Illinois · House Bill · 2024 Session
HB35
Illinois HB 35 — Artificial Intelligence Systems Use in Health Insurance Act

Status ● Engrossed Effective N/A Passage Likelihood H

WHAT THIS BILL REGULATES · 4 REQUIREMENT TYPES

How Is This Bill Enforced

Enforcement Authority
Department of Insurance is the designated enforcement authority. Enforcement is agency-initiated through investigations and market conduct actions. The Department may request information and documentation from health insurance issuers and third parties, and compliance with such requests is mandatory. No private right of action is created.
Private Right of Action
No private right of action. Enforcement is exclusive to the designated authority.
Penalties
The bill does not specify monetary penalties, damages, or non-monetary remedies. Enforcement is through the Department of Insurance's existing regulatory authority, including investigations and market conduct actions. Penalties would presumably follow from existing Illinois Insurance Code enforcement provisions.

What This Bill Requires

Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.

Statutory Text
Analysis & Obligations
Section 1
Short title

This Act may be cited as the Artificial IntelligenceArtificial intelligence"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.Section 5 Systems Use in Health Insurance Act.

Establishes the short title of the Act as the Artificial Intelligence Systems Use in Health Insurance Act. Creates no compliance obligations.

Section 5
Definitions

In this Act: "Adverse consumer outcomeAdverse consumer outcome"Adverse consumer outcome" means a decision by a health insurance issuer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI system.Section 5" means a decision by a health insurance issuerHealth insurance issuer"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.Section 5 that is subject to insurance regulatory standards enforced by the DepartmentDepartment"Department" means the Department of Insurance.Section 5 that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5. "AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 includes artificial intelligenceArtificial intelligence"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.Section 5. "AI systems programAI systems program"AI systems program" means the health insurance issuer's controls and processes for the responsible use of AI systems, including governance, risk management, and internal audit functions, which take into account third-party AI systems and data.Section 5" means the health insurance issuerHealth insurance issuer"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.Section 5's controls and processes for the responsible use of AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5, including governance, risk management, and internal audit functions, which take into account third-party AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 and data. "AlgorithmAlgorithm"Algorithm" means a clearly specified mathematical process for computation and a set of rules that, if followed, will give a prescribed result.Section 5" means a clearly specified mathematical process for computation and a set of rules that, if followed, will give a prescribed result. "Artificial intelligenceArtificial intelligence"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.Section 5" or "AI" has the meaning given to the term "artificial intelligenceArtificial intelligence"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.Section 5" in Section 2-101 of the Illinois Human Rights Act. "CompanyCompany"Company" has the meaning given to that term in Section 2 of the Illinois Insurance Code.Section 5" has the meaning given to that term in Section 2 of the Illinois Insurance Code. "DepartmentDepartment"Department" means the Department of Insurance.Section 5" means the Department of Insurance. "Health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5" includes excepted benefits under the DepartmentDepartment"Department" means the Department of Insurance.Section 5's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code. "Health insurance issuerHealth insurance issuer"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.Section 5" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance issuerHealth insurance issuer"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.Section 5" includes a companyCompany"Company" has the meaning given to that term in Section 2 of the Illinois Insurance Code.Section 5 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 DepartmentDepartment"Department" means the Department of Insurance.Section 5's jurisdiction. "Machine learningMachine learning"Machine learning" means a field within artificial intelligence that focuses on the ability of computers to learn from provided data without being explicitly programmed.Section 5" means a field within artificial intelligenceArtificial intelligence"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.Section 5 that focuses on the ability of computers to learn from provided data without being explicitly programmed. "Predictive modelPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5" means the processing of historic data using algorithmsAlgorithm"Algorithm" means a clearly specified mathematical process for computation and a set of rules that, if followed, will give a prescribed result.Section 5 or machine learningMachine learning"Machine learning" means a field within artificial intelligence that focuses on the ability of computers to learn from provided data without being explicitly programmed.Section 5 to identify patterns and predict outcomes that can be used to make decisions or support decision-making. "Third partyThird party"Third party" means an organization other than the health insurance issuer that provides services, data, or other resources related to AI, including any person who develops or uses AI to support the health insurance issuer in administering its health insurance coverage.Section 5" means an organization other than the health insurance issuerHealth insurance issuer"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.Section 5 that provides services, data, or other resources related to AI, including any person who develops or uses AI to support the health insurance issuerHealth insurance issuer"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.Section 5 in administering its health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5.

