Illinois General Assembly - Full Text of HB5540

LRB104 20668 RPS 34166 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5540

Introduced 2/13/2026, by Rep. Tom Weber

SYNOPSIS AS INTRODUCED:

40 ILCS 5/7-141.5 new
215 ILCS 5/367j	from Ch. 73, par. 979j
30 ILCS 805/8.50 new

Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. Provides that, if the payment of a retirement annuity is made to an annuitant more than one month after that retirement annuity payment became payable, then the Fund shall pay interest to the annuitant in an amount equal to 6% of that payment of the retirement annuity. Amends the Illinois Insurance Code. In provisions concerning the municipal employee's continuance privilege, provides that if an employee has elected to have the monthly premium deducted by the Illinois Municipal Retirement Fund from the employee's monthly pension payment, then the Illinois Municipal Retirement Fund shall promptly remit the premium payments to the insurance company, regardless of whether the employee's monthly pension payment has been paid to the employee. Amends the State Mandates Act to require implementation without reimbursement.

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT MAY APPLY

A BILL FOR

AN ACT concerning public employee benefits.

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 adding Section 7-141.5 as follows:

(40 ILCS 5/7-141.5 new)

Sec. 7-141.5. Retirement annuity; interest payment. If the payment of a retirement annuity is made to an annuitant more than one month after that retirement annuity payment became payable, then the Fund shall pay interest to the annuitant in an amount equal to 6% of that payment of the retirement annuity.

Section 10. The Illinois Insurance Code is amended by changing Section 367j as follows:

(215 ILCS 5/367j) (from Ch. 73, par. 979j)

Sec. 367j. Municipal employee's continuance privilege.

(a) As used in this Section:

(1) The term "creditable service" shall have the meaning ascribed to it by Section 7-113 of the Illinois Pension Code.

(2) The term "municipality" means any municipality, instrumentality, or participating instrumentality (as those terms are defined in Sections 7-105, 7-107 and 7-108, respectively, of the Illinois Pension Code) that participates in the Illinois Municipal Retirement Fund pursuant to Section 7-132 of the Illinois Pension Code.

(3) The term "employee" shall mean an employee as defined in Section 7-109 of the Illinois Pension Code, but does not include any person who is a deputy as defined in Section 367h of this Code.

(4) The "retirement or disability period" of an employee means the period:

(A) which begins on the day the employee is removed from the municipality payroll because of the occurrence of either of the following events: (i) the employee retires from active service as an employee with an attained age and accumulated creditable service which together qualify the employee for immediate receipt of retirement pension benefits under Article 7 of the Illinois Pension Code, or (ii) the employee's disability is established under Article 7 of the Illinois Pension Code; and

(B) which ends on the first to occur of any of the following events: (i) the employee's reinstatement or reentry into active service as provided for under Article 7 of the Illinois Pension Code, (ii) the employee's exercise of any refund option or acceptance of any separation benefit available under Article 7 of the Illinois Pension Code, (iii) the employee's loss pursuant to Section 7-219 of the Illinois Pension Code of any benefits provided for in Article 7 of that Code, or (iv) the employee's death or, if at the time of the employee's death the employee is survived by a spouse who, in that capacity, is entitled to receive a surviving spouse's monthly pension pursuant to Article 7 of the Illinois Pension Code, the death or remarriage of that spouse.

(b) No policy of group accident and health insurance under which employees of a municipality are insured for their individual benefit shall be issued or delivered in this State to a municipality unless such group policy provides for the election of continued group insurance coverage for the retirement or disability period of each employee who is insured under the provisions of the group policy on the day immediately preceding the day on which the retirement or disability period of such employee begins. So long as any required premiums for continued group insurance coverage are paid in accordance with the provisions of the group policy, an election made pursuant to this Section shall provide continued group insurance coverage for an employee throughout the retirement or disability period of the employee and, unless the employee otherwise elects and subject to any other provisions of the group policy which relate either to the provision or to the termination of dependents' coverage and which are not inconsistent with this Section, for any dependents of the employee who are insured under the group policy on the day immediately preceding the day on which the retirement or disability period of the employee begins; provided, however, that when such continued group insurance coverage is in effect with respect to an employee on the date of the employee's death but the retirement or disability period of the employee does not end with the employee's death, then the deceased employee's surviving spouse upon whose death or remarriage such retirement or disability period will end shall be entitled, without further election and upon payment of any required premiums in accordance with the provisions of the group policy, to maintain such continued group insurance coverage in effect until the end of the retirement or disability period. Continued group insurance coverage shall be provided in accordance with this Section at the same premium rate from time to time charged for equivalent coverage provided under the group policy with respect to covered employees whose retirement or disability period has not begun, and no distinction or discrimination in the amount or rate of premiums or in any waiver of premium or other benefit provision shall be made between continued group insurance coverage elected pursuant to this Section and equivalent coverage provided to employees under the group policy other than pursuant to the provisions of this Section; provided that no municipality shall be required by reason of any provision of this Section to pay any group insurance premium other than one that may be negotiated in a collective bargaining agreement. If the group policy provides for a reduction in benefits and premium for insureds who become eligible for medicare, such provision shall apply to persons electing continued coverage under this Section.

