97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3413

 

Introduced 2/24/2011, by Rep. Roger L. Eddy

 

SYNOPSIS AS INTRODUCED:
 
5 ILCS 375/6.5
30 ILCS 187/1-40 new
35 ILCS 5/201.5

    Amends the State Employees Group Insurance Act of 1971. Provides that neither the Teacher Health Insurance Security Fund nor moneys that are to be transferred from the General Revenue Fund into the Teacher Health Insurance Security Fund are subject to provisions in the Emergency Budget Act or provisions of the Illinois Income Tax Act authorizing the Governor to set aside reserves. Amends the Illinois Income Tax Act and the Emergency Budget Act of Fiscal Year 2011 to make conforming changes. Effective immediately.


LRB097 07125 JDS 47225 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3413LRB097 07125 JDS 47225 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The State Employees Group Insurance Act of 1971
5is amended by changing Section 6.5 as follows:
 
6    (5 ILCS 375/6.5)
7    Sec. 6.5. Health benefits for TRS benefit recipients and
8TRS dependent beneficiaries.
9    (a) Purpose. It is the purpose of this amendatory Act of
101995 to transfer the administration of the program of health
11benefits established for benefit recipients and their
12dependent beneficiaries under Article 16 of the Illinois
13Pension Code to the Department of Central Management Services.
14    (b) Transition provisions. The Board of Trustees of the
15Teachers' Retirement System shall continue to administer the
16health benefit program established under Article 16 of the
17Illinois Pension Code through December 31, 1995. Beginning
18January 1, 1996, the Department of Central Management Services
19shall be responsible for administering a program of health
20benefits for TRS benefit recipients and TRS dependent
21beneficiaries under this Section. The Department of Central
22Management Services and the Teachers' Retirement System shall
23cooperate in this endeavor and shall coordinate their

 

 

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1activities so as to ensure a smooth transition and
2uninterrupted health benefit coverage.
3    (c) Eligibility. All persons who were enrolled in the
4Article 16 program at the time of the transfer shall be
5eligible to participate in the program established under this
6Section without any interruption or delay in coverage or
7limitation as to pre-existing medical conditions. Eligibility
8to participate shall be determined by the Teachers' Retirement
9System. Eligibility information shall be communicated to the
10Department of Central Management Services in a format
11acceptable to the Department.
12    A TRS dependent beneficiary who is an unmarried child age
1319 or over and mentally or physically disabled does not become
14ineligible to participate by reason of (i) becoming ineligible
15to be claimed as a dependent for Illinois or federal income tax
16purposes or (ii) receiving earned income, so long as those
17earnings are insufficient for the child to be fully
18self-sufficient.
19    (d) Coverage. The level of health benefits provided under
20this Section shall be similar to the level of benefits provided
21by the program previously established under Article 16 of the
22Illinois Pension Code.
23    Group life insurance benefits are not included in the
24benefits to be provided to TRS benefit recipients and TRS
25dependent beneficiaries under this Act.
26    The program of health benefits under this Section may

 

 

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1include any or all of the benefit limitations, including but
2not limited to a reduction in benefits based on eligibility for
3federal medicare benefits, that are provided under subsection
4(a) of Section 6 of this Act for other health benefit programs
5under this Act.
6    (e) Insurance rates and premiums. The Director shall
7determine the insurance rates and premiums for TRS benefit
8recipients and TRS dependent beneficiaries, and shall present
9to the Teachers' Retirement System of the State of Illinois, by
10April 15 of each calendar year, the rate-setting methodology
11(including but not limited to utilization levels and costs)
12used to determine the amount of the health care premiums.
13        For Fiscal Year 1996, the premium shall be equal to the
14    premium actually charged in Fiscal Year 1995; in subsequent
15    years, the premium shall never be lower than the premium
16    charged in Fiscal Year 1995.
17        For Fiscal Year 2003, the premium shall not exceed 110%
18    of the premium actually charged in Fiscal Year 2002.
19        For Fiscal Year 2004, the premium shall not exceed 112%
20    of the premium actually charged in Fiscal Year 2003.
21        For Fiscal Year 2005, the premium shall not exceed a
22    weighted average of 106.6% of the premium actually charged
23    in Fiscal Year 2004.
24        For Fiscal Year 2006, the premium shall not exceed a
25    weighted average of 109.1% of the premium actually charged
26    in Fiscal Year 2005.

