HB 5540

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Full Text of HB5540
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	HB5540 - 104th General Assembly
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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.
LRB104 20668 RPS 34166 b
	STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT
MAY APPLY
A BILL FOR
		HB5540		LRB104 20668 RPS 34166 b
1    AN ACT concerning public employee benefits.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Pension Code is amended by adding
5Section 7-141.5 as follows:
6    (40 ILCS 5/7-141.5 new)
7    Sec. 7-141.5. Retirement annuity; interest payment. If the 
8payment of a retirement annuity is made to an annuitant more 
9than one month after that retirement annuity payment became 
10payable, then the Fund shall pay interest to the annuitant in 
11an amount equal to 6% of that payment of the retirement 
12annuity.
13    Section 10. The Illinois Insurance Code is amended by
14changing Section 367j as follows:
15    (215 ILCS 5/367j)  (from Ch. 73, par. 979j)
16    Sec. 367j. Municipal employee's continuance privilege.
17    (a) As used in this Section:
18        (1) The term "creditable service" shall have the
19    meaning ascribed to it by Section 7-113 of the Illinois
20    Pension Code.
21        (2) The term "municipality" means any municipality,
		HB5540	- 2 -	LRB104 20668 RPS 34166 b
1    instrumentality, or participating instrumentality (as
2    those terms are defined in Sections 7-105, 7-107 and
3    7-108, respectively, of the Illinois Pension Code) that
4    participates in the Illinois Municipal Retirement Fund
5    pursuant to Section 7-132 of the Illinois Pension Code.
6        (3) The term "employee" shall mean an employee as
7    defined in Section 7-109 of the Illinois Pension Code, but
8    does not include any person who is a deputy as defined in
9    Section 367h of this Code.
10        (4) The "retirement or disability period" of an
11    employee means the period:
12            (A) which begins on the day the employee is
13        removed from the municipality payroll because of the
14        occurrence of either of the following events: (i) the
15        employee retires from active service as an employee
16        with an attained age and accumulated creditable
17        service which together qualify the employee for
18        immediate receipt of retirement pension benefits under
19        Article 7 of the Illinois Pension Code, or (ii) the
20        employee's disability is established under Article 7
21        of the Illinois Pension Code; and
22            (B) which ends on the first to occur of any of the
23        following events: (i) the employee's reinstatement or
24        reentry into active service as provided for under
25        Article 7 of the Illinois Pension Code, (ii) the
26        employee's exercise of any refund option or acceptance
		HB5540	- 3 -	LRB104 20668 RPS 34166 b
1        of any separation benefit available under Article 7 of
2        the Illinois Pension Code, (iii) the employee's loss
3        pursuant to Section 7-219 of the Illinois Pension Code
4        of any benefits provided for in Article 7 of that Code,
5        or (iv) the employee's death or, if at the time of the
6        employee's death the employee is survived by a spouse
7        who, in that capacity, is entitled to receive a
8        surviving spouse's monthly pension pursuant to Article
9        7 of the Illinois Pension Code, the death or
10        remarriage of that spouse.
11    (b) No policy of group accident and health insurance under
12which employees of a municipality are insured for their
13individual benefit shall be issued or delivered in this State
14to a municipality unless such group policy provides for the
15election of continued group insurance coverage for the
16retirement or disability period of each employee who is
17insured under the provisions of the group policy on the day
18immediately preceding the day on which the retirement or
19disability period of such employee begins. So long as any
20required premiums for continued group insurance coverage are
21paid in accordance with the provisions of the group policy, an
22election made pursuant to this Section shall provide continued
23group insurance coverage for an employee throughout the
24retirement or disability period of the employee and, unless
25the employee otherwise elects and subject to any other
26provisions of the group policy which relate either to the
		HB5540	- 4 -	LRB104 20668 RPS 34166 b
1provision or to the termination of dependents' coverage and
2which are not inconsistent with this Section, for any
3dependents of the employee who are insured under the group
4policy on the day immediately preceding the day on which the
5retirement or disability period of the employee begins;
6provided, however, that when such continued group insurance
7coverage is in effect with respect to an employee on the date
8of the employee's death but the retirement or disability
9period of the employee does not end with the employee's death,
10then the deceased employee's surviving spouse upon whose death
11or remarriage such retirement or disability period will end
12shall be entitled, without further election and upon payment
13of any required premiums in accordance with the provisions of
14the group policy, to maintain such continued group insurance
15coverage in effect until the end of the retirement or
16disability period. Continued group insurance coverage shall be
17provided in accordance with this Section at the same premium
18rate from time to time charged for equivalent coverage
19provided under the group policy with respect to covered
20employees whose retirement or disability period has not begun,
21and no distinction or discrimination in the amount or rate of
22premiums or in any waiver of premium or other benefit
23provision shall be made between continued group insurance
24coverage elected pursuant to this Section and equivalent
25coverage provided to employees under the group policy other
26than pursuant to the provisions of this Section; provided that
		HB5540	- 5 -	LRB104 20668 RPS 34166 b
1no municipality shall be required by reason of any provision
2of this Section to pay any group insurance premium other than
3one that may be negotiated in a collective bargaining
4agreement. If the group policy provides for a reduction in
5benefits and premium for insureds who become eligible for
6medicare, such provision shall apply to persons electing
7continued coverage under this Section.
