Mental, emotional, nervous, or
substance use disorder or condition" includes any mental
health condition that occurs during pregnancy or during the
postpartum period and includes, but is not limited to,
postpartum depression.
(5) Medically necessary treatment and medical necessity
determinations shall be interpreted and made in a manner that
is consistent with and pursuant to subsections (h) through
(t).
(b)(1) (Blank).
(2) (Blank).
(2.5) (Blank).
(3) Unless otherwise prohibited by federal law and
consistent with the parity requirements of Section 370c.1 of
this Code, the reimbursing insurer that amends, delivers,
issues, or renews a group or individual policy of accident and
health insurance, a qualified health plan offered through the
health insurance marketplace, or a provider of treatment of
mental, emotional, nervous, or substance use disorders or
conditions shall furnish medical records or other necessary
data that substantiate that initial or continued treatment is
at all times medically necessary. An insurer shall provide a
mechanism for the timely review by a provider holding the same
license and practicing in the same specialty as the patient's
provider, who is unaffiliated with the insurer, jointly
selected by the patient (or the patient's next of kin or legal
representative if the patient is unable to act for himself or
herself), the patient's provider, and the insurer in the event
of a dispute between the insurer and patient's provider
regarding the medical necessity of a treatment proposed by a
patient's provider. If the reviewing provider determines the
treatment to be medically necessary, the insurer shall provide
reimbursement for the treatment. Future contractual or
employment actions by the insurer regarding the patient's
provider may not be based on the provider's participation in
this procedure. Nothing prevents the insured from agreeing in
writing to continue treatment at his or her expense. When
making a determination of the medical necessity for a
treatment modality for mental, emotional, nervous, or
substance use disorders or conditions, an insurer must make
the determination in a manner that is consistent with the
manner used to make that determination with respect to other
diseases or illnesses covered under the policy, including an
appeals process. Medical necessity determinations for
substance use disorders shall be made in accordance with
appropriate patient placement criteria established by the
American Society of Addiction Medicine. No additional criteria
may be used to make medical necessity determinations for
substance use disorders.
(4) A group health benefit plan amended, delivered,
issued, or renewed on or after January 1, 2019 (the effective
date of Public Act 100-1024) or an individual policy of
accident and health insurance or a qualified health plan
offered through the health insurance marketplace amended,
delivered, issued, or renewed on or after January 1, 2019 (the
effective date of Public Act 100-1024):
(A) shall provide coverage based upon medical
necessity for the treatment of a mental, emotional,
nervous, or substance use disorder or condition consistent
with the parity requirements of Section 370c.1 of this
Code; provided, however, that in each calendar year
coverage shall not be less than the following:
(i) 45 days of inpatient treatment; and
(ii) beginning on June 26, 2006 (the effective
date of Public Act 94-921), 60 visits for outpatient
treatment including group and individual outpatient
treatment; and
(iii) for plans or policies delivered, issued for
delivery, renewed, or modified after January 1, 2007
(the effective date of Public Act 94-906), 20
additional outpatient visits for speech therapy for
treatment of pervasive developmental disorders that
will be in addition to speech therapy provided
pursuant to item (ii) of this subparagraph (A); and
(B) may not include a lifetime limit on the number of
days of inpatient treatment or the number of outpatient
visits covered under the plan.
(C) (Blank).
(5) An issuer of a group health benefit plan or an
individual policy of accident and health insurance or a
qualified health plan offered through the health insurance
marketplace may not count toward the number of outpatient
visits required to be covered under this Section an outpatient
visit for the purpose of medication management and shall cover
the outpatient visits under the same terms and conditions as
it covers outpatient visits for the treatment of physical
illness.
(5.5) An individual or group health benefit plan amended,
delivered, issued, or renewed on or after September 9, 2015
(the effective date of Public Act 99-480) shall offer coverage
for medically necessary acute treatment services and medically
necessary clinical stabilization services. The treating
provider shall base all treatment recommendations and the
health benefit plan shall base all medical necessity
determinations for substance use disorders in accordance with
the most current edition of the Treatment Criteria for
Addictive, Substance-Related, and Co-Occurring Conditions
established by the American Society of Addiction Medicine. The
treating provider shall base all treatment recommendations and
the health benefit plan shall base all medical necessity
determinations for medication-assisted treatment in accordance
with the most current Treatment Criteria for Addictive,
Substance-Related, and Co-Occurring Conditions established by
the American Society of Addiction Medicine.
As used in this subsection:
"Acute treatment services" means 24-hour medically
supervised addiction treatment that provides evaluation and
withdrawal management and may include biopsychosocial
assessment, individual and group counseling, psychoeducational
groups, and discharge planning.
"Clinical stabilization services" means 24-hour treatment,
usually following acute treatment services for substance
abuse, which may include intensive education and counseling
regarding the nature of addiction and its consequences,
relapse prevention, outreach to families and significant
others, and aftercare planning for individuals beginning to
engage in recovery from addiction.
(6) An issuer of a group health benefit plan may provide or
offer coverage required under this Section through a managed
care plan.
(6.5) An individual or group health benefit plan amended,
delivered, issued, or renewed on or after January 1, 2019 (the
effective date of Public Act 100-1024):
(A) shall not impose prior authorization requirements,
other than those established under the Treatment Criteria
for Addictive, Substance-Related, and Co-Occurring
Conditions established by the American Society of
Addiction Medicine, on a prescription medication approved
by the United States Food and Drug Administration that is
prescribed or administered for the treatment of substance
use disorders;
(B) shall not impose any step therapy requirements,
other than those established under the Treatment Criteria
for Addictive, Substance-Related, and Co-Occurring
Conditions established by the American Society of
Addiction Medicine, before authorizing coverage for a
prescription medication approved by the United States Food
and Drug Administration that is prescribed or administered
for the treatment of substance use disorders;
(C) shall place all prescription medications approved
by the United States Food and Drug Administration
prescribed or administered for the treatment of substance
use disorders on, for brand medications, the lowest tier
of the drug formulary developed and maintained by the
individual or group health benefit plan that covers brand
medications and, for generic medications, the lowest tier
of the drug formulary developed and maintained by the
individual or group health benefit plan that covers
generic medications; and
(D) shall not exclude coverage for a prescription
medication approved by the United States Food and Drug
Administration for the treatment of substance use
disorders and any associated counseling or wraparound
services on the grounds that such medications and services
were court ordered.
(7) (Blank).
(8) (Blank).
(9) With respect to all mental, emotional, nervous, or
substance use disorders or conditions, coverage for inpatient
treatment shall include coverage for treatment in a
residential treatment center certified or licensed by the
Department of Public Health or the Department of Human
Services.
(c) This Section shall not be interpreted to require
coverage for speech therapy or other habilitative services for
those individuals covered under Section 356z.15 of this Code.