Section 5 defines key terms used throughout the Act, including the broad definitions of AI system and predictive model that establish the scope of covered technologies, the definition of health insurance issuer that identifies covered entities, and the concept of an AI systems program that will anchor governance obligations in later sections. The definition of adverse consumer outcome is notably broad — it covers both decisions that violate insurance regulatory standards and any claim denial determined by use of an AI system.

Section 10
Regulatory oversight of the use of AI systems
Deployer

(a) 1 The DepartmentDepartment"Department" means the Department of Insurance.Section 5's regulatory oversight of health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5 includes oversight of the use of AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 or predictive modelsPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5 to make or support adverse consumer outcomesAdverse consumer outcome"Adverse consumer outcome" means a decision by a health insurance issuer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI system.Section 5. The DepartmentDepartment"Department" means the Department of Insurance.Section 5's authority in an investigation or market conduct action includes review regarding the development, implementation, and use of AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 or predictive modelsPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5 and the outcomes from the use of those AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 or predictive modelsPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5. The DepartmentDepartment"Department" means the Department of Insurance.Section 5 may also request other information or documentation relevant to an investigation or market conduct action, and a health insurance issuerHealth insurance issuer"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.Section 5 or any other person described in subsection (b) of Section 132 of the Illinois Insurance Code must comply with that request. The DepartmentDepartment"Department" means the Department of Insurance.Section 5's inquiries may include, but are not limited to, questions regarding any specific model, AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5, or application of a model or AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5. The DepartmentDepartment"Department" means the Department of Insurance.Section 5 may also make requests for information and documentation relating to AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 governance, risk management, and use protocols; information and documentation relating to the health insurance issuerHealth insurance issuer"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.Section 5's preacquisition and preutilization diligence, monitoring, and auditing of data or AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 developed or used by a third partyThird party"Third party" means an organization other than the health insurance issuer that provides services, data, or other resources related to AI, including any person who develops or uses AI to support the health insurance issuer in administering its health insurance coverage.Section 5; and information and documentation relating to implementation and compliance with the health insurance issuerHealth insurance issuer"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.Section 5's AI systems programAI systems program"AI systems program" means the health insurance issuer's controls and processes for the responsible use of AI systems, including governance, risk management, and internal audit functions, which take into account third-party AI systems and data.Section 5.

(b) 2 A health insurance issuerHealth insurance issuer"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.Section 5 authorized to do business in this State shall not issue an adverse consumer outcomeAdverse consumer outcome"Adverse consumer outcome" means a decision by a health insurance issuer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI system.Section 5 with regard to the denial, reduction, or termination of health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5 or benefits that result solely from the use or application of any AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 or predictive modelPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5. Any decision-making process concerning the denial, reduction, or termination of insurance plans or benefits that results from the use of AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 or predictive modelsPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5 shall be meaningfully reviewed, in accordance with review procedures established by DepartmentDepartment"Department" means the Department of Insurance.Section 5 rules, by an individual with authority to override the AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 and the determinations of the AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5. When an adverse consumer outcomeAdverse consumer outcome"Adverse consumer outcome" means a decision by a health insurance issuer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI system.Section 5 is an adverse determination regulated under the Managed Care Reform and Patient Rights Act, the individual with authority to override the AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 and the determinations of the AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 shall be a clinical peer as required and defined under that Act.

Section 10 is the operative core of the bill. Subsection (a) establishes the Department of Insurance's broad regulatory authority over AI systems and predictive models used in health insurance, including the power to investigate AI development, implementation, use, and outcomes. It also grants the Department authority to request information and documentation on AI governance, risk management, third-party AI diligence, and AI systems program compliance — with mandatory compliance by issuers and other persons.

Subsection (b) imposes the bill's central substantive prohibition: health insurance issuers may not issue an adverse consumer outcome regarding denial, reduction, or termination of coverage or benefits that results solely from an AI system or predictive model. Any AI-informed decision must be meaningfully reviewed by an individual with authority to override the AI. When the adverse outcome falls under the Managed Care Reform and Patient Rights Act, the reviewing individual must be a clinical peer as defined under that Act.

