Laws & Statutes › IL › IL-HB-0035
HB-0035
IL · State · USA
IL
USA
● Pending
Proposed Effective Date
2025-01-01
Illinois HB 0035 — Artificial Intelligence Systems Use in Health Insurance Act
Regulates the use of AI systems and predictive models by health insurance issuers authorized to do business in Illinois. Prohibits adverse consumer outcomes — including denial, reduction, or termination of health insurance coverage or benefits — that result solely from the use of AI systems or predictive models. Requires meaningful human review by an individual with override authority before any such adverse outcome is issued; when the adverse outcome is an adverse determination under the Managed Care Reform and Patient Rights Act, the reviewer must be a clinical peer. Establishes the Department of Insurance as the enforcement authority with broad investigatory powers over AI governance, risk management, third-party AI diligence, and AI systems programs. Authorizes the Department to adopt rules for disclosure of AI use to consumers, including pre-decision notice and appeals processes.
Passage Likelihood
High
Chamber passed chamber of origin
Committee Passed
Majority party Yes
Bipartisan No
Prior session None
Legislative History
2024-12-06 introduced Prefiled with Clerk by Rep. Bob Morgan
2025-01-09 introduced First Reading
2025-01-09 committee referral Referred to Rules Committee
2025-02-04 committee referral Assigned to Insurance Committee
2025-03-11 committee passage Do Pass / Short Debate Insurance Committee; 011-006-000
2025-03-11 Added Co-Sponsor Rep. Lilian Jiménez Added Co-Sponsor Rep. Lilian Jiménez
2025-03-12 Placed on Calendar 2nd Reading - Short Debate Placed on Calendar 2nd Reading - Short Debate
2025-03-26 Second Reading - Short Debate Second Reading - Short Debate
2025-03-26 Held on Calendar Order of Second Reading - Short Debate Held on Calendar Order of Second Reading - Short Debate
2025-04-04 introduced House Floor Amendment No. 1 Filed with Clerk by Rep. Bob Morgan
2025-04-04 committee referral House Floor Amendment No. 1 Referred to Rules Committee
2025-04-07 amendment House Floor Amendment No. 1 Rules Refers to Insurance Committee
2025-04-08 amendment House Floor Amendment No. 1 Recommends Be Adopted Insurance Committee; 010-004-000
2025-04-09 amendment House Floor Amendment No. 1 Adopted
2025-04-09 chamber passage Third Reading - Short Debate - Passed 079-035-000
2025-04-09 Added Co-Sponsor Rep. Janet Yang Rohr Added Co-Sponsor Rep. Janet Yang Rohr
2025-04-09 Placed on Calendar Order of 3rd Reading - Short Debate Placed on Calendar Order of 3rd Reading - Short Debate
2025-04-09 Added Co-Sponsor Rep. Nicolle Grasse Added Co-Sponsor Rep. Nicolle Grasse
2025-04-09 Added Co-Sponsor Rep. Jennifer Gong-Gershowitz Added Co-Sponsor Rep. Jennifer Gong-Gershowitz
2025-04-09 Added Co-Sponsor Rep. Curtis J. Tarver, II Added Co-Sponsor Rep. Curtis J. Tarver, II
2025-04-10 introduced Placed on Calendar Order of First Reading
2025-04-10 introduced First Reading
2025-04-10 committee referral Referred to Assignments
2025-04-10 Added Co-Sponsor Rep. Hoan Huynh Added Co-Sponsor Rep. Hoan Huynh
2025-04-10 Arrive in Senate Arrive in Senate
2025-04-10 Chief Senate Sponsor Sen. Laura Fine
2025-04-23 committee referral Assigned to Executive
2025-05-09 Rule 2-10 Committee Deadline Established As May 23, 2025 Rule 2-10 Committee Deadline Established As May 23, 2025
2025-05-12 introduced Senate Committee Amendment No. 1 Filed with Secretary by Sen. Laura Fine
2025-05-12 committee referral Senate Committee Amendment No. 1 Referred to Assignments
2025-05-13 Senate Committee Amendment No. 1 Assignments Refers to Executive Senate Committee Amendment No. 1 Assignments Refers to Executive
2025-05-23 Rule 2-10 Committee Deadline Established As June 1, 2025 Rule 2-10 Committee Deadline Established As June 1, 2025
2025-05-27 Added as Alternate Co-Sponsor Sen. Graciela Guzmán Added as Alternate Co-Sponsor Sen. Graciela Guzmán
2025-06-02 committee referral Rule 3-9(a) / Re-referred to Assignments
2025-06-02 committee referral Senate Committee Amendment No. 1 Rule 3-9(a) / Re-referred to Assignments
Mapped Requirements
HC-01 Healthcare AI Decision Restrictions R-02 Regulatory Disclosure & Submissions G-01 AI Governance Program & Documentation
Official Sources
Full Text ↗
Entry Last Reviewed
2026-04-02
AI generated
Summary

Regulates the use of AI systems and predictive models by health insurance issuers authorized to do business in Illinois. Prohibits adverse consumer outcomes — including denial, reduction, or termination of health insurance coverage or benefits — that result solely from the use of AI systems or predictive models. Requires meaningful human review by an individual with override authority before any such adverse outcome is issued; when the adverse outcome is an adverse determination under the Managed Care Reform and Patient Rights Act, the reviewer must be a clinical peer. Establishes the Department of Insurance as the enforcement authority with broad investigatory powers over AI governance, risk management, third-party AI diligence, and AI systems programs. Authorizes the Department to adopt rules for disclosure of AI use to consumers, including pre-decision notice and appeals processes.

