Health insurance premiums in Illinois are set to rise sharply in 2026, with individual plans increasing by an average of 28.8% and marketplace plans potentially costing 78% more. Factors behind these increases include escalating healthcare costs, the expiration of federal premium tax credits, Medicaid policy changes, and regional disparities. Here’s a quick breakdown:
- Healthcare Costs: Rising hospital expenses, workforce shortages, and prescription drug price hikes are pushing premiums higher.
- Federal Tax Credits Ending: Without extensions, ACA enrollees could see premiums jump by 75% or more.
- Medicaid Shifts: Policy changes are reducing coverage, forcing more people into private plans and driving up costs.
- Regional Impact: Southern and western Illinois face steeper increases due to fewer providers and higher Medicaid populations.
- State Oversight: Illinois now reviews and adjusts premium proposals to prevent excessive hikes, though underlying cost drivers remain.
These changes will affect individuals, families, and businesses across the state, making it essential to evaluate your options. Shopping carefully for coverage and staying informed about subsidies and policy updates can help manage these rising costs.
Health insurance premiums set to skyrocket this year, Senator Durbin warns
1. Increasing Healthcare Costs
Healthcare costs are on the rise, and Illinois residents are feeling the impact through higher insurance premiums. When hospitals, doctors, and pharmacies charge more for their services, those increased expenses trickle down to policyholders in the form of higher premiums.
Medical trends are a big part of this. A combination of rising service costs and greater use of medical services is driving claims expenses up by an estimated 10% annually, with 7% of that tied directly to these factors. This creates ongoing pressure from both healthcare providers and pharmaceutical companies.
Hospitals and providers are grappling with workforce shortages and inflation, which push them to negotiate higher reimbursement rates during contract discussions. These increases are passed directly to insurers, who then factor them into premium calculations. In short, these higher costs eventually show up on your bill.
Prescription drug costs are another major contributor. Medications like GLP-1 drugs (e.g., Wegovy, Ozempic) are seeing annual price hikes of about 14.8%, adding to the overall surge in healthcare spending.
Statewide, the Illinois Department of Central Management Services projects a 16.5% jump in liability for group health insurance in fiscal year 2025 compared to 2024. This increase is largely driven by inflation in medical trends and new mandates requiring coverage for specific treatments and medications. While this directly affects state employees, it also signals broader financial challenges for all health insurance plans in Illinois.
Where you live in Illinois also matters. Southern and western regions are seeing steeper premium increases due to a mix of costly specialized care facilities and a higher number of Medicaid patients. When insurers face revenue losses from Medicaid policy changes, they often make up the difference by raising rates for other customers. As Illinois Department of Insurance Director Ann Gillespie explained:
"When [insurers] lose the revenue stream from Medicaid, they’re going to have to find some way to close that gap, and so the most likely way to do that is to raise rates for commercial payers".
This cost-shifting hits hardest in areas with a large Medicaid population, creating noticeable regional differences in premium hikes across the state.
Administrative costs, while smaller than medical expenses, are also climbing due to inflation, further contributing to premium increases.
Looking ahead, starting in 2026, the Illinois Department of Insurance will have the authority to review and adjust premium proposals, potentially rejecting those deemed unreasonable. However, the underlying factors driving costs will still be in play.
2. End of Federal Enhanced Premium Tax Credits
The federal enhanced premium tax credits, introduced under recent federal laws, are set to expire at the close of 2025 unless Congress decides to extend them. These subsidies have played a major role in lowering out-of-pocket costs for ACA marketplace plans, making healthcare more affordable for millions.
If these credits expire, the financial impact on consumers could be dramatic. Out-of-pocket premiums for ACA marketplace enrollees are projected to rise by over 75%. However, this increase won’t affect everyone equally – certain regions and age groups are expected to see especially steep hikes. Insurers are already responding to this looming shift by adjusting their rate strategies.
In fact, many insurers have factored the anticipated loss of these subsidies into their 2026 rate filings, incorporating an estimated 4 percentage point adjustment to account for the subsidy reduction. This creates further instability in premiums as the market risk pool tightens.
The ripple effects could be significant. Higher premiums may lead healthier individuals to drop their coverage, leaving a sicker risk pool behind – a phenomenon known as adverse selection. This, in turn, could push premiums even higher over time.