(d) With respect to a group or individual policy of
accident and health insurance or a qualified health plan
offered through the health insurance marketplace, the
Department and, with respect to medical assistance, the
Department of Healthcare and Family Services shall each
enforce the requirements of this Section and Sections 356z.23
and 370c.1 of this Code, the Paul Wellstone and Pete Domenici
Mental Health Parity and Addiction Equity Act of 2008, 42
U.S.C. 18031(j), and any amendments to, and federal guidance
or regulations issued under, those Acts, including, but not
limited to, final regulations issued under the Paul Wellstone
and Pete Domenici Mental Health Parity and Addiction Equity
Act of 2008 and final regulations applying the Paul Wellstone
and Pete Domenici Mental Health Parity and Addiction Equity
Act of 2008 to Medicaid managed care organizations, the
Children's Health Insurance Program, and alternative benefit
plans. Specifically, the Department and the Department of
Healthcare and Family Services shall take action:
(1) proactively ensuring compliance by individual and
group policies, including by requiring that insurers
submit comparative analyses, as set forth in paragraph (6)
of subsection (k) of Section 370c.1, demonstrating how
they design and apply nonquantitative treatment
limitations, both as written and in operation, for mental,
emotional, nervous, or substance use disorder or condition
benefits as compared to how they design and apply
nonquantitative treatment limitations, as written and in
operation, for medical and surgical benefits;
(2) evaluating all consumer or provider complaints
regarding mental, emotional, nervous, or substance use
disorder or condition coverage for possible parity
violations;
(3) performing parity compliance market conduct
examinations or, in the case of the Department of
Healthcare and Family Services, parity compliance audits
of individual and group plans and policies, including, but
not limited to, reviews of:
(A) nonquantitative treatment limitations,
including, but not limited to, prior authorization
requirements, concurrent review, retrospective review,
step therapy, network admission standards,
reimbursement rates, and geographic restrictions;
(B) denials of authorization, payment, and
coverage; and
(C) other specific criteria as may be determined
by the Department.
The findings and the conclusions of the parity compliance
market conduct examinations and audits shall be made public.
The Director may adopt rules to effectuate any provisions
of the Paul Wellstone and Pete Domenici Mental Health Parity
and Addiction Equity Act of 2008 that relate to the business of
insurance.
(e) Availability of plan information.
(1) The criteria for medical necessity determinations
made under a group health plan, an individual policy of
accident and health insurance, or a qualified health plan
offered through the health insurance marketplace with
respect to mental health or substance use disorder
benefits (or health insurance coverage offered in
connection with the plan with respect to such benefits)
must be made available by the plan administrator (or the
health insurance issuer offering such coverage) to any
current or potential participant, beneficiary, or
contracting provider upon request.
(2) The reason for any denial under a group health
benefit plan, an individual policy of accident and health
insurance, or a qualified health plan offered through the
health insurance marketplace (or health insurance coverage
offered in connection with such plan or policy) of
reimbursement or payment for services with respect to
mental, emotional, nervous, or substance use disorders or
conditions benefits in the case of any participant or
beneficiary must be made available within a reasonable
time and in a reasonable manner and in readily
understandable language by the plan administrator (or the
health insurance issuer offering such coverage) to the
participant or beneficiary upon request.
(f) As used in this Section, "group policy of accident and
health insurance" and "group health benefit plan" includes (1)
State-regulated employer-sponsored group health insurance
plans written in Illinois or which purport to provide coverage
for a resident of this State; and (2) State employee health
plans.
(g) (1) As used in this subsection:
"Benefits", with respect to insurers, means the benefits
provided for treatment services for inpatient and outpatient
treatment of substance use disorders or conditions at American
Society of Addiction Medicine levels of treatment 2.1
(Intensive Outpatient), 2.5 (Partial Hospitalization), 3.1
(Clinically Managed Low-Intensity Residential), 3.3
(Clinically Managed Population-Specific High-Intensity
Residential), 3.5 (Clinically Managed High-Intensity
Residential), and 3.7 (Medically Monitored Intensive
Inpatient) and OMT (Opioid Maintenance Therapy) services.
"Benefits", with respect to managed care organizations,
means the benefits provided for treatment services for
inpatient and outpatient treatment of substance use disorders
or conditions at American Society of Addiction Medicine levels
of treatment 2.1 (Intensive Outpatient), 2.5 (Partial
Hospitalization), 3.5 (Clinically Managed High-Intensity
Residential), and 3.7 (Medically Monitored Intensive
Inpatient) and OMT (Opioid Maintenance Therapy) services.
"Substance use disorder treatment provider or facility"
means a licensed physician, licensed psychologist, licensed
psychiatrist, licensed advanced practice registered nurse, or
licensed, certified, or otherwise State-approved facility or
provider of substance use disorder treatment.
(2) A group health insurance policy, an individual health
benefit plan, or qualified health plan that is offered through
the health insurance marketplace, small employer group health
plan, and large employer group health plan that is amended,
delivered, issued, executed, or renewed in this State, or
approved for issuance or renewal in this State, on or after
January 1, 2019 (the effective date of Public Act 100-1023)
shall comply with the requirements of this Section and Section
370c.1. The services for the treatment and the ongoing
assessment of the patient's progress in treatment shall follow
the requirements of 77 Ill. Adm. Code 2060.
(3) Prior authorization shall not be utilized for the
benefits under this subsection. The substance use disorder
treatment provider or facility shall notify the insurer of the
initiation of treatment. For an insurer that is not a managed
care organization, the substance use disorder treatment
provider or facility notification shall occur for the
initiation of treatment of the covered person within 2
business days. For managed care organizations, the substance
use disorder treatment provider or facility notification shall
occur in accordance with the protocol set forth in the
provider agreement for initiation of treatment within 24
hours. If the managed care organization is not capable of
accepting the notification in accordance with the contractual
protocol during the 24-hour period following admission, the
substance use disorder treatment provider or facility shall
have one additional business day to provide the notification
to the appropriate managed care organization. Treatment plans
shall be developed in accordance with the requirements and
timeframes established in 77 Ill. Adm. Code 2060. If the
substance use disorder treatment provider or facility fails to
notify the insurer of the initiation of treatment in
accordance with these provisions, the insurer may follow its
normal prior authorization processes.
(4) For an insurer that is not a managed care
organization, if an insurer determines that benefits are no
longer medically necessary, the insurer shall notify the
covered person, the covered person's authorized
representative, if any, and the covered person's health care
provider in writing of the covered person's right to request
an external review pursuant to the Health Carrier External
Review Act. The notification shall occur within 24 hours
following the adverse determination.
Pursuant to the requirements of the Health Carrier
External Review Act, the covered person or the covered
person's authorized representative may request an expedited
external review. An expedited external review may not occur if
the substance use disorder treatment provider or facility
determines that continued treatment is no longer medically
necessary. Under this subsection, a request for expedited
external review must be initiated within 24 hours following
the adverse determination notification by the insurer. Failure
to request an expedited external review within 24 hours shall
preclude a covered person or a covered person's authorized
representative from requesting an expedited external review.
If an expedited external review request meets the criteria
of the Health Carrier External Review Act, an independent
review organization shall make a final determination of
medical necessity within 72 hours. If an independent review
organization upholds an adverse determination, an insurer
shall remain responsible to provide coverage of benefits
through the day following the determination of the independent
review organization. A decision to reverse an adverse
determination shall comply with the Health Carrier External
Review Act.
(5) The substance use disorder treatment provider or
facility shall provide the insurer with 7 business days'
advance notice of the planned discharge of the patient from
the substance use disorder treatment provider or facility and
notice on the day that the patient is discharged from the
substance use disorder treatment provider or facility.
(6) The benefits required by this subsection shall be
provided to all covered persons with a diagnosis of substance
use disorder or conditions. The presence of additional related
or unrelated diagnoses shall not be a basis to reduce or deny
the benefits required by this subsection.
(7) Nothing in this subsection shall be construed to
require an insurer to provide coverage for any of the benefits
in this subsection.
(h) As used in this Section:
"Generally accepted standards of mental, emotional,
nervous, or substance use disorder or condition care" means
standards of care and clinical practice that are generally
recognized by health care providers practicing in relevant
clinical specialties such as psychiatry, psychology, clinical
sociology, social work, addiction medicine and counseling, and
behavioral health treatment. Valid, evidence-based sources
reflecting generally accepted standards of mental, emotional,
nervous, or substance use disorder or condition care include
peer-reviewed scientific studies and medical literature,
recommendations of nonprofit health care provider professional
associations and specialty societies, including, but not
limited to, patient placement criteria and clinical practice
guidelines, recommendations of federal government agencies,
and drug labeling approved by the United States Food and Drug
Administration.