 

 

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1        For Fiscal Year 2007, the premium shall not exceed a
2    weighted average of 103.9% of the premium actually charged
3    in Fiscal Year 2006.
4        For Fiscal Year 2008 and thereafter, the premium in
5    each fiscal year shall not exceed 105% of the premium
6    actually charged in the previous fiscal year.
7    Rates and premiums may be based in part on age and
8eligibility for federal medicare coverage. However, the cost of
9participation for a TRS dependent beneficiary who is an
10unmarried child age 19 or over and mentally or physically
11disabled shall not exceed the cost for a TRS dependent
12beneficiary who is an unmarried child under age 19 and
13participates in the same major medical or managed care program.
14    The cost of health benefits under the program shall be paid
15as follows:
16        (1) For a TRS benefit recipient selecting a managed
17    care program, up to 75% of the total insurance rate shall
18    be paid from the Teacher Health Insurance Security Fund.
19    Effective with Fiscal Year 2007 and thereafter, for a TRS
20    benefit recipient selecting a managed care program, 75% of
21    the total insurance rate shall be paid from the Teacher
22    Health Insurance Security Fund.
23        (2) For a TRS benefit recipient selecting the major
24    medical coverage program, up to 50% of the total insurance
25    rate shall be paid from the Teacher Health Insurance
26    Security Fund if a managed care program is accessible, as

 

 

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1    determined by the Teachers' Retirement System. Effective
2    with Fiscal Year 2007 and thereafter, for a TRS benefit
3    recipient selecting the major medical coverage program,
4    50% of the total insurance rate shall be paid from the
5    Teacher Health Insurance Security Fund if a managed care
6    program is accessible, as determined by the Department of
7    Central Management Services.
8        (3) For a TRS benefit recipient selecting the major
9    medical coverage program, up to 75% of the total insurance
10    rate shall be paid from the Teacher Health Insurance
11    Security Fund if a managed care program is not accessible,
12    as determined by the Teachers' Retirement System.
13    Effective with Fiscal Year 2007 and thereafter, for a TRS
14    benefit recipient selecting the major medical coverage
15    program, 75% of the total insurance rate shall be paid from
16    the Teacher Health Insurance Security Fund if a managed
17    care program is not accessible, as determined by the
18    Department of Central Management Services.
19        (3.1) For a TRS dependent beneficiary who is Medicare
20    primary and enrolled in a managed care plan, or the major
21    medical coverage program if a managed care plan is not
22    available, 25% of the total insurance rate shall be paid
23    from the Teacher Health Security Fund as determined by the
24    Department of Central Management Services. For the purpose
25    of this item (3.1), the term "TRS dependent beneficiary who
26    is Medicare primary" means a TRS dependent beneficiary who

 

 

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1    is participating in Medicare Parts A and B.
2        (4) Except as otherwise provided in item (3.1), the
3    balance of the rate of insurance, including the entire
4    premium of any coverage for TRS dependent beneficiaries
5    that has been elected, shall be paid by deductions
6    authorized by the TRS benefit recipient to be withheld from
7    his or her monthly annuity or benefit payment from the
8    Teachers' Retirement System; except that (i) if the balance
9    of the cost of coverage exceeds the amount of the monthly
10    annuity or benefit payment, the difference shall be paid
11    directly to the Teachers' Retirement System by the TRS
12    benefit recipient, and (ii) all or part of the balance of
13    the cost of coverage may, at the school board's option, be
14    paid to the Teachers' Retirement System by the school board
15    of the school district from which the TRS benefit recipient
16    retired, in accordance with Section 10-22.3b of the School
17    Code. The Teachers' Retirement System shall promptly
18    deposit all moneys withheld by or paid to it under this
19    subdivision (e)(4) into the Teacher Health Insurance
20    Security Fund. These moneys shall not be considered assets
21    of the Retirement System.
22    (f) Financing. Beginning July 1, 1995, all revenues arising
23from the administration of the health benefit programs
24established under Article 16 of the Illinois Pension Code or
25this Section shall be deposited into the Teacher Health
26Insurance Security Fund, which is hereby created as a

 

 

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1nonappropriated trust fund to be held outside the State
2Treasury, with the State Treasurer as custodian. Any interest
3earned on moneys in the Teacher Health Insurance Security Fund
4shall be deposited into the Fund.
5    Moneys in the Teacher Health Insurance Security Fund shall
6be used only to pay the costs of the health benefit program
7established under this Section, including associated
8administrative costs, and the costs associated with the health
9benefit program established under Article 16 of the Illinois
10Pension Code, as authorized in this Section. Beginning July 1,
111995, the Department of Central Management Services may make
12expenditures from the Teacher Health Insurance Security Fund
13for those costs.
14    After other funds authorized for the payment of the costs
15of the health benefit program established under Article 16 of
16the Illinois Pension Code are exhausted and until January 1,
171996 (or such later date as may be agreed upon by the Director
18of Central Management Services and the Secretary of the
19Teachers' Retirement System), the Secretary of the Teachers'
20Retirement System may make expenditures from the Teacher Health
21Insurance Security Fund as necessary to pay up to 75% of the
22cost of providing health coverage to eligible benefit
23recipients (as defined in Sections 16-153.1 and 16-153.3 of the
24Illinois Pension Code) who are enrolled in the Article 16
25health benefit program and to facilitate the transfer of
26administration of the health benefit program to the Department