8    Within 15 days of the beginning of the retirement or
9disability period of any employee entitled to elect continued
10group insurance coverage under any group policy affected by
11this Section, the municipality last employing such employee
12shall give written notice of such beginning by certified mail,
13return receipt requested, to the insurance company issuing
14such policy. The notice shall include the employee's name and
15last known place of residence and the beginning date of the
16employee's retirement or disability period.
17    Within 15 days of the date of receipt of such notice from
18the municipality, the insurance company by certified mail,
19return receipt requested, shall give written notice to the
20employee at the employee's last known place of residence that
21coverage under the group policy may be continued for the
22retirement or disability period of the employee as provided in
23this Section. Such notice shall set forth: (i) a statement of
24election to be filed by the employee if the employee wishes to
25continue such group insurance coverage, (ii) the amount of
26monthly premium, including a statement of the portion of such
		HB5540	- 6 -	LRB104 20668 RPS 34166 b
1monthly premium attributable to any dependents' coverage which
2the employee may elect, and (iii) instructions as to the
3return of the election form to the insurance company issuing
4such policy. Election shall be made, if at all, by returning
5the statement of election to the insurance company by
6certified mail, return receipt requested, within 15 days after
7having received it.
8    If the employee elects to continue coverage, it shall be
9the obligation of the employee to pay the monthly premium
10directly to the municipality which shall forward it to the
11insurance company issuing the group insurance policy, or as
12otherwise directed by the insurance company; provided,
13however, that the employee shall be entitled to designate on
14the statement of election required to be filed with the
15insurance company that the total monthly premium, or such
16portion thereof as is not contributed by a municipality, be
17deducted by the Illinois Municipal Retirement Fund from the
18monthly pension payment otherwise payable to or on behalf of
19the employee pursuant to Article 7 of the Illinois Pension
20Code, and be remitted by such Fund to the insurance company. If 
21the employee has elected to have the monthly premium deducted 
22by the Illinois Municipal Retirement Fund from the employee's 
23monthly pension payment, then the Illinois Municipal 
24Retirement Fund shall promptly remit the premium payments to 
25the insurance company, regardless of whether the employee's 
26monthly pension payment has been paid to the employee. The
		HB5540	- 7 -	LRB104 20668 RPS 34166 b
1portion, if any, of the monthly premium contributed by a
2municipality for such continued group insurance coverage shall
3be paid by the municipality directly to the insurance company
4issuing the group insurance policy, or as directed by the
5insurance company. Such continued group insurance coverage
6shall relate back to the beginning of the employee's
7retirement or disability period.
8    The amendment, renewal or extension of any group insurance
9policy affected by this Section shall be deemed to be the
10issuance of a new policy of insurance for purposes of this
11Section.
12    (c) In the event that a municipality makes a program of
13accident, health, hospital or medical benefits available to
14its employees through self-insurance, or by participation in a
15pool or reciprocal insurer, or by contract in a form other than
16a policy of group insurance with one or more medical service
17plans, health care service corporations, health maintenance
18organizations, or any other professional corporations or plans
19under which health care or reimbursement for the costs thereof
20is provided, whether the cost of such benefits is borne by the
21municipality or the employees or both, such employees and
22their surviving spouses shall have the same right to elect
23continued coverage under such program of benefits as they
24would have if such benefits were provided by a policy of group
25accident and health insurance. In such cases, the notice of
26right to elect continued coverage shall be sent by the
		HB5540	- 8 -	LRB104 20668 RPS 34166 b
1municipality; the statement of election shall be sent to the
2municipality; and references to the required premium shall
3refer to that portion of the cost of such benefits which is not
4borne by the municipality, either voluntarily or pursuant to
5the provisions of a collective bargaining agreement. In the
6case of a municipality providing such benefits through
7self-insurance or participation in a pool or reciprocal
8insurer, the right to elect continued coverage which is
9provided by this paragraph shall be implemented and made
10available to the employees of the municipality and qualifying
11surviving spouses not later than July 1, 1991.
12    The amendment, renewal or extension of any such contract
13in a form other than a policy of group insurance policy shall
14be deemed the formation of a new contract for the purposes of
15this Section.
16    (d) This Section shall not limit the exercise of any
17conversion privileges available under Section 367e.
18(Source: P.A. 86-1444; 87-435.)
19    Section 90. The State Mandates Act is amended by adding
20Section 8.50 as follows:
21    (30 ILCS 805/8.50 new)
22    Sec. 8.50. Exempt mandate. Notwithstanding Sections 6 and 
238 of this Act, no reimbursement by the State is required for 
24the implementation of any mandate created by this amendatory 
		HB5540	- 9 -	LRB104 20668 RPS 34166 b
1Act of the 104th General Assembly.