"Medically necessary treatment of mental, emotional,
nervous, or substance use disorders or conditions" means a
service or product addressing the specific needs of that
patient, for the purpose of screening, preventing, diagnosing,
managing, or treating an illness, injury, or condition or its
symptoms and comorbidities, including minimizing the
progression of an illness, injury, or condition or its
symptoms and comorbidities in a manner that is all of the
following:
(1) in accordance with the generally accepted
standards of mental, emotional, nervous, or substance use
disorder or condition care;
(2) clinically appropriate in terms of type,
frequency, extent, site, and duration; and
(3) not primarily for the economic benefit of the
insurer, purchaser, or for the convenience of the patient,
treating physician, or other health care provider.
"Utilization review" means either of the following:
(1) prospectively, retrospectively, or concurrently
reviewing and approving, modifying, delaying, or denying,
based in whole or in part on medical necessity, requests
by health care providers, insureds, or their authorized
representatives for coverage of health care services
before, retrospectively, or concurrently with the
provision of health care services to insureds.
(2) evaluating the medical necessity, appropriateness,
level of care, service intensity, efficacy, or efficiency
of health care services, benefits, procedures, or
settings, under any circumstances, to determine whether a
health care service or benefit subject to a medical
necessity coverage requirement in an insurance policy is
covered as medically necessary for an insured.
"Utilization review criteria" means patient placement
criteria or any criteria, standards, protocols, or guidelines
used by an insurer to conduct utilization review.
(i)(1) Every insurer that amends, delivers, issues, or
renews a group or individual policy of accident and health
insurance or a qualified health plan offered through the
health insurance marketplace in this State and Medicaid
managed care organizations providing coverage for hospital or
medical treatment on or after January 1, 2023 shall, pursuant
to subsections (h) through (s), provide coverage for medically
necessary treatment of mental, emotional, nervous, or
substance use disorders or conditions.
(2) An insurer shall not set a specific limit on the
duration of benefits or coverage of medically necessary
treatment of mental, emotional, nervous, or substance use
disorders or conditions or limit coverage only to alleviation
of the insured's current symptoms.
(3) All medical necessity determinations made by the
insurer concerning service intensity, level of care placement,
continued stay, and transfer or discharge of insureds
diagnosed with mental, emotional, nervous, or substance use
disorders or conditions shall be conducted in accordance with
the requirements of subsections (k) through (u).
(4) An insurer that authorizes a specific type of
treatment by a provider pursuant to this Section shall not
rescind or modify the authorization after that provider
renders the health care service in good faith and pursuant to
this authorization for any reason, including, but not limited
to, the insurer's subsequent cancellation or modification of
the insured's or policyholder's contract, or the insured's or
policyholder's eligibility. Nothing in this Section shall
require the insurer to cover a treatment when the
authorization was granted based on a material
misrepresentation by the insured, the policyholder, or the
provider. Nothing in this Section shall require Medicaid
managed care organizations to pay for services if the
individual was not eligible for Medicaid at the time the
service was rendered. Nothing in this Section shall require an
insurer to pay for services if the individual was not the
insurer's enrollee at the time services were rendered. As used
in this paragraph, "material" means a fact or situation that
is not merely technical in nature and results in or could
result in a substantial change in the situation.
(j) An insurer shall not limit benefits or coverage for
medically necessary services on the basis that those services
should be or could be covered by a public entitlement program,
including, but not limited to, special education or an
individualized education program, Medicaid, Medicare,
Supplemental Security Income, or Social Security Disability
Insurance, and shall not include or enforce a contract term
that excludes otherwise covered benefits on the basis that
those services should be or could be covered by a public
entitlement program. Nothing in this subsection shall be
construed to require an insurer to cover benefits that have
been authorized and provided for a covered person by a public
entitlement program. Medicaid managed care organizations are
not subject to this subsection.
(k) An insurer shall base any medical necessity
determination or the utilization review criteria that the
insurer, and any entity acting on the insurer's behalf,
applies to determine the medical necessity of health care
services and benefits for the diagnosis, prevention, and
treatment of mental, emotional, nervous, or substance use
disorders or conditions on current generally accepted
standards of mental, emotional, nervous, or substance use
disorder or condition care. All denials and appeals shall be
reviewed by a professional with experience or expertise
comparable to the provider requesting the authorization.
(l) For medical necessity determinations relating to level
of care placement, continued stay, and transfer or discharge
of insureds diagnosed with mental, emotional, and nervous
disorders or conditions, an insurer shall apply the patient
placement criteria set forth in the most recent version of the
treatment criteria developed by an unaffiliated nonprofit
professional association for the relevant clinical specialty
or, for Medicaid managed care organizations, patient placement
criteria determined by the Department of Healthcare and Family
Services that are consistent with generally accepted standards
of mental, emotional, nervous or substance use disorder or
condition care. Pursuant to subsection (b), in conducting
utilization review of all covered services and benefits for
the diagnosis, prevention, and treatment of substance use
disorders an insurer shall use the most recent edition of the
patient placement criteria established by the American Society
of Addiction Medicine.
(m) For medical necessity determinations relating to level
of care placement, continued stay, and transfer or discharge
that are within the scope of the sources specified in
subsection (l), an insurer shall not apply different,
additional, conflicting, or more restrictive utilization
review criteria than the criteria set forth in those sources.
For all level of care placement decisions, the insurer shall
authorize placement at the level of care consistent with the
assessment of the insured using the relevant patient placement
criteria as specified in subsection (l). If that level of
placement is not available, the insurer shall authorize the
next higher level of care. In the event of disagreement, the
insurer shall provide full detail of its assessment using the
relevant criteria as specified in subsection (l) to the
provider of the service and the patient.
Nothing in this subsection or subsection (l) prohibits an
insurer from applying utilization review criteria that were
developed in accordance with subsection (k) to health care
services and benefits for mental, emotional, and nervous
disorders or conditions that are not related to medical
necessity determinations for level of care placement,
continued stay, and transfer or discharge. If an insurer
purchases or licenses utilization review criteria pursuant to
this subsection, the insurer shall verify and document before
use that the criteria were developed in accordance with
subsection (k).
(n) In conducting utilization review that is outside the
scope of the criteria as specified in subsection (l) or
relates to the advancements in technology or in the types or
levels of care that are not addressed in the most recent
versions of the sources specified in subsection (l), an
insurer shall conduct utilization review in accordance with
subsection (k).
(o) This Section does not in any way limit the rights of a
patient under the Medical Patient Rights Act.
(p) This Section does not in any way limit early and
periodic screening, diagnostic, and treatment benefits as
defined under 42 U.S.C. 1396d(r).
(q) To ensure the proper use of the criteria described in
subsection (l), every insurer shall do all of the following:
(1) Educate the insurer's staff, including any third
parties contracted with the insurer to review claims,
conduct utilization reviews, or make medical necessity
determinations about the utilization review criteria.
(2) Make the educational program available to other
stakeholders, including the insurer's participating or
contracted providers and potential participants,
beneficiaries, or covered lives. The education program
must be provided at least once a year, in-person or
digitally, or recordings of the education program must be
made available to the aforementioned stakeholders.
(3) Provide, at no cost, the utilization review
criteria and any training material or resources to
providers and insured patients upon request. For
utilization review criteria not concerning level of care
placement, continued stay, and transfer or discharge used
by the insurer pursuant to subsection (m), the insurer may
place the criteria on a secure, password-protected website
so long as the access requirements of the website do not
unreasonably restrict access to insureds or their
providers. No restrictions shall be placed upon the
insured's or treating provider's access right to
utilization review criteria obtained under this paragraph
at any point in time, including before an initial request
for authorization.