Within 15 days of the beginning of the retirement or disability period of any employee entitled to elect continued group insurance coverage under any group policy affected by this Section, the municipality last employing such employee shall give written notice of such beginning by certified mail, return receipt requested, to the insurance company issuing such policy. The notice shall include the employee's name and last known place of residence and the beginning date of the employee's retirement or disability period.

Within 15 days of the date of receipt of such notice from the municipality, the insurance company by certified mail, return receipt requested, shall give written notice to the employee at the employee's last known place of residence that coverage under the group policy may be continued for the retirement or disability period of the employee as provided in this Section. Such notice shall set forth: (i) a statement of election to be filed by the employee if the employee wishes to continue such group insurance coverage, (ii) the amount of monthly premium, including a statement of the portion of such monthly premium attributable to any dependents' coverage which the employee may elect, and (iii) instructions as to the return of the election form to the insurance company issuing such policy. Election shall be made, if at all, by returning the statement of election to the insurance company by certified mail, return receipt requested, within 15 days after having received it.

If the employee elects to continue coverage, it shall be the obligation of the employee to pay the monthly premium directly to the municipality which shall forward it to the insurance company issuing the group insurance policy, or as otherwise directed by the insurance company; provided, however, that the employee shall be entitled to designate on the statement of election required to be filed with the insurance company that the total monthly premium, or such portion thereof as is not contributed by a municipality, be deducted by the Illinois Municipal Retirement Fund from the monthly pension payment otherwise payable to or on behalf of the employee pursuant to Article 7 of the Illinois Pension Code, and be remitted by such Fund to the insurance company. If the employee has elected to have the monthly premium deducted by the Illinois Municipal Retirement Fund from the employee's monthly pension payment, then the Illinois Municipal Retirement Fund shall promptly remit the premium payments to the insurance company, regardless of whether the employee's monthly pension payment has been paid to the employee. The portion, if any, of the monthly premium contributed by a municipality for such continued group insurance coverage shall be paid by the municipality directly to the insurance company issuing the group insurance policy, or as directed by the insurance company. Such continued group insurance coverage shall relate back to the beginning of the employee's retirement or disability period.

The amendment, renewal or extension of any group insurance policy affected by this Section shall be deemed to be the issuance of a new policy of insurance for purposes of this Section.

(c) In the event that a municipality makes a program of accident, health, hospital or medical benefits available to its employees through self-insurance, or by participation in a pool or reciprocal insurer, or by contract in a form other than a policy of group insurance with one or more medical service plans, health care service corporations, health maintenance organizations, or any other professional corporations or plans under which health care or reimbursement for the costs thereof is provided, whether the cost of such benefits is borne by the municipality or the employees or both, such employees and their surviving spouses shall have the same right to elect continued coverage under such program of benefits as they would have if such benefits were provided by a policy of group accident and health insurance. In such cases, the notice of right to elect continued coverage shall be sent by the municipality; the statement of election shall be sent to the municipality; and references to the required premium shall refer to that portion of the cost of such benefits which is not borne by the municipality, either voluntarily or pursuant to the provisions of a collective bargaining agreement. In the case of a municipality providing such benefits through self-insurance or participation in a pool or reciprocal insurer, the right to elect continued coverage which is provided by this paragraph shall be implemented and made available to the employees of the municipality and qualifying surviving spouses not later than July 1, 1991.

The amendment, renewal or extension of any such contract in a form other than a policy of group insurance policy shall be deemed the formation of a new contract for the purposes of this Section.

(d) This Section shall not limit the exercise of any conversion privileges available under Section 367e.

(Source: P.A. 86-1444; 87-435.)

Section 90. The State Mandates Act is amended by adding Section 8.50 as follows:

(30 ILCS 805/8.50 new)

Sec. 8.50. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 104th General Assembly.