Compliance actions 2 items
1
Health insurance issuersHealth insurance issuer"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.Section 5 must comply with Department of Insurance requests for information and documentation relating to AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 and predictive modelsPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5, including documentation on AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 governance, risk management, and use protocols; preacquisition and preutilization diligence, monitoring, and auditing of third-party AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 and data; and implementation and compliance with the issuer's AI systems programAI systems program"AI systems program" means the health insurance issuer's controls and processes for the responsible use of AI systems, including governance, risk management, and internal audit functions, which take into account third-party AI systems and data.Section 5. This includes responding to inquiries regarding any specific model, AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5, or application thereof during investigations or market conduct actions.
R-02.2
2
Health insurance issuersHealth insurance issuer"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.Section 5 must not issue an adverse consumer outcomeAdverse consumer outcome"Adverse consumer outcome" means a decision by a health insurance issuer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI system.Section 5 — including denial, reduction, or termination of health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5 or benefits — that results solely from the use of any AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 or predictive modelPredictive model"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.Section 5. Every AI-informed decision concerning denial, reduction, or termination of coverage or benefits must be meaningfully reviewed by an individual with authority to override the AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5's determinations, in accordance with review procedures established by DepartmentDepartment"Department" means the Department of Insurance.Section 5 rules. When the adverse consumer outcomeAdverse consumer outcome"Adverse consumer outcome" means a decision by a health insurance issuer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI system.Section 5 is an adverse determination regulated under the Managed Care Reform and Patient Rights Act, the reviewing individual must be a clinical peer as required and defined under that Act.
HC-01.1
Section 15
Disclosure of AI system utilization
Deployer

3 The Department of Insurance may adopt rules that include standards for the full and fair disclosure of a health insurance issuerHealth insurance issuer"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.Section 5's use of AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 that may impact consumers, that set forth the manner, content, and required disclosures including notice before the use of AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5, 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.

Section 15 grants the Department of Insurance discretionary rulemaking authority to adopt disclosure standards for health insurance issuers' use of AI systems. The disclosure framework contemplated is comprehensive — covering pre-use notice, post-adverse-decision notice, how personal information is used to inform decisions, a process for correcting inaccurate information, and instructions for appealing decisions. However, this section does not itself impose immediate disclosure obligations on issuers; it is an enabling provision authorizing future Department rulemaking.

Compliance actions 1 item
3
Health insurance issuersHealth insurance issuer"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.Section 5 must comply with any rules the Department of Insurance adopts regarding disclosure of AI systemAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 utilization, including standards for pre-use notice, post-adverse-decision notice, disclosure of how personal information is used to inform decisions, a process for correcting inaccurate information, and instructions for appealing decisions.
HC-01.6
Section 20
Compliance with Act
Deployer

(a) 4 All health insurance issuersHealth insurance issuer"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.Section 5 authorized to do business in Illinois shall comply with this Act regarding any decisions impacting consumers that are made or supported by AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 and machine learningMachine learning"Machine learning" means a field within artificial intelligence that focuses on the ability of computers to learn from provided data without being explicitly programmed.Section 5, 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 issuersHealth insurance issuer"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.Section 5 using AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 must comply with applicable federal and State laws, regulations, and rules.

(b) 5 A health insurance issuerHealth insurance issuer"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.Section 5 shall ensure that its health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5 is administered in conformity with this Act. The health insurance issuerHealth insurance issuer"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.Section 5's AI systems programAI systems program"AI systems program" means the health insurance issuer's controls and processes for the responsible use of AI systems, including governance, risk management, and internal audit functions, which take into account third-party AI systems and data.Section 5 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 coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5. The health insurance issuerHealth insurance issuer"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.Section 5 shall be responsible for any noncompliance under this Act with respect to its health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5. Nothing in this Section relieves any other person from liability for failure to comply with the DepartmentDepartment"Department" means the Department of Insurance.Section 5's investigations or market conduct actions related to a health insurance issuerHealth insurance issuer"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.Section 5's compliance with this Act.

Section 20 imposes two related compliance obligations. Subsection (a) requires all health insurance issuers to comply with the Act and all applicable insurance laws and regulations — including unfair trade practices and unfair discrimination laws — regarding any AI-informed consumer-impacting decisions. Subsection (b) requires issuers to maintain an AI systems program with policies and procedures ensuring conformity by all employees, agents, contractors, and third parties administering coverage. The issuer bears ultimate responsibility for noncompliance, but a savings clause preserves third-party liability for failing to cooperate with Department investigations.