(4) Track, identify, and analyze how the utilization
review criteria are used to certify care, deny care, and
support the appeals process.
(5) Conduct interrater reliability testing to ensure
consistency in utilization review decision making that
covers how medical necessity decisions are made; this
assessment shall cover all aspects of utilization review
as defined in subsection (h).
(6) Run interrater reliability reports about how the
clinical guidelines are used in conjunction with the
utilization review process and parity compliance
activities.
(7) Achieve interrater reliability pass rates of at
least 90% and, if this threshold is not met, immediately
provide for the remediation of poor interrater reliability
and interrater reliability testing for all new staff
before they can conduct utilization review without
supervision.
(8) Maintain documentation of interrater reliability
testing and the remediation actions taken for those with
pass rates lower than 90% and submit to the Department of
Insurance or, in the case of Medicaid managed care
organizations, the Department of Healthcare and Family
Services the testing results and a summary of remedial
actions as part of parity compliance reporting set forth
in subsection (k) of Section 370c.1.
(r) This Section applies to all health care services and
benefits for the diagnosis, prevention, and treatment of
mental, emotional, nervous, or substance use disorders or
conditions covered by an insurance policy, including
prescription drugs.
(s) This Section applies to an insurer that amends,
delivers, issues, or renews a group or individual policy of
accident and health insurance or a qualified health plan
offered through the health insurance marketplace in this State
providing coverage for hospital or medical treatment and
conducts utilization review as defined in this Section,
including Medicaid managed care organizations, and any entity
or contracting provider that performs utilization review or
utilization management functions on an insurer's behalf.
(t) If the Director determines that an insurer has
violated this Section, the Director may, after appropriate
notice and opportunity for hearing, by order, assess a civil
penalty between $1,000 and $5,000 for each violation. Moneys
collected from penalties shall be deposited into the Parity
Advancement Fund established in subsection (i) of Section
370c.1.
(u) An insurer shall not adopt, impose, or enforce terms
in its policies or provider agreements, in writing or in
operation, that undermine, alter, or conflict with the
requirements of this Section.
(v) The provisions of this Section are severable. If any
provision of this Section or its application is held invalid,
that invalidity shall not affect other provisions or
applications that can be given effect without the invalid
provision or application.
(Source: P.A. 101-81, eff. 7-12-19; 101-386, eff. 8-16-19;
102-558, eff. 8-20-21; 102-579, eff. 1-1-22; 102-813, eff.
5-13-22.)
(215 ILCS 5/412) (from Ch. 73, par. 1024)
Sec. 412. Refunds; penalties; collection.
(1)(a) Whenever it appears to the satisfaction of the
Director that because of some mistake of fact, error in
calculation, or erroneous interpretation of a statute of this
or any other state, any authorized company, surplus line
producer, or industrial insured has paid to him, pursuant to
any provision of law, taxes, fees, or other charges in excess
of the amount legally chargeable against it, during the 6 year
period immediately preceding the discovery of such
overpayment, he shall have power to refund to such company,
surplus line producer, or industrial insured the amount of the
excess or excesses by applying the amount or amounts thereof
toward the payment of taxes, fees, or other charges already
due, or which may thereafter become due from that company
until such excess or excesses have been fully refunded, or
upon a written request from the authorized company, surplus
line producer, or industrial insured, the Director shall
provide a cash refund within 120 days after receipt of the
written request if all necessary information has been filed
with the Department in order for it to perform an audit of the
tax report for the transaction or period or annual return for
the year in which the overpayment occurred or within 120 days
after the date the Department receives all the necessary
information to perform such audit. The Director shall not
provide a cash refund if there are insufficient funds in the
Insurance Premium Tax Refund Fund to provide a cash refund, if
the amount of the overpayment is less than $100, or if the
amount of the overpayment can be fully offset against the
taxpayer's estimated liability for the year following the year
of the cash refund request. Any cash refund shall be paid from
the Insurance Premium Tax Refund Fund, a special fund hereby
created in the State treasury.
(b) As determined by the Director pursuant to paragraph
(a) of this subsection, the Department shall deposit an amount
of cash refunds approved by the Director for payment as a
result of overpayment of tax liability collected under
Sections 121-2.08, 409, 444, 444.1, and 445 of this Code into
the Insurance Premium Tax Refund Fund.
(c) Beginning July 1, 1999, moneys in the Insurance
Premium Tax Refund Fund shall be expended exclusively for the
purpose of paying cash refunds resulting from overpayment of
tax liability under Sections 121-2.08, 409, 444, 444.1, and
445 of this Code as determined by the Director pursuant to
subsection 1(a) of this Section. Cash refunds made in
accordance with this Section may be made from the Insurance
Premium Tax Refund Fund only to the extent that amounts have
been deposited and retained in the Insurance Premium Tax
Refund Fund.
(d) This Section shall constitute an irrevocable and
continuing appropriation from the Insurance Premium Tax Refund
Fund for the purpose of paying cash refunds pursuant to the
provisions of this Section.
(2)(a) When any insurance company fails to file any tax
return required under Sections 408.1, 409, 444, and 444.1 of
this Code or Section 12 of the Fire Investigation Act on the
date prescribed, including any extensions, there shall be
added as a penalty $400 or 10% of the amount of such tax,
whichever is greater, for each month or part of a month of
failure to file, the entire penalty not to exceed $2,000 or 50%
of the tax due, whichever is greater.
(b) When any industrial insured or surplus line producer
fails to file any tax return or report required under Sections
121-2.08 and 445 of this Code or Section 12 of the Fire
Investigation Act on the date prescribed, including any
extensions, there shall be added:
(i) as a late fee, if the return or report is received
at least one day but not more than 15 7 days after the
prescribed due date, $50 $400 or 5% 10% of the tax due,
whichever is greater, the entire fee not to exceed $1,000;
(ii) as a late fee, if the return or report is received
at least 8 days but not more than 14 days after the
prescribed due date, $400 or 10% of the tax due, whichever
is greater, the entire fee not to exceed $1,500;
(ii) (iii) as a late fee, if the return or report is
received at least 16 15 days but not more than 30 21 days
after the prescribed due date, $100 $400 or 5% 10% of the
tax due, whichever is greater, the entire fee not to
exceed $2,000; or
(iii) (iv) as a penalty, if the return or report is
received more than 30 21 days after the prescribed due
date, $100 $400 or 5% 10% of the tax due, whichever is
greater, for each month or part of a month of failure to
file, the entire penalty not to exceed $500 $2,000 or 30%
50% of the tax due, whichever is greater.
A tax return or report shall be deemed received as of the
date mailed as evidenced by a postmark, proof of mailing on a
recognized United States Postal Service form or a form
acceptable to the United States Postal Service or other
commercial mail delivery service, or other evidence acceptable
to the Director.
(3)(a) When any insurance company fails to pay the full
amount due under the provisions of this Section, Sections
408.1, 409, 444, or 444.1 of this Code, or Section 12 of the
Fire Investigation Act, there shall be added to the amount due
as a penalty an amount equal to 10% of the deficiency.
(a-5) When any industrial insured or surplus line producer
fails to pay the full amount due under the provisions of this
Section, Sections 121-2.08 or 445 of this Code, or Section 12
of the Fire Investigation Act on the date prescribed, there
shall be added:
(i) as a late fee, if the payment is received at least
one day but not more than 7 days after the prescribed due
date, 10% of the tax due, the entire fee not to exceed
$1,000;
(ii) as a late fee, if the payment is received at least
8 days but not more than 14 days after the prescribed due
date, 10% of the tax due, the entire fee not to exceed
$1,500;
(iii) as a late fee, if the payment is received at
least 15 days but not more than 21 days after the
prescribed due date, 10% of the tax due, the entire fee not
to exceed $2,000; or
(iv) as a penalty, if the return or report is received
more than 21 days after the prescribed due date, 10% of the
tax due.
