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Bill

SB 3508

INSURANCE-VARIOUS

104th Regular Session Introduced by Bob Morgan and 1 co-sponsor

Expands dependent coverage to eligible parents under many group and individual health policies starting 2026, broadening who is insured under existing plans.

Sent to the Governor
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WeVote Research Nonpartisan
Bill Summary · SB 3508

Overview

SB3508 (104th Illinois General Assembly) introduces several amendments across the Illinois Administrative Procedure Act and the Illinois Insurance Code, with some provisions extending to related acts. The bill primarily addresses incorporation by reference in agency rules, insurer regulatory disclosures and processes, supplier diversity reporting, dependent coverage requirements, and administrative rulemaking procedures. It also repeals the Health Care Purchasing Group Act and makes targeted changes to the Network Adequacy and Transparency Act. The act becomes effective immediately upon becoming law.

Main purpose and intent

  • Modernize and clarify how agencies may incorporate federal rules by reference, including for the Department of Insurance, to streamline rulemaking related to federal health care laws.
  • Update and refine insurer governance, reporting, and licensing requirements to improve transparency, regulatory oversight, and consumer protections.
  • Expand or adjust coverage rules to include dependent parents under certain health coverage policies.
  • Reorganize record retention and confidentiality provisions among the Director of Insurance and regulatory bodies.
  • Repeal outdated or redundant legislation (Health Care Purchasing Group Act) and adjust network adequacy rules.

Key provisions and changes

  • Administrative Procedure Act (Section 5-75):

    • Allows incorporation by reference of federal rules and standards without requiring date-specific identification or a statement that later amendments are excluded, but only if the issuing body provides copies readily to the public.
    • For laws implementing the federal ACA, the Department of Insurance may adopt rules with these incorporations by reference.
    • Requires Joint Committee on Administrative Rules review of incorporation-by-reference procedures.
    • Agencies must maintain copies of incorporated materials and make them accessible to the public at no more than cost; requests for copies are not FOIA requests unless labeled as such.

  • Insurance Code amendments (Sections 143.11b, 155.49, 356z.73, 404, 500-35):

    • Assignment/transfer of property and casualty policies within holding companies or via mergers: treated as not a renewal nonrenewal for notification purposes, but requires at least 60 days’ notice to named insured and to the producer/record agent; ensures proper contract boundaries with producers, with electronic notification optional for named insured/producer.
    • Supplier diversity reporting (Section 155.49): Repeats/clarifies a 2-page annual report requirement for insurers with substantial assets, including contact information, certifications recognized, narrative goals, and procurement focus. Reports due by April 1 annually; Department publishes results for five years and holds a July workshop; creates a standard one-page template.
    • Dependent coverage (Section 356z.73): Starting January 1, 2026, group or individual accident and health policies must extend dependent coverage to eligible parents or stepparents who are qualifying relatives under IRS rules and reside within the policy’s service area, with exceptions for certain specialized plans and publicly funded programs. Applies to many policy forms, including stand-alone dental plans in the Health Benefits Exchange, Medicare supplement, hospital-only, accident-only, and certain disease-related coverages.
    • Record confidentiality and destruction (Section 404 and 500-35, with 500-35 scheduled for repeal on 1/1/2027): Strengthens confidential handling of sensitive information and outlines destruction timelines for various records, including examination papers, complaints, filings, and correspondence, with mandatory certificates of destruction and options to preserve copies via microfilming.

  • Network Adequacy and Transparency Act (Section 3 of 215 ILCS 124): Adjusts applicability; removes exemption language for short-term, limited-duration coverage with network plans, effectively broadening applicability.

  • Repeal (Health Care Purchasing Group Act): The Act is repealed.

Who is affected

  • Insurance regulators (Department of Insurance) and the Director: new rulemaking flexibility, confidentiality standards, and record management requirements.
  • Insurance companies and producers: notice requirements for policy assignments/transfers; potential changes to licensing education, costs, and government-entity course waivers; dependent-coverage expansion affecting plan designs and benefits.
  • Insurers with supplier diversity programs: annual reporting, transparency, and workshop requirements.
  • Policyholders, especially those with dependents and parents who may gain dependent coverage under existing policies.
  • Stakeholders in network adequacy and transparency, including consumers and employers, due to broader applicability of network standards.

Timelines and effective date

  • Effective date: immediately upon enactment.
  • Dependent-parent coverage: applies to policies issued, amended, delivered, or renewed on or after January 1, 2026.
  • Supplier diversity reporting: annual cycle with April 1 deadline; workshop ongoing each July.
  • Repeal of Health Care Purchasing Group Act: effective date aligned with the act’s repeal provision.

Note: The bill includes various cross-references and transitional provisions; readers should consult the final enacted text for precise statutory language and any amendment-specific clarifications.

Compiled from official sources — confirm details with the bill’s official record.

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