Illinois employers face new health plan rules in 2025. Here’s what you need to know:

• Expanded Coverage Requirements: Mandatory coverage for more medical procedures, including annual cancer screenings, hearing aids for all ages, and mental health counseling for first responders.
• Cost Caps on Medications: Epinephrine injectors capped at $60 per two-pack; inhalers limited to $25 for a 30-day supply.
• Short-Term Insurance Restrictions: Short-term limited-duration insurance policies are now prohibited, pushing businesses and individuals toward comprehensive plans.
• Major Insurer Exit: Health Alliance will discontinue all non-Medicare Advantage plans by January 1, 2026, affecting 187,000 individuals.
• New Compliance Mandates: Employers must provide transparent benefit comparisons under the Illinois Consumer Coverage Disclosure Act (CCDA) and adhere to stricter recordkeeping and anti-discrimination rules.
• Rising Costs: Group health insurance premiums are projected to increase by 8% in 2025, with some insurers proposing rate hikes nearing 20%.
• HSA and HDHP Adjustments: Higher HSA contribution limits and updated deductible requirements for High-Deductible Health Plans (HDHPs).

Key Deadlines:

• ACA reporting forms (1094-C, 1095-C) must be filed electronically by March 31, 2025.
• Benefit Choice Open Enrollment ends on June 2, 2025, with changes effective July 1, 2025.

Employers must act quickly to meet compliance requirements, avoid penalties, and ensure smooth transitions for employees.

How Small Businesses in Illinois Can Save on Group Insurance Premiums

Major Regulatory Changes for Employer Health Plans

Employers in Illinois are facing a wave of new federal and state regulations that are reshaping the compliance landscape. With changes driven by both national political shifts and Illinois-specific mandates, staying compliant has become increasingly complex for employer-sponsored health plans.

Affordable Care Act (ACA) Affordability Threshold

The future of employer health plans under the Affordable Care Act (ACA) remains uncertain as potential changes loom in 2025. Republican-led proposals in Congress could significantly alter compliance requirements for employer-sponsored plans. For example, the House has passed a budget reconciliation bill that proposes several changes to the ACA, including eliminating automatic reenrollment for subsidy recipients and suspending provisional subsidies. Another key change would remove the cap on the repayment of ACA subsidies for individuals whose income exceeds initial estimates.

The Congressional Budget Office estimates these changes could leave nearly 3 million more people uninsured.

"I think what happened during the Biden years led to massive fraud and improper spending, and that needs to be rolled back." – Brian Blase, president of Paragon Health Institute and a former health official in the Trump administration

Experts caution that such disruptions could lead to higher premiums for many individuals. Meanwhile, new mental health parity rules set to take effect in 2025 will require employers to ensure their plans comply with updated provisions under the Mental Health Parity and Addiction Equity Act. Employers will also need to implement stricter HIPAA privacy standards related to reproductive healthcare.

Illinois Consumer Coverage Disclosure Act (CCDA) Updates

Illinois employers must also adapt to updates to the Illinois Consumer Coverage Disclosure Act (CCDA) for 2025. The Illinois Department of Labor has issued a revised model disclosure form, which all Illinois employers are required to use.

Under the CCDA, employers must provide a written comparison of their group health plan’s benefits against Illinois’s essential health benefits (EHBs). This disclosure must be provided at three key points: during the hiring process, annually, and upon an employee’s request. Employers can share this information either electronically or in print.

To comply, employers should carefully review their plan benefits against Illinois’s EHB requirements and use the updated form to provide accurate and timely information. Non-compliance carries penalties ranging from $500 to $5,000 per violation. Employers are also required to maintain detailed records of when and how these disclosures were distributed.

The Illinois Department of Labor applies a "base of operations" test to determine whether the CCDA applies to a particular employee. It’s important to note that the CCDA does not require employer plans to include Illinois EHBs. Instead, it mandates transparency by requiring employers to disclose how their plans compare to state standards. These updates signal potential shifts in cost and plan design trends as we move into 2025.

These changes come amidst broader federal efforts to control healthcare and prescription drug costs. Employers must also navigate group health plan transparency requirements and Federal Trade Commission investigations into the pharmacy benefit manager industry. Balancing these overlapping mandates while ensuring comprehensive employee coverage will remain a top priority for employers in the coming year.

New State Coverage Requirements for 2025

Starting January 1, 2025, Illinois is rolling out new health coverage mandates, marking a major shift in the state’s approach to health benefits. These updates bring some of the most extensive changes seen in recent years.

Expanded Health Benefits

Illinois has introduced four key legislative changes that reshape employer health plan requirements:

• HB 2350: This law requires annual prostate and cervical cancer screenings for all insured individuals, aiming to catch these conditions early.
• HB 2443: Hearing aid coverage now extends to all ages, covering medically necessary devices and services. Previously, many plans only included coverage for individuals under 18, but this change ensures access for everyone.
• SB 3538: Mental health counseling is now mandated for first responders, recognizing the unique challenges faced by police officers, firefighters, and emergency medical personnel.
• SB 2744: Vaccine administration fees must now be covered without any copay or deductible, removing financial barriers that might discourage employees from getting vaccinated.

Governor J.B. Pritzker emphasized the critical importance of these reforms, stating:

"For thousands of Illinoisans, the reforms in this bill will mean the difference between suffering with curable health conditions and getting the care that they need in a timely manner, and for some, this bill will quite literally save their lives."

In addition to these expanded health benefits, Illinois is also implementing new measures to protect employees with caregiving responsibilities.

Family Responsibility Protections

Illinois is taking significant steps to support employees who juggle work and caregiving duties. Changes to the Illinois Human Rights Act (IHRA) now include two new protected categories that directly impact workplace policies:

• HB 2161: This legislation prohibits discrimination against employees based on their caregiving roles. It covers essential responsibilities like medical care and transportation, ensuring caregivers aren’t penalized for their family duties.
• HB 4