A tax payment shall be deemed received as of the date
mailed as evidenced by a postmark, proof of mailing on a
recognized United States Postal Service form or a form
acceptable to the United States Postal Service or other
commercial mail delivery service, or other evidence acceptable
to the Director.
(b) If such failure to pay is determined by the Director to
be wilful, after a hearing under Sections 402 and 403, there
shall be added to the tax as a penalty an amount equal to the
greater of 50% of the deficiency or 10% of the amount due and
unpaid for each month or part of a month that the deficiency
remains unpaid commencing with the date that the amount
becomes due. Such amount shall be in lieu of any determined
under paragraph (a) or (a-5).
(4) Any insurance company, industrial insured, or surplus
line producer that fails to pay the full amount due under this
Section or Sections 121-2.08, 408.1, 409, 444, 444.1, or 445
of this Code, or Section 12 of the Fire Investigation Act is
liable, in addition to the tax and any late fees and penalties,
for interest on such deficiency at the rate of 12% per annum,
or at such higher adjusted rates as are or may be established
under subsection (b) of Section 6621 of the Internal Revenue
Code, from the date that payment of any such tax was due,
determined without regard to any extensions, to the date of
payment of such amount.
(5) The Director, through the Attorney General, may
institute an action in the name of the People of the State of
Illinois, in any court of competent jurisdiction, for the
recovery of the amount of such taxes, fees, and penalties due,
and prosecute the same to final judgment, and take such steps
as are necessary to collect the same.
(6) In the event that the certificate of authority of a
foreign or alien company is revoked for any cause or the
company withdraws from this State prior to the renewal date of
the certificate of authority as provided in Section 114, the
company may recover the amount of any such tax paid in advance.
Except as provided in this subsection, no revocation or
withdrawal excuses payment of or constitutes grounds for the
recovery of any taxes or penalties imposed by this Code.
(7) When an insurance company or domestic affiliated group
fails to pay the full amount of any fee of $200 or more due
under Section 408 of this Code, there shall be added to the
amount due as a penalty the greater of $100 or an amount equal
to 10% of the deficiency for each month or part of a month that
the deficiency remains unpaid.
(8) The Department shall have a lien for the taxes, fees,
charges, fines, penalties, interest, other charges, or any
portion thereof, imposed or assessed pursuant to this Code,
upon all the real and personal property of any company or
person to whom the assessment or final order has been issued or
whenever a tax return is filed without payment of the tax or
penalty shown therein to be due, including all such property
of the company or person acquired after receipt of the
assessment, issuance of the order, or filing of the return.
The company or person is liable for the filing fee incurred by
the Department for filing the lien and the filing fee incurred
by the Department to file the release of that lien. The filing
fees shall be paid to the Department in addition to payment of
the tax, fee, charge, fine, penalty, interest, other charges,
or any portion thereof, included in the amount of the lien.
However, where the lien arises because of the issuance of a
final order of the Director or tax assessment by the
Department, the lien shall not attach and the notice referred
to in this Section shall not be filed until all administrative
proceedings or proceedings in court for review of the final
order or assessment have terminated or the time for the taking
thereof has expired without such proceedings being instituted.
Upon the granting of Department review after a lien has
attached, the lien shall remain in full force except to the
extent to which the final assessment may be reduced by a
revised final assessment following the rehearing or review.
The lien created by the issuance of a final assessment shall
terminate, unless a notice of lien is filed, within 3 years
after the date all proceedings in court for the review of the
final assessment have terminated or the time for the taking
thereof has expired without such proceedings being instituted,
or (in the case of a revised final assessment issued pursuant
to a rehearing or review by the Department) within 3 years
after the date all proceedings in court for the review of such
revised final assessment have terminated or the time for the
taking thereof has expired without such proceedings being
instituted. Where the lien results from the filing of a tax
return without payment of the tax or penalty shown therein to
be due, the lien shall terminate, unless a notice of lien is
filed, within 3 years after the date when the return is filed
with the Department.
The time limitation period on the Department's right to
file a notice of lien shall not run during any period of time
in which the order of any court has the effect of enjoining or
restraining the Department from filing such notice of lien. If
the Department finds that a company or person is about to
depart from the State, to conceal himself or his property, or
to do any other act tending to prejudice or to render wholly or
partly ineffectual proceedings to collect the amount due and
owing to the Department unless such proceedings are brought
without delay, or if the Department finds that the collection
of the amount due from any company or person will be
jeopardized by delay, the Department shall give the company or
person notice of such findings and shall make demand for
immediate return and payment of the amount, whereupon the
amount shall become immediately due and payable. If the
company or person, within 5 days after the notice (or within
such extension of time as the Department may grant), does not
comply with the notice or show to the Department that the
findings in the notice are erroneous, the Department may file
a notice of jeopardy assessment lien in the office of the
recorder of the county in which any property of the company or
person may be located and shall notify the company or person of
the filing. The jeopardy assessment lien shall have the same
scope and effect as the statutory lien provided for in this
Section. If the company or person believes that the company or
person does not owe some or all of the tax for which the
jeopardy assessment lien against the company or person has
been filed, or that no jeopardy to the revenue in fact exists,
the company or person may protest within 20 days after being
notified by the Department of the filing of the jeopardy
assessment lien and request a hearing, whereupon the
Department shall hold a hearing in conformity with the
provisions of this Code and, pursuant thereto, shall notify
the company or person of its findings as to whether or not the
jeopardy assessment lien will be released. If not, and if the
company or person is aggrieved by this decision, the company
or person may file an action for judicial review of the final
determination of the Department in accordance with the
Administrative Review Law. If, pursuant to such hearing (or
after an independent determination of the facts by the
Department without a hearing), the Department determines that
some or all of the amount due covered by the jeopardy
assessment lien is not owed by the company or person, or that
no jeopardy to the revenue exists, or if on judicial review the
final judgment of the court is that the company or person does
not owe some or all of the amount due covered by the jeopardy
assessment lien against them, or that no jeopardy to the
revenue exists, the Department shall release its jeopardy
assessment lien to the extent of such finding of nonliability
for the amount, or to the extent of such finding of no jeopardy
to the revenue. The Department shall also release its jeopardy
assessment lien against the company or person whenever the
amount due and owing covered by the lien, plus any interest
which may be due, are paid and the company or person has paid
the Department in cash or by guaranteed remittance an amount
representing the filing fee for the lien and the filing fee for
the release of that lien. The Department shall file that
release of lien with the recorder of the county where that lien
was filed.
Nothing in this Section shall be construed to give the
Department a preference over the rights of any bona fide
purchaser, holder of a security interest, mechanics
lienholder, mortgagee, or judgment lien creditor arising prior
to the filing of a regular notice of lien or a notice of
jeopardy assessment lien in the office of the recorder in the
county in which the property subject to the lien is located.
For purposes of this Section, "bona fide" shall not include
any mortgage of real or personal property or any other credit
transaction that results in the mortgagee or the holder of the
security acting as trustee for unsecured creditors of the
company or person mentioned in the notice of lien who executed
such chattel or real property mortgage or the document
evidencing such credit transaction. The lien shall be inferior
to the lien of general taxes, special assessments, and special
taxes levied by any political subdivision of this State. In
case title to land to be affected by the notice of lien or
notice of jeopardy assessment lien is registered under the
provisions of the Registered Titles (Torrens) Act, such notice
shall be filed in the office of the Registrar of Titles of the
county within which the property subject to the lien is
situated and shall be entered upon the register of titles as a
memorial or charge upon each folium of the register of titles
affected by such notice, and the Department shall not have a
preference over the rights of any bona fide purchaser,
mortgagee, judgment creditor, or other lienholder arising
prior to the registration of such notice. The regular lien or
jeopardy assessment lien shall not be effective against any
purchaser with respect to any item in a retailer's stock in
trade purchased from the retailer in the usual course of the
retailer's business.