 

 

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1of Central Management Services.
2    The Department of Healthcare and Family Services, or any
3successor agency designated to procure healthcare contracts
4pursuant to this Act, is authorized to establish funds,
5separate accounts provided by any bank or banks as defined by
6the Illinois Banking Act, or separate accounts provided by any
7savings and loan association or associations as defined by the
8Illinois Savings and Loan Act of 1985 to be held by the
9Director, outside the State treasury, for the purpose of
10receiving the transfer of moneys from the Teacher Health
11Insurance Security Fund. The Department may promulgate rules
12further defining the methodology for the transfers. Any
13interest earned by moneys in the funds or accounts shall inure
14to the Teacher Health Insurance Security Fund. The transferred
15moneys, and interest accrued thereon, shall be used exclusively
16for transfers to administrative service organizations or their
17financial institutions for payments of claims to claimants and
18providers under the self-insurance health plan. The
19transferred moneys, and interest accrued thereon, shall not be
20used for any other purpose including, but not limited to,
21reimbursement of administration fees due the administrative
22service organization pursuant to its contract or contracts with
23the Department.
24    Notwithstanding any other provision of law, neither the
25Teacher Health Insurance Security Fund nor moneys that are to
26be deposited into that Fund under subsection (d) of Section 6.6

 

 

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1of this Act are subject to the Emergency Budget Act or to
2Section 201.5 of the Illinois Income Tax Act.
3    (g) Contract for benefits. The Director shall by contract,
4self-insurance, or otherwise make available the program of
5health benefits for TRS benefit recipients and their TRS
6dependent beneficiaries that is provided for in this Section.
7The contract or other arrangement for the provision of these
8health benefits shall be on terms deemed by the Director to be
9in the best interest of the State of Illinois and the TRS
10benefit recipients based on, but not limited to, such criteria
11as administrative cost, service capabilities of the carrier or
12other contractor, and the costs of the benefits.
13    (g-5) Committee. A Teacher Retirement Insurance Program
14Committee shall be established, to consist of 10 persons
15appointed by the Governor.
16    The Committee shall convene at least 4 times each year, and
17shall consider and make recommendations on issues affecting the
18program of health benefits provided under this Section.
19Recommendations of the Committee shall be based on a consensus
20of the members of the Committee.
21    If the Teacher Health Insurance Security Fund experiences a
22deficit balance based upon the contribution and subsidy rates
23established in this Section and Section 6.6 for Fiscal Year
242008 or thereafter, the Committee shall make recommendations
25for adjustments to the funding sources established under these
26Sections.

 

 

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1    (h) Continuation of program. It is the intention of the
2General Assembly that the program of health benefits provided
3under this Section be maintained on an ongoing, affordable
4basis.
5    The program of health benefits provided under this Section
6may be amended by the State and is not intended to be a pension
7or retirement benefit subject to protection under Article XIII,
8Section 5 of the Illinois Constitution.
9    (i) Repeal. (Blank).
10(Source: P.A. 95-632, eff. 9-25-07.)
 
11    Section 10. The Emergency Budget Act of Fiscal Year 2011 is
12amended by adding Section 1-40 as follows:
 
13    (30 ILCS 187/1-40 new)
14    Sec. 1-40. Teacher Health Insurance Security Fund;
15exemption. Notwithstanding any other provision of this Act,
16this Act does not apply to the Teacher Health Insurance
17Security Fund.
 
18    Section 15. The Illinois Income Tax Act is amended by
19changing Section 201.5 as follows:
 
20    (35 ILCS 5/201.5)
21    Sec. 201.5. State spending limitation and tax reduction.
22    (a) If, beginning in State fiscal year 2012 and continuing

 

 