To put this into perspective, subsidized enrollees paid an average annual premium of $460 in 2025. Without the enhanced tax credits, that cost is expected to climb significantly, with some families potentially facing premiums that double or even triple.
State officials are raising alarms about the potential fallout. Legislators have warned that without an extension of these subsidies, many households will face unaffordable premium increases. As of late November 2025, there is a proposal on the table to extend ACA premium subsidies for two more years, but its future remains uncertain.
Adding to the challenges, Illinois faces unique pressures. The state’s large Medicaid population and federal policy changes that reduce Medicaid enrollment could exacerbate the situation. When insurers lose Medicaid revenue and encounter a growing number of uninsured patients, they often compensate by raising premiums across the board. This creates a compounding effect that could lead to even steeper rate increases.
Given these rapid changes, it’s more important than ever to carefully evaluate your healthcare options. If you’re enrolled in an ACA marketplace plan, this is the time to review your coverage. Illinois Health Agents can provide personalized guidance to help you navigate these shifts and explore alternative options, including other subsidies or assistance programs that might be available to you.
3. Medicaid Policy Changes and Coverage Shifts
Illinois is undergoing major changes in Medicaid enrollment, and these shifts are having a ripple effect on private health insurance premiums. Recent adjustments in federal funding and state policies – like the closure of specific programs – have forced thousands to either switch to individual insurance plans or lose coverage entirely.
One of the most impactful changes is the planned closure of the Health Benefits for Immigrant Adults (HBIA) program, which will end on June 30, 2025. This program has been a lifeline for low-income adults aged 42 to 64 who don’t qualify for Medicare. It currently serves 33,000 individuals, many of whom work in low-wage jobs without employer-sponsored insurance. Despite its importance, the program accounts for just 0.07% of the state’s FY26 healthcare budget while saving Illinois $65 million annually and cutting hospital bad debt by up to 28%.
When HBIA coverage ends, these 33,000 individuals will face tough choices. While some may qualify for ACA marketplace plans, many will find premiums difficult to manage even with subsidies. Others could become uninsured, a situation that already affected 7% of Illinois residents in 2021.
This shift will likely drive up premiums in the individual insurance market. People transitioning from Medicaid to private insurance often have higher healthcare needs than the average marketplace enrollee. This forces insurers to adjust rates to account for increased usage and higher costs. Additionally, the loss of Medicaid revenue pushes insurers to raise premiums for commercial payers, compounding the financial strain. These trends are particularly pronounced in regions like Southern Illinois, where premium increases are more noticeable.
The demographic impact is also striking. In 2023, Medicaid covered 16.5% of Illinois adults aged 19–64. However, coverage rates vary significantly by race and ethnicity. Between 2021 and 2023, Medicaid covered 67.8% of births among Black women and 60.8% among Hispanic women. These groups are especially vulnerable as eligibility criteria become stricter.
The broader healthcare system is feeling the strain, too. As more people lose Medicaid coverage, providers are dealing with higher uncompensated care costs. To offset these losses, healthcare facilities often seek higher reimbursement rates from private insurers, which can lead to staff layoffs and even clinic closures. Access to care is another challenge. In 2023, 96% of HBIA enrollees were moved into Managed Care Organizations (MCOs) to improve budgeting. However, MCOs don’t provide comprehensive geographic coverage, leaving rural areas and some communities without adequate access to care.
The uninsured rate highlights these challenges. In 2023, 11.1% of Illinois adults didn’t have health insurance, compared to 5.3% of children. Among Black residents, the uninsured rate was 7.9%. With Medicaid programs shutting down and eligibility tightening, these numbers are expected to rise, further straining healthcare providers and leaving many individuals to navigate an increasingly complicated insurance system.
If you’re currently on Medicaid or have recently lost coverage, it’s crucial to explore your options during this transition. Illinois Health Agents can assist in finding plans that fit your budget and healthcare needs, whether through the ACA marketplace or other available programs.
sbb-itb-a729c26
4. State Regulations and Market Structure Changes
Since 2026, Illinois has adopted a state-run approach to premium regulation, giving the Department of Insurance the authority to review proposed rates and limit excessive increases. This initiative works alongside existing cost factors to help stabilize premium growth.
Central to this effort is the Health Premium Rate Review Program, which evaluates proposed rate increases for individual and group major medical policies. The program not only prevents unjustified rate hikes but also provides transparency by explaining the medical and administrative costs that influence these changes.