Compliance actions 2 items
4
Health insurance issuersHealth insurance issuer"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.Section 5 must ensure that all decisions impacting consumers that are made or supported by AI systemsAI system"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.Section 5 and machine learningMachine learning"Machine learning" means a field within artificial intelligence that focuses on the ability of computers to learn from provided data without being explicitly programmed.Section 5 comply with this Act and all applicable insurance laws and regulations, including laws addressing unfair trade practices and unfair discrimination. All AI-informed decisions and actions must comply with applicable federal and State laws, regulations, and rules.
H-02
5
Health insurance issuersHealth insurance issuer"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.Section 5 must maintain an AI systems programAI systems program"AI systems program" means the health insurance issuer's controls and processes for the responsible use of AI systems, including governance, risk management, and internal audit functions, which take into account third-party AI systems and data.Section 5 that includes policies and procedures ensuring compliance with this Act by all employees, directors, trustees, agents, representatives, and persons directly or indirectly contracted to administer health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5. The issuer bears ultimate responsibility for any noncompliance under the Act with respect to its health insurance coverageHealth insurance coverage"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.Section 5.
G-01.1
Section 95
Amendment to Voluntary Health Services Plans Act

The Voluntary Health Services Plans Act is amended by adding Section 15.35 as follows: (215 ILCS 165/15.35 new) Sec. 15.35. Artificial IntelligenceArtificial intelligence"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.Section 5 Systems Use in Health Insurance Act. A health service plan corporation is subject to the provisions of the Artificial IntelligenceArtificial intelligence"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.Section 5 Systems use in Health Insurance Act.

Section 95 amends the Voluntary Health Services Plans Act (215 ILCS 165) by adding a new Section 15.35, which subjects health service plan corporations to the requirements of this Act. This is a cross-reference provision extending the Act's coverage to an additional category of entity and creates no independent obligation beyond what is already imposed by the preceding sections.

Passage Likelihood

High
Status Engrossed
Chamber Passed origin
Committee Passed
Majority party Yes
Bipartisan No
Prior session None

Legislative History

2024-12-06 Prefiled with Clerk by Rep. Bob Morgan
2025-01-09 First Reading
2025-01-09 Referred to Rules Committee
2025-02-04 Assigned to Insurance Committee
2025-03-11 Do Pass / Short Debate Insurance Committee; 011-006-000
2025-03-11 Added Co-Sponsor Rep. Lilian Jiménez
2025-03-12 Placed on Calendar 2nd Reading - Short Debate
2025-03-26 Second Reading - Short Debate
2025-03-26 Held on Calendar Order of Second Reading - Short Debate
2025-04-04 House Floor Amendment No. 1 Filed with Clerk by Rep. Bob Morgan
2025-04-04 House Floor Amendment No. 1 Referred to Rules Committee
2025-04-07 House Floor Amendment No. 1 Rules Refers to Insurance Committee
2025-04-08 House Floor Amendment No. 1 Recommends Be Adopted Insurance Committee; 010-004-000
2025-04-09 Added Co-Sponsor Rep. Janet Yang Rohr
2025-04-09 House Floor Amendment No. 1 Adopted
2025-04-09 Placed on Calendar Order of 3rd Reading - Short Debate
2025-04-09 Third Reading - Short Debate - Passed 079-035-000
2025-04-09 Added Co-Sponsor Rep. Nicolle Grasse
2025-04-09 Added Co-Sponsor Rep. Jennifer Gong-Gershowitz
2025-04-09 Added Co-Sponsor Rep. Curtis J. Tarver, II
2025-04-10 Added Co-Sponsor Rep. Hoan Huynh
2025-04-10 Arrive in Senate
2025-04-10 Placed on Calendar Order of First Reading
2025-04-10 Chief Senate Sponsor Sen. Laura Fine
2025-04-10 First Reading
2025-04-10 Referred to Assignments
2025-04-23 Assigned to Executive
2025-05-09 Rule 2-10 Committee Deadline Established As May 23, 2025
2025-05-12 Senate Committee Amendment No. 1 Filed with Secretary by Sen. Laura Fine
2025-05-12 Senate Committee Amendment No. 1 Referred to Assignments
2025-05-13 Senate Committee Amendment No. 1 Assignments Refers to Executive
2025-05-23 Rule 2-10 Committee Deadline Established As June 1, 2025
2025-05-27 Added as Alternate Co-Sponsor Sen. Graciela Guzmán
2025-06-02 Rule 3-9(a) / Re-referred to Assignments
2025-06-02 Senate Committee Amendment No. 1 Rule 3-9(a) / Re-referred to Assignments

Entry Last Reviewed

2026-05-20
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