Enforcement & Penalties
Enforcement Authority
Illinois Department of Insurance. Enforcement is agency-initiated through the Department's existing investigation and market conduct action authority. The Department may request information and documentation from health insurance issuers and third parties, and compliance is mandatory. No private right of action is created by the Act.
Penalties
The Act does not specify independent penalty amounts, damages, or remedies. Enforcement relies on the Department of Insurance's existing regulatory authority, including penalties available under the Illinois Insurance Code for noncompliance with Department investigations and market conduct actions.
Who Is Covered
"Health insurance issuer" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance issuer" includes a company offering accident and health insurance under Class 1(b) or 2(a) of Section 4 of the Illinois Insurance Code, a dental service plan corporation, a health maintenance organization, a limited health service organization, a limited health services organization, or a health services plan corporation transacting or authorized to transact business under the Department's jurisdiction.
Compliance Obligations 6 obligations · click obligation ID to open requirement page
HC-01 Healthcare AI Decision Restrictions · HC-01.1HC-01.2 · Deployer · Healthcare
Section 10(b)
Plain Language
Health insurance issuers may not deny, reduce, or terminate coverage or benefits based solely on an AI system or predictive model output. Every adverse consumer outcome involving AI must receive meaningful human review — by an individual with actual authority to override the AI's determination — before it is issued. When the adverse outcome is an adverse determination under the Managed Care Reform and Patient Rights Act, the human reviewer must be a clinical peer as defined under that Act. The Department of Insurance will establish specific review procedures by rule. This creates two distinct obligations: (1) no AI-only adverse decisions, and (2) mandatory human review with override authority for all AI-informed adverse decisions.
Statutory Text
(b) A health insurance issuer authorized to do business in this State shall not issue an adverse consumer outcome with regard to the denial, reduction, or termination of health insurance coverage or benefits that result solely from the use or application of any AI system or predictive model. Any decision-making process concerning the denial, reduction, or termination of insurance plans or benefits that results from the use of AI systems or predictive models shall be meaningfully reviewed, in accordance with review procedures established by Department rules, by an individual with authority to override the AI systems and the determinations of the AI systems. When an adverse consumer outcome is an adverse determination regulated under the Managed Care Reform and Patient Rights Act, the individual with authority to override the AI systems and the determinations of the AI systems shall be a clinical peer as required and defined under that Act.
R-02 Regulatory Disclosure & Submissions · R-02.2 · Deployer · Healthcare
Section 10(a)
Plain Language
The Department of Insurance has broad authority to request any information or documentation related to a health insurance issuer's use of AI systems during an investigation or market conduct action, and the issuer must comply. The scope of permissible requests is expansive: it covers AI governance, risk management, use protocols, third-party AI vendor diligence and monitoring, and the issuer's AI systems program implementation. This is a produce-on-demand obligation — the statute does not require proactive submission, but issuers must maintain documentation in a form that can be produced when requested. Both insurers and other persons subject to Section 132(b) of the Illinois Insurance Code are obligated to comply.
