AI Frontier Institute

AI USE IN HEALTH INSURANCE ACT

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Illinois HB0035, the Artificial Intelligence Systems Use in Health Insurance Act, regulates how health insurance issuers in Illinois may use AI systems and predictive models in coverage decisions. Under Section 10, no health insurer may issue an adverse consumer outcome—such as a denial, reduction, or termination of health insurance coverage or benefits—based solely on an AI system or predictive model; every such decision must be meaningfully reviewed by a human with authority to override the AI's determination. When the adverse outcome constitutes an adverse determination under the Managed Care Reform and Patient Rights Act, that reviewer must be a clinical peer as defined under that Act. Section 10 also grants the Department of Insurance broad oversight authority, including the power to review AI governance, risk management protocols, pre-acquisition diligence on third-party AI tools, and auditing practices during investigations or market conduct actions. Section 15 authorizes the Department to adopt disclosure rules requiring insurers to notify consumers before AI is used, after an adverse AI-assisted decision, about how personal data informs decisions, and about appeal and correction processes. Section 20 requires all authorized health insurance issuers to maintain an AI systems program with internal policies and procedures ensuring compliance across employees, agents, directors, and contracted parties, and holds issuers responsible for any noncompliance. Section 95 amends the Voluntary Health Services Plans Act (215 ILCS 165) by adding Section 15.35, making health service plan corporations subject to this Act.

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