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1through State fiscal year 2015, State spending for any fiscal
2year exceeds the State spending limitation set forth in
3subsection (b) of this Section, then the tax rates set forth in
4subsection (b) of Section 201 of this Act shall be reduced,
5according to the procedures set forth in this Section, to 3% of
6the taxpayer's net income for individuals, trusts, and estates
7and to 4.8% of the taxpayer's net income for corporations. For
8all taxable years following the taxable year in which the rate
9has been reduced pursuant to this Section, the tax rate set
10forth in subsection (b) of Section 201 of this Act shall be 3%
11of the taxpayer's net income for individuals, trusts, and
12estates and 4.8% of the taxpayer's net income for corporations.
13    (b) The State spending limitation for fiscal years 2012
14through 2015 shall be as follows: (i) for fiscal year 2012,
15$36,818,000,000; (ii) for fiscal year 2013, $37,554,000,000;
16(iii) for fiscal year 2014, $38,305,000,000; and (iv) for
17fiscal year 2015, $39,072,000,000.
18    (c) Nothwithstanding any other provision of law to the
19contrary, the Auditor General shall examine each Public Act
20authorizing State spending from State general funds and prepare
21a report no later than 30 days after receiving notification of
22the Public Act from the Secretary of State or 60 days after the
23effective date of the Public Act, whichever is earlier. The
24Auditor General shall file the report with the Secretary of
25State and copies with the Governor, the State Treasurer, the
26State Comptroller, the Senate, and the House of

 

 

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1Representatives. The report shall indicate: (i) the amount of
2State spending set forth in the applicable Public Act; (ii) the
3total amount of State spending authorized by law for the
4applicable fiscal year as of the date of the report; and (iii)
5whether State spending exceeds the State spending limitation
6set forth in subsection (b). The Auditor General may examine
7multiple Public Acts in one consolidated report, provided that
8each Public Act is examined within the time period mandated by
9this subsection (c). The Auditor General shall issue reports in
10accordance with this Section through June 30, 2015 or the
11effective date of a reduction in the rate of tax imposed by
12subsections (a) and (b) of Section 201 of this Act pursuant to
13this Section, whichever is earlier.
14    At the request of the Auditor General, each State agency
15shall, without delay, make available to the Auditor General or
16his or her designated representative any record or information
17requested and shall provide for examination or copying all
18records, accounts, papers, reports, vouchers, correspondence,
19books and other documentation in the custody of that agency,
20including information stored in electronic data processing
21systems, which is related to or within the scope of a report
22prepared under this Section. The Auditor General shall report
23to the Governor each instance in which a State agency fails to
24cooperate promptly and fully with his or her office as required
25by this Section.
26    The Auditor General's report shall not be in the nature of

 

 

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1a post-audit or examination and shall not lead to the issuance
2of an opinion as that term is defined in generally accepted
3government auditing standards.
4    (d) If the Auditor General reports that State spending has
5exceeded the State spending limitation set forth in subsection
6(b) and if the Governor has not been presented with a bill or
7bills passed by the General Assembly to reduce State spending
8to a level that does not exceed the State spending limitation
9within 45 calendar days of receipt of the Auditor General's
10report, then the Governor may, for the purpose of reducing
11State spending to a level that does not exceed the State
12spending limitation set forth in subsection (b), designate
13amounts to be set aside as a reserve from the amounts
14appropriated from the State general funds for all boards,
15commissions, agencies, institutions, authorities, colleges,
16universities, and bodies politic and corporate of the State,
17but not other constitutional officers, the legislative or
18judicial branch, the office of the Executive Inspector General,
19or the Executive Ethics Commission. Such a designation must be
20made within 15 calendar days after the end of that 45-day
21period. If the Governor designates amounts to be set aside as a
22reserve, the Governor shall give notice of the designation to
23the Auditor General, the State Treasurer, the State
24Comptroller, the Senate, and the House of Representatives. The
25amounts placed in reserves shall not be transferred, obligated,
26encumbered, expended, or otherwise committed unless so

 

 

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1authorized by law. Any amount placed in reserves is not State
2spending and shall not be considered when calculating the total
3amount of State spending. Any Public Act authorizing the use of
4amounts placed in reserve by the Governor is considered State
5spending, unless such Public Act authorizes the use of amounts
6placed in reserves in response to a fiscal emergency under
7subsection (g).
8    (e) If the Auditor General reports under subsection (c)
9that State spending has exceeded the State spending limitation
10set forth in subsection (b), then the Auditor General shall
11issue a supplemental report no sooner than the 61st day and no
12later than the 65th day after issuing the report pursuant to
13subsection (c). The supplemental report shall: (i) summarize
14details of actions taken by the General Assembly and the
15Governor after the issuance of the initial report to reduce
16State spending, if any, (ii) indicate whether the level of
17State spending has changed since the initial report, and (iii)
18indicate whether State spending exceeds the State spending
19limitation. The Auditor General shall file the report with the
20Secretary of State and copies with the Governor, the State
21Treasurer, the State Comptroller, the Senate, and the House of
22Representatives. If the supplemental report of the Auditor
23General provides that State spending exceeds the State spending
24limitation, then the rate of tax imposed by subsections (a) and
25(b) of Section 201 is reduced as provided in this Section
26beginning on the first day of the first month to occur not less