Statutory Text
(a) The Department's regulatory oversight of health insurance coverage includes oversight of the use of AI systems or predictive models to make or support adverse consumer outcomes. The Department's authority in an investigation or market conduct action includes review regarding the development, implementation, and use of AI systems or predictive models and the outcomes from the use of those AI systems or predictive models. The Department may also request other information or documentation relevant to an investigation or market conduct action, and a health insurance issuer or any other person described in subsection (b) of Section 132 of the Illinois Insurance Code must comply with that request. The Department's inquiries may include, but are not limited to, questions regarding any specific model, AI system, or application of a model or AI system. The Department may also make requests for information and documentation relating to AI systems governance, risk management, and use protocols; information and documentation relating to the health insurance issuer's preacquisition and preutilization diligence, monitoring, and auditing of data or AI systems developed or used by a third party; and information and documentation relating to implementation and compliance with the health insurance issuer's AI systems program.
G-01 AI Governance Program & Documentation · G-01.1 · Deployer · Healthcare
Section 20(b)
Plain Language
Health insurance issuers must establish and maintain an AI systems program — encompassing governance, risk management, and internal audit functions — with policies and procedures that ensure compliance with this Act by all employees, officers, agents, and contractors involved in administering health insurance coverage. The issuer bears ultimate responsibility for noncompliance, including noncompliance by third-party vendors. Other persons involved in administering coverage are not relieved of their own liability for failing to cooperate with Department investigations. This effectively requires a formal governance program that extends compliance controls across the issuer's entire supply chain of AI-related services.
Statutory Text
(b) A health insurance issuer shall ensure that its health insurance coverage is administered in conformity with this Act. The health insurance issuer's AI systems program shall include policies and procedures to ensure such conformity by all employees, directors, trustees, agents, representatives, and persons directly or indirectly contracted to administer the health insurance coverage. The health insurance issuer shall be responsible for any noncompliance under this Act with respect to its health insurance coverage. Nothing in this Section relieves any other person from liability for failure to comply with the Department's investigations or market conduct actions related to a health insurance issuer's compliance with this Act.
HC-01 Healthcare AI Decision Restrictions · HC-01.6 · Deployer · Healthcare
Section 15
Plain Language
The Department of Insurance is authorized — but not required — to adopt rules establishing consumer disclosure standards for health insurance issuers' use of AI systems. The potential scope of such rules is broad: pre-decision notice of AI use, post-adverse-decision notice, disclosure of how personal information informs decisions, a correction process for inaccurate data, and appeal instructions. This is a rulemaking authorization rather than a self-executing obligation — health insurance issuers face no immediate disclosure requirement from this section until the Department promulgates rules. However, prudent issuers should anticipate that rules will be adopted and begin designing disclosure processes accordingly.
Statutory Text
The Department of Insurance may adopt rules that include standards for the full and fair disclosure of a health insurance issuer's use of AI systems that may impact consumers, that set forth the manner, content, and required disclosures including notice before the use of AI systems, notice after an adverse decision, the way personal information is used to inform decisions, a process for correcting inaccurate information, and instructions for appealing decisions.
Other · Healthcare
Section 95 (215 ILCS 165/15.35 new)
Plain Language
This provision amends the Voluntary Health Services Plans Act to confirm that health services plan corporations are subject to the Artificial Intelligence Systems Use in Health Insurance Act. It creates no new obligation of its own — it is a cross-reference ensuring that health services plan corporations fall within the Act's existing coverage.
Statutory Text
Sec. 15.35. Artificial Intelligence Systems Use in Health Insurance Act. A health service plan corporation is subject to the provisions of the Artificial Intelligence Systems use in Health Insurance Act.
Other · Healthcare
Section 20(a)
Plain Language
This provision confirms that health insurance issuers must comply with this Act and all existing insurance laws — including unfair trade practices and discrimination laws — when using AI systems. It does not create a new standalone obligation; it reaffirms that AI use does not create an exemption from preexisting regulatory requirements. The compliance-with-this-Act portion is tautological, and the compliance-with-existing-law portion is a pass-through, not a new obligation.
Statutory Text
(a) All health insurance issuers authorized to do business in Illinois shall comply with this Act regarding any decisions impacting consumers that are made or supported by AI systems and machine learning, and must comply with all applicable insurance laws and regulations, including laws addressing unfair trade practices and unfair discrimination. All decisions made and actions taken by authorized health insurance issuers using AI systems must comply with applicable federal and State laws, regulations, and rules.