(Source: P.A. 102-775, eff. 5-13-22.)
(215 ILCS 5/500-140)
(Section scheduled to be repealed on January 1, 2027)
Sec. 500-140. Injunctive relief. A person required to be
licensed under this Article but failing to obtain a valid and
current license under this Article constitutes a public
nuisance. The Director may report the failure to obtain a
license to the Attorney General, whose duty it is to apply
forthwith by complaint on relation of the Director in the name
of the people of the State of Illinois, for injunctive relief
in the circuit court of the county where the failure to obtain
a license occurred to enjoin that person from acting in any
capacity that requires such a license failing to obtain a
license. Upon the filing of a verified petition in the court,
the court, if satisfied by affidavit or otherwise that the
person is required to have a license and does not have a valid
and current license, may enter a temporary restraining order
without notice or bond, enjoining the defendant from acting in
any capacity that requires such license. A copy of the
verified complaint shall be served upon the defendant, and the
proceedings shall thereafter be conducted as in other civil
cases. If it is established that the defendant has been, or is
engaged in any unlawful practice, the court may enter an order
or judgment perpetually enjoining the defendant from further
engaging in such practice. In all proceedings brought under
this Section, the court, in its discretion, may apportion the
costs among the parties, including the cost of filing the
complaint, service of process, witness fees and expenses,
court reporter charges, and reasonable attorney fees. In case
of the violation of any injunctive order entered under the
provisions of this Section, the court may summarily try and
punish the offender for contempt of court. The injunctive
relief available under this Section is in addition to and not
in lieu of all other penalties and remedies provided in this
Code.
(Source: P.A. 92-386, eff. 1-1-02.)
(215 ILCS 5/1204) (from Ch. 73, par. 1065.904)
(Text of Section WITHOUT the changes made by P.A. 94-677,
which has been held unconstitutional)
Sec. 1204. (A) The Director shall promulgate rules and
regulations which shall require each insurer licensed to write
property or casualty insurance in the State and each syndicate
doing business on the Illinois Insurance Exchange to record
and report its loss and expense experience and other data as
may be necessary to assess the relationship of insurance
premiums and related income as compared to insurance costs and
expenses. The Director may designate one or more rate service
organizations or advisory organizations to gather and compile
such experience and data. The Director shall require each
insurer licensed to write property or casualty insurance in
this State and each syndicate doing business on the Illinois
Insurance Exchange to submit a report, on a form furnished by
the Director, showing its direct writings in this State and
companywide.
(B) Such report required by subsection (A) of this Section
may include, but not be limited to, the following specific
types of insurance written by such insurer:
(1) Political subdivision liability insurance reported
separately in the following categories:
(a) municipalities;
(b) school districts;
(c) other political subdivisions;
(2) Public official liability insurance;
(3) Dram shop liability insurance;
(4) Day care center liability insurance;
(5) Labor, fraternal or religious organizations
liability insurance;
(6) Errors and omissions liability insurance;
(7) Officers and directors liability insurance
reported separately as follows:
(a) non-profit entities;
(b) for-profit entities;
(8) Products liability insurance;
(9) Medical malpractice insurance;
(10) Attorney malpractice insurance;
(11) Architects and engineers malpractice insurance;
and
(12) Motor vehicle insurance reported separately for
commercial and private passenger vehicles as follows:
(a) motor vehicle physical damage insurance;
(b) motor vehicle liability insurance.
(C) Such report may include, but need not be limited to the
following data, both specific to this State and companywide,
in the aggregate or by type of insurance for the previous year
on a calendar year basis:
(1) Direct premiums written;
(2) Direct premiums earned;
(3) Number of policies;
(4) Net investment income, using appropriate estimates
where necessary;
(5) Losses paid;
(6) Losses incurred;
(7) Loss reserves:
(a) Losses unpaid on reported claims;
(b) Losses unpaid on incurred but not reported
claims;
(8) Number of claims:
(a) Paid claims;
(b) Arising claims;
(9) Loss adjustment expenses:
(a) Allocated loss adjustment expenses;
(b) Unallocated loss adjustment expenses;
(10) Net underwriting gain or loss;
(11) Net operation gain or loss, including net
investment income;
(12) Any other information requested by the Director.
(C-3) Additional information by an advisory organization
as defined in Section 463 of this Code.
(1) An advisory organization as defined in Section 463
of this Code shall report annually the following
information in such format as may be prescribed by the
Secretary:
(a) paid and incurred losses for each of the past
10 years;
(b) medical payments and medical charges, if
collected, for each of the past 10 years;
(c) the following indemnity payment information:
cumulative payments by accident year by calendar year
of development. This array will show payments made and
frequency of claims in the following categories:
medical only, permanent partial disability (PPD),
permanent total disability (PTD), temporary total
disability (TTD), and fatalities;
(d) injuries by frequency and severity;
(e) by class of employee.
(2) The report filed with the Secretary of Financial
and Professional Regulation under paragraph (1) of this
subsection (C-3) shall be made available, on an aggregate
basis, to the General Assembly and to the general public.
The identity of the petitioner, the respondent, the
attorneys, and the insurers shall not be disclosed.
(3) Reports required under this subsection (C-3) shall
be filed with the Secretary no later than September 1 in
2006 and no later than September 1 of each year
thereafter.
(D) In addition to the information which may be requested
under subsection (C), the Director may also request on a
companywide, aggregate basis, Federal Income Tax recoverable,
net realized capital gain or loss, net unrealized capital gain
or loss, and all other expenses not requested in subsection
(C) above.
(E) Violations - Suspensions - Revocations.
(1) Any company or person subject to this Article, who
willfully or repeatedly fails to observe or who otherwise
violates any of the provisions of this Article or any rule
or regulation promulgated by the Director under authority
of this Article or any final order of the Director entered
under the authority of this Article shall by civil penalty
forfeit to the State of Illinois a sum not to exceed
$2,000. Each day during which a violation occurs
constitutes a separate offense.
(2) No forfeiture liability under paragraph (1) of
this subsection may attach unless a written notice of
apparent liability has been issued by the Director and
received by the respondent, or the Director sends written
notice of apparent liability by registered or certified
mail, return receipt requested, to the last known address
of the respondent. Any respondent so notified must be
granted an opportunity to request a hearing within 10 days
from receipt of notice, or to show in writing, why he
should not be held liable. A notice issued under this
Section must set forth the date, facts and nature of the
act or omission with which the respondent is charged and
must specifically identify the particular provision of
this Article, rule, regulation or order of which a
violation is charged.
(3) No forfeiture liability under paragraph (1) of
this subsection may attach for any violation occurring
more than 2 years prior to the date of issuance of the
notice of apparent liability and in no event may the total
civil penalty forfeiture imposed for the acts or omissions
set forth in any one notice of apparent liability exceed
$100,000.
(4) All administrative hearings conducted pursuant to
this Article are subject to 50 Ill. Adm. Code 2402 and all
administrative hearings are subject to the Administrative
Review Law.
(5) The civil penalty forfeitures provided for in this
Section are payable to the General Revenue Fund of the
State of Illinois, and may be recovered in a civil suit in
the name of the State of Illinois brought in the Circuit
Court in Sangamon County or in the Circuit Court of the
county where the respondent is domiciled or has its
principal operating office.