 

 

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1than 30 days after issuance of the supplemental report.
2    (f) For any taxable year in which the rates of tax have
3been reduced under this Section, the tax imposed by subsections
4(a) and (b) of Section 201 shall be determined as follows:
5        (1) In the case of an individual, trust, or estate, the
6    tax shall be imposed in an amount equal to the sum of (i)
7    the rate applicable to the taxpayer under subsection (b) of
8    Section 201 (without regard to the provisions of this
9    Section) times the taxpayer's net income for any portion of
10    the taxable year prior to the effective date of the
11    reduction and (ii) 3% of the taxpayer's net income for any
12    portion of the taxable year on or after the effective date
13    of the reduction.
14        (2) In the case of a corporation, the tax shall be
15    imposed in an amount equal to the sum of (i) the rate
16    applicable to the taxpayer under subsection (b) of Section
17    201 (without regard to the provisions of this Section)
18    times the taxpayer's net income for any portion of the
19    taxable year prior to the effective date of the reduction
20    and (ii) 4.8% of the taxpayer's net income for any portion
21    of the taxable year on or after the effective date of the
22    reduction.
23        (3) For any taxpayer for whom the rate has been reduced
24    under this Section for a portion of a taxable year, the
25    taxpayer shall determine the net income for each portion of
26    the taxable year following the rules set forth in Section

 

 

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1    202.5 of this Act, using the effective date of the rate
2    reduction rather than the January 1 dates found in that
3    Section, and the day before the effective date of the rate
4    reduction rather than the December 31 dates found in that
5    Section.
6        (4) If the rate applicable to the taxpayer under
7    subsection (b) of Section 201 (without regard to the
8    provisions of this Section) changes during a portion of the
9    taxable year to which that rate is applied under paragraphs
10    (1) or (2) of this subsection (f), the tax for that portion
11    of the taxable year for purposes of paragraph (1) or (2) of
12    this subsection (f) shall be determined as if that portion
13    of the taxable year were a separate taxable year, following
14    the rules set forth in Section 202.5 of this Act. If the
15    taxpayer elects to follow the rules set forth in subsection
16    (b) of Section 202.5, the taxpayer shall follow the rules
17    set forth in subsection (b) of Section 202.5 for all
18    purposes of this Section for that taxable year.
19    (g) Notwithstanding the State spending limitation set
20forth in subsection (b) of this Section, the Governor may
21declare a fiscal emergency by filing a declaration with the
22Secretary of State and copies with the State Treasurer, the
23State Comptroller, the Senate, and the House of
24Representatives. The declaration must be limited to only one
25State fiscal year, set forth compelling reasons for declaring a
26fiscal emergency, and request a specific dollar amount. Unless,

 

 

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1within 10 calendar days of receipt of the Governor's
2declaration, the State Comptroller or State Treasurer notifies
3the Senate and the House of Representatives that he or she does
4not concur in the Governor's declaration, State spending
5authorized by law to address the fiscal emergency in an amount
6no greater than the dollar amount specified in the declaration
7shall not be considered "State spending" for purposes of the
8State spending limitation. The Governor may not, however, take
9any action that reduces the amount transferred from the General
10Revenue Fund to the Teacher Health Insurance Security Fund
11under subsection (d) of Section 6.6 of the State Employees
12Group Insurance Act of 1971.
13    (h) As used in this Section:
14    "State general funds" means the General Revenue Fund, the
15Common School Fund, the General Revenue Common School Special
16Account Fund, the Education Assistance Fund, and the Budget
17Stabilization Fund.
18    "State spending" means (i) the total amount authorized for
19spending by appropriation or statutory transfer from the State
20general funds in the applicable fiscal year, and (ii) any
21amounts the Governor places in reserves in accordance with
22subsection (d) that are subsequently released from reserves
23following authorization by a Public Act. For the purpose of
24this definition, "appropriation" means authority to spend
25money from a State general fund for a specific amount, purpose,
26and time period, including any supplemental appropriation or

 

 

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1continuing appropriation, but does not include
2reappropriations from a previous fiscal year. For the purpose
3of this definition, "statutory transfer" means authority to
4transfer funds from one State general fund to any other fund in
5the State treasury, but does not include transfers made from
6one State general fund to another State general fund.
7    "State spending limitation" means the amount described in
8subsection (b) of this Section for the applicable fiscal year.
9(Source: P.A. 96-1496, eff. 1-13-11.)
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.