The effects were immediate. In 2026, the Department finalized the year’s rates, reducing many of the increases initially proposed by insurers. While the weighted average increase for individual plans that year still reached 28.8%, state intervention helped mitigate what could have been even higher jumps.
Under these regulations, insurers are required to submit detailed explanations of the key cost factors driving their proposed rate increases. The Department carefully reviews these justifications before approving, rejecting, or modifying the premiums. This ensures that any changes are based on legitimate costs rather than arbitrary decisions.
Another outcome of this regulatory framework is standardized pricing. Since rates are now determined by the Illinois Department of Insurance, consumers pay the same monthly premium for a specific product, whether they purchase it through an independent agent, healthcare.gov, or directly from an insurer.
State regulations now play a pivotal role in shaping the health insurance market. While market shifts, like fewer competing carriers, contribute to rising premiums, the state’s rate review authority helps maintain a level of competition. This dual approach balances the market, preventing monopolistic pricing while addressing cost drivers.
To further promote transparency, the Illinois Department of Insurance requires insurers to publicly justify their rate increases. This ensures that consumers can clearly understand the factors behind their premiums.
For those navigating these changes, Illinois Health Agents can provide guidance in selecting plans that align with your budget and coverage needs.
5. Demographics and Geographic Location
Where you live in Illinois and your age play a big role in determining your health insurance costs. These factors lead to noticeable differences in premiums across the state, with some regions seeing much steeper increases than others. This adds another layer of complexity to the cost pressures already discussed.
Age is a major factor in how premiums are calculated. Older individuals generally require more medical care, which drives up healthcare usage and claims costs. Insurers use these patterns to predict expenses, basing their rates on expected changes in how frequently people access medical services. As the population shifts, these age-related costs ripple through the market, amplifying the financial strain.
Geographic location, however, creates even sharper disparities. For instance, southern and western Illinois have seen much higher premium increases compared to other parts of the state, especially as federal subsidies phase out.
"Southern rural communities will see much higher increases", said Illinois Department of Insurance Director Ann Gillespie.
These regional differences are tied to several interconnected factors. One key issue is the availability of healthcare providers. Rural areas, particularly in the southern and western parts of Illinois, often have fewer providers competing for patients. This lack of competition gives existing healthcare systems more power to demand higher reimbursement rates, which insurers then pass on to consumers through higher premiums.
Provider consolidation also drives up premiums. Insurers frequently cite "contracting and provider consolidation" as major reasons for rising healthcare costs. In areas where healthcare providers have consolidated and competition is limited, providers facing higher staffing costs and financial challenges from the pandemic push for increased reimbursement rates during negotiations. Insurers account for these higher costs when setting premiums.
Another factor is the concentration of Medicaid enrollees in certain areas. Regions with high Medicaid enrollment often see premium pressures for commercial insurance plans. When federal policies remove people from Medicaid, providers lose a key revenue source. To make up for this loss, they often raise rates for commercial payers.
"When [insurers] lose the revenue stream from Medicaid, they’re going to have to find some way to close that gap, and so the most likely way to do that is to raise rates for commercial payers", explained Director Gillespie.
This creates a domino effect, with areas that have historically high Medicaid populations – like southern Illinois – facing some of the largest premium increases for commercial plans.
Health conditions and usage patterns in specific communities also influence premiums. Regions with higher rates of chronic conditions, such as obesity and diabetes, often see greater pressure on premiums. The growing use of specialty medications, including GLP-1 drugs like Wegovy and Ozempic, has had a notable impact. For example, Blue Cross Blue Shield of Vermont has projected a 14.8% year-over-year trend in costs for GLP-1 drugs alone. Communities where these medications are widely prescribed experience steeper premium hikes.
Uninsured populations add another layer of financial strain. In 2021, about 7.9% of Black residents in Illinois lacked health insurance, and racial and ethnic disparities in coverage remain a challenge despite some overall improvements. Uninsured individuals often rely on emergency care, which is more expensive and less preventive. Healthcare systems absorb these costs and pass them on to insurers, further driving up premiums.
Taking all these factors into account, while the statewide average rate increase for individual plans is 28.8% compared to 2025, certain areas are seeing increases of 30% or more. For example, in Sangamon County, marketplace enrollees faced an average premium of about $850 per month in 2025 before tax credits reduced the cost to below $200 per month. This highlights how much Illinois residents depend on federal subsidies and how geographic variations in base premiums can lead to vastly different outcomes.