(6) In any case where the Director issues a notice of
apparent liability looking toward the imposition of a
civil penalty forfeiture under this Section that fact may
not be used in any other proceeding before the Director to
the prejudice of the respondent to whom the notice was
issued, unless (a) the civil penalty forfeiture has been
paid, or (b) a court has ordered payment of the civil
penalty forfeiture and that order has become final.
(7) When any person or company has a license or
certificate of authority under this Code and knowingly
fails or refuses to comply with a lawful order of the
Director requiring compliance with this Article, entered
after notice and hearing, within the period of time
specified in the order, the Director may, in addition to
any other penalty or authority provided, revoke or refuse
to renew the license or certificate of authority of such
person or company, or may suspend the license or
certificate of authority of such person or company until
compliance with such order has been obtained.
(8) When any person or company has a license or
certificate of authority under this Code and knowingly
fails or refuses to comply with any provisions of this
Article, the Director may, after notice and hearing, in
addition to any other penalty provided, revoke or refuse
to renew the license or certificate of authority of such
person or company, or may suspend the license or
certificate of authority of such person or company, until
compliance with such provision of this Article has been
obtained.
(9) No suspension or revocation under this Section may
become effective until 5 days from the date that the
notice of suspension or revocation has been personally
delivered or delivered by registered or certified mail to
the company or person. A suspension or revocation under
this Section is stayed upon the filing, by the company or
person, of a petition for judicial review under the
Administrative Review Law.
(Source: P.A. 94-277, eff. 7-20-05; 95-331, eff. 8-21-07.)
(215 ILCS 5/155.18a rep.)
Section 15. The Illinois Insurance Code is amended by
repealing Section 155.18a.
Section 20. The Small Employer Health Insurance Rating Act
is amended by changing Section 15 as follows:
(215 ILCS 93/15)
Sec. 15. Applicability and scope.
(a) This Act shall apply to each health benefit plan for a
small employer that is delivered, issued for delivery,
renewed, or continued in this State after July 1, 2000. For
purposes of this Section, the date a plan is continued shall be
the first rating period which commences after July 1, 2000.
The Act shall apply to any such health benefit plan which
provides coverage to employees of a small employer, except
that the Act shall not apply to individual health insurance
policies.
(b) This Act shall not apply to any health benefit plan for
a small employer that is delivered, issued, renewed, or
continued in this State on or after January 1, 2022. However,
if 42 U.S.C. 18032(c)(2) or any successor law is repealed,
then this Act shall apply to each health benefit plan for a
small employer that is delivered, issued, renewed, or
continued in this State on or after the date that law ceases to
apply to such plans.
(Source: P.A. 91-510, eff. 1-1-00; 92-16, eff. 6-28-01.)
Section 22. The Dental Service Plan Act is amended by
changing Section 25 as follows:
(215 ILCS 110/25) (from Ch. 32, par. 690.25)
Sec. 25. Application of Insurance Code provisions. Dental
service plan corporations and all persons interested therein
or dealing therewith shall be subject to the provisions of
Articles IIA, XI, and XII 1/2 and Sections 3.1, 133, 136, 139,
140, 143, 143c, 149, 155.49, 355.2, 355.3, 367.2, 401, 401.1,
402, 403, 403A, 408, 408.2, and 412, and subsection (15) of
Section 367 of the Illinois Insurance Code.
(Source: P.A. 99-151, eff. 7-28-15.)
Section 25. The Health Maintenance Organization Act is
amended by changing Section 5-3 as follows:
(215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 136, 137, 139, 140,
141.1, 141.2, 141.3, 143, 143c, 147, 148, 149, 151, 152, 153,
154, 154.5, 154.6, 154.7, 154.8, 155.04, 155.22a, 155.49,
355.2, 355.3, 355b, 355c, 356f, 356g.5-1, 356m, 356q, 356v,
356w, 356x, 356y, 356z.2, 356z.3a, 356z.4, 356z.4a, 356z.5,
356z.6, 356z.8, 356z.9, 356z.10, 356z.11, 356z.12, 356z.13,
356z.14, 356z.15, 356z.17, 356z.18, 356z.19, 356z.20, 356z.21,
356z.22, 356z.23, 356z.24, 356z.25, 356z.26, 356z.28, 356z.29,
356z.30, 356z.30a, 356z.31, 356z.32, 356z.33, 356z.34,
356z.35, 356z.36, 356z.37, 356z.38, 356z.39, 356z.40, 356z.41,
356z.44, 356z.45, 356z.46, 356z.47, 356z.48, 356z.49, 356z.50,
356z.51, 356z.53 256z.53, 356z.54, 356z.55, 356z.56, 356z.57,
356z.58, 356z.59, 356z.60, 364, 364.01, 364.3, 367.2, 367.2-5,
367i, 368a, 368b, 368c, 368d, 368e, 370c, 370c.1, 401, 401.1,
402, 403, 403A, 408, 408.2, 409, 412, 444, and 444.1,
paragraph (c) of subsection (2) of Section 367, and Articles
IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, XXVI, and
XXXIIB of the Illinois Insurance Code.
(b) For purposes of the Illinois Insurance Code, except
for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
Health Maintenance Organizations in the following categories
are deemed to be "domestic companies":
(1) a corporation authorized under the Dental Service
Plan Act or the Voluntary Health Services Plans Act;
(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of another
state, 30% or more of the enrollees of which are residents
of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article VIII
1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration to
the continuation of benefits to enrollees and the
financial conditions of the acquired Health Maintenance
Organization after the merger, consolidation, or other
acquisition of control takes effect;
(2)(i) the criteria specified in subsection (1)(b) of
Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination
with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or
other acquisition of control;
(3) the Director shall have the power to require the
following information:
(A) certification by an independent actuary of the
adequacy of the reserves of the Health Maintenance
Organization sought to be acquired;
(B) pro forma financial statements reflecting the
combined balance sheets of the acquiring company and
the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as of
a date 90 days prior to the acquisition, as well as pro
forma financial statements reflecting projected
combined operation for a period of 2 years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the operation
of the Health Maintenance Organization sought to be
acquired for a period of not less than 3 years; and
(D) such other information as the Director shall
require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale by
any health maintenance organization of greater than 10% of its
enrollee population (including without limitation the health
maintenance organization's right, title, and interest in and
to its health care certificates).
(e) In considering any management contract or service
agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code,
take into account the effect of the management contract or
service agreement on the continuation of benefits to enrollees
and the financial condition of the health maintenance
organization to be managed or serviced, and (ii) need not take
into account the effect of the management contract or service
agreement on competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a
Health Maintenance Organization may by contract agree with a
group or other enrollment unit to effect refunds or charge
additional premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions with
respect to, the refund or additional premium are set forth
in the group or enrollment unit contract agreed in advance
of the period for which a refund is to be paid or
additional premium is to be charged (which period shall
not be less than one year); and
(ii) the amount of the refund or additional premium
shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the
period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and
marketing expenses, but shall not include any refund to be
made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the profitable
or unprofitable experience may be calculated taking into
account the refund period and the immediately preceding 2
plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and
the resulting additional premium to be paid by the group or
enrollment unit.
In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay any
refund authorized under this Section.
(g) Rulemaking authority to implement Public Act 95-1045,
if any, is conditioned on the rules being adopted in
accordance with all provisions of the Illinois Administrative
Procedure Act and all rules and procedures of the Joint
Committee on Administrative Rules; any purported rule not so
adopted, for whatever reason, is unauthorized.
(Source: P.A. 101-13, eff. 6-12-19; 101-81, eff. 7-12-19;
101-281, eff. 1-1-20; 101-371, eff. 1-1-20; 101-393, eff.
1-1-20; 101-452, eff. 1-1-20; 101-461, eff. 1-1-20; 101-625,
eff. 1-1-21; 102-30, eff. 1-1-22; 102-34, eff. 6-25-21;
102-203, eff. 1-1-22; 102-306, eff. 1-1-22; 102-443, eff.