For those navigating these regional cost differences, Illinois Health Agents can provide guidance.
Conclusion
Health insurance premiums in Illinois are climbing, and it’s not happening in a vacuum. The surge in healthcare costs – fueled by inflation and a shortage of clinical workers – is at the core of these increases. Claims expenses alone are expected to rise by about 10% annually. On top of that, the enhanced federal premium tax credits are set to expire at the end of 2025, which could push out-of-pocket premiums for ACA marketplace enrollees up by more than 75%. Medicaid policy changes are also playing a role, as insurers adjust commercial rates to make up for lost revenue, particularly in areas like southern Illinois where Medicaid enrollment is high. State regulations and marketplace rule changes are further complicating the landscape by shifting risk pools, often causing healthier individuals to drop coverage, which drives premiums even higher. Add to this the impact of demographics and geography, and it’s clear why premiums vary so widely across the state.
The Illinois Department of Insurance finalized the rates for 2026 in September 2025, setting the stage for what consumers can expect in the coming year. If you’re shopping for coverage, it’s essential to check enrollment dates and explore your options without delay.
Staying informed is more important than ever. Changes in state and federal policies, including any Congressional action to extend premium tax credits, could significantly impact out-of-pocket costs. Keeping an eye on updates about ACA subsidies and Medicaid eligibility rules can help you make smarter decisions.
When it comes to choosing a plan, it’s not just about finding the lowest premium. State oversight helps maintain some consistency in pricing, but the real value lies in selecting a plan that aligns with both your budget and healthcare needs. Comparing plans thoroughly – beyond just the sticker price – is key to making cost-effective decisions.
For Illinois residents navigating these challenges, local expertise can make all the difference. Illinois Health Agents offers brokerage services for individuals, families, and businesses, connecting clients with top-rated insurance carriers. Their independent agents provide personalized guidance, helping you weigh the benefits and trade-offs of different plans to find coverage that works for you.
In a healthcare system where costs, policies, and demographics are so tightly connected, understanding these dynamics is crucial. With the right information and a thoughtful approach, you can make informed choices that help manage costs and secure the coverage you need.
FAQs
How could the expiration of federal premium tax credits affect my health insurance costs in Illinois?
The expiration of federal premium tax credits could lead to a noticeable increase in monthly health insurance premiums for many individuals and families across Illinois. These tax credits, originally established under the Affordable Care Act (ACA), were designed to reduce premium costs based on factors like income and household size. Without these credits, you might face paying the full premium amount, which could substantially raise your out-of-pocket costs.
If you’re worried about how this change might affect your finances, it’s worth exploring all your options. Partnering with an experienced health insurance broker, such as Illinois Health Agents, can help you navigate these shifts and identify plans that align with both your needs and budget.
How can I manage rising health insurance premiums in areas with limited healthcare providers?
Managing increasing health insurance premiums can be tough, particularly in areas with limited healthcare provider options. To help ease the financial burden, you might want to look into Affordable Care Act (ACA) plans. These plans often come with subsidies that are determined by your income, making them a practical choice for many. If you’re in need of temporary coverage, short-term health insurance plans could be another cost-effective solution worth considering.
For a more tailored approach, teaming up with an experienced health insurance broker, such as Illinois Health Agents, can make a big difference. They offer personalized guidance to help you navigate the available plans, ensuring you find coverage that fits both your needs and your budget. With their expertise, you can feel confident about making an informed decision.
How do changes to Medicaid policies impact the cost and availability of private health insurance in Illinois?
Medicaid policy changes have a noticeable impact on the private health insurance market in Illinois. When Medicaid expands eligibility, more people gain access to public coverage, which often leads to a drop in demand for private insurance plans. On the flip side, if eligibility becomes more restrictive, some individuals might need to turn to private insurance instead, potentially driving up demand and influencing premium rates.
Changes in Medicaid funding or coverage levels can also ripple through the broader healthcare system. For instance, hospitals and healthcare providers might adjust their pricing strategies to reflect shifts in Medicaid reimbursements. These adjustments can, in turn, affect the premiums for private insurance. This dynamic underscores the close relationship between public and private health insurance systems in Illinois.
Recent Comments