1-1-22; 102-589, eff. 1-1-22; 102-642, eff. 1-1-22; 102-665,
eff. 10-8-21; 102-731, eff. 1-1-23; 102-775, eff. 5-13-22;
102-804, eff. 1-1-23; 102-813, eff. 5-13-22; 102-816, eff.
1-1-23; 102-860, eff. 1-1-23; 102-901, eff. 7-1-22; 102-1093,
eff. 1-1-23; 102-1117, eff. 1-13-23; revised 1-22-23.)
Section 27. The Limited Health Service Organization Act is
amended by changing Section 4003 as follows:
(215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
Sec. 4003. Illinois Insurance Code provisions. Limited
health service organizations shall be subject to the
provisions of Sections 133, 134, 136, 137, 139, 140, 141.1,
141.2, 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154,
154.5, 154.6, 154.7, 154.8, 155.04, 155.37, 155.49, 355.2,
355.3, 355b, 356q, 356v, 356z.10, 356z.21, 356z.22, 356z.25,
356z.26, 356z.29, 356z.30a, 356z.32, 356z.33, 356z.41,
356z.46, 356z.47, 356z.51, 356z.53, 356z.54, 356z.57, 356z.59,
364.3, 368a, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412,
444, and 444.1 and Articles IIA, VIII 1/2, XII, XII 1/2, XIII,
XIII 1/2, XXV, and XXVI of the Illinois Insurance Code. For
purposes of the Illinois Insurance Code, except for Sections
444 and 444.1 and Articles XIII and XIII 1/2, limited health
service organizations in the following categories are deemed
to be domestic companies:
(1) a corporation under the laws of this State; or
(2) a corporation organized under the laws of another
state, 30% or more of the enrollees of which are residents
of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a domestic company under Article VIII
1/2 of the Illinois Insurance Code.
(Source: P.A. 101-81, eff. 7-12-19; 101-281, eff. 1-1-20;
101-393, eff. 1-1-20; 101-625, eff. 1-1-21; 102-30, eff.
1-1-22; 102-203, eff. 1-1-22; 102-306, eff. 1-1-22; 102-642,
eff. 1-1-22; 102-731, eff. 1-1-23; 102-775, eff. 5-13-22;
102-813, eff. 5-13-22; 102-816, eff. 1-1-23; 102-860, eff.
1-1-23; 102-1093, eff. 1-1-23; revised 12-13-22.)
Section 30. The Managed Care Reform and Patient Rights Act
is amended by changing Section 10 as follows:
(215 ILCS 134/10)
Sec. 10. Definitions.
"Adverse determination" means a determination by a health
care plan under Section 45 or by a utilization review program
under Section 85 that a health care service is not medically
necessary.
"Clinical peer" means a health care professional who is in
the same profession and the same or similar specialty as the
health care provider who typically manages the medical
condition, procedures, or treatment under review.
"Department" means the Department of Insurance.
"Emergency medical condition" means a medical condition
manifesting itself by acute symptoms of sufficient severity,
regardless of the final diagnosis given, such that a prudent
layperson, who possesses an average knowledge of health and
medicine, could reasonably expect the absence of immediate
medical attention to result in:
(1) placing the health of the individual (or, with
respect to a pregnant woman, the health of the woman or her
unborn child) in serious jeopardy;
(2) serious impairment to bodily functions;
(3) serious dysfunction of any bodily organ or part;
(4) inadequately controlled pain; or
(5) with respect to a pregnant woman who is having
contractions:
(A) inadequate time to complete a safe transfer to
another hospital before delivery; or
(B) a transfer to another hospital may pose a
threat to the health or safety of the woman or unborn
child.
"Emergency medical screening examination" means a medical
screening examination and evaluation by a physician licensed
to practice medicine in all its branches, or to the extent
permitted by applicable laws, by other appropriately licensed
personnel under the supervision of or in collaboration with a
physician licensed to practice medicine in all its branches to
determine whether the need for emergency services exists.
"Emergency services" means, with respect to an enrollee of
a health care plan, transportation services, including but not
limited to ambulance services, and covered inpatient and
outpatient hospital services furnished by a provider qualified
to furnish those services that are needed to evaluate or
stabilize an emergency medical condition. "Emergency services"
does not refer to post-stabilization medical services.
"Enrollee" means any person and his or her dependents
enrolled in or covered by a health care plan.
"Health care plan" means a plan, including, but not
limited to, a health maintenance organization, a managed care
community network as defined in the Illinois Public Aid Code,
or an accountable care entity as defined in the Illinois
Public Aid Code that receives capitated payments to cover
medical services from the Department of Healthcare and Family
Services, that establishes, operates, or maintains a network
of health care providers that has entered into an agreement
with the plan to provide health care services to enrollees to
whom the plan has the ultimate obligation to arrange for the
provision of or payment for services through organizational
arrangements for ongoing quality assurance, utilization review
programs, or dispute resolution. Nothing in this definition
shall be construed to mean that an independent practice
association or a physician hospital organization that
subcontracts with a health care plan is, for purposes of that
subcontract, a health care plan.
For purposes of this definition, "health care plan" shall
not include the following:
(1) indemnity health insurance policies including
those using a contracted provider network;
(2) health care plans that offer only dental or only
vision coverage;
(3) preferred provider administrators, as defined in
Section 370g(g) of the Illinois Insurance Code;
(4) employee or employer self-insured health benefit
plans under the federal Employee Retirement Income
Security Act of 1974;
(5) health care provided pursuant to the Workers'
Compensation Act or the Workers' Occupational Diseases
Act; and
(6) except with respect to subsections (a) and (b) of
Section 65 and subsection (a-5) of Section 70,
not-for-profit voluntary health services plans with health
maintenance organization authority in existence as of
January 1, 1999 that are affiliated with a union and that
only extend coverage to union members and their
dependents.
"Health care professional" means a physician, a registered
professional nurse, or other individual appropriately licensed
or registered to provide health care services.
"Health care provider" means any physician, hospital
facility, facility licensed under the Nursing Home Care Act,
long-term care facility as defined in Section 1-113 of the
Nursing Home Care Act, or other person that is licensed or
otherwise authorized to deliver health care services. Nothing
in this Act shall be construed to define Independent Practice
Associations or Physician-Hospital Organizations as health
care providers.
"Health care services" means any services included in the
furnishing to any individual of medical care, or the
hospitalization incident to the furnishing of such care, as
well as the furnishing to any person of any and all other
services for the purpose of preventing, alleviating, curing,
or healing human illness or injury including behavioral
health, mental health, home health, and pharmaceutical
services and products.
"Medical director" means a physician licensed in any state
to practice medicine in all its branches appointed by a health
care plan.
"Person" means a corporation, association, partnership,
limited liability company, sole proprietorship, or any other
legal entity.
"Physician" means a person licensed under the Medical
Practice Act of 1987.
"Post-stabilization medical services" means health care
services provided to an enrollee that are furnished in a
licensed hospital by a provider that is qualified to furnish
such services, and determined to be medically necessary and
directly related to the emergency medical condition following
stabilization.
"Stabilization" means, with respect to an emergency
medical condition, to provide such medical treatment of the
condition as may be necessary to assure, within reasonable
medical probability, that no material deterioration of the
condition is likely to result.
"Utilization review" means the evaluation of the medical
necessity, appropriateness, and efficiency of the use of
health care services, procedures, and facilities.
"Utilization review program" means a program established
by a person to perform utilization review.
(Source: P.A. 101-452, eff. 1-1-20; 102-409, eff. 1-1-22.)
Section 99. Effective date. This Act takes effect July 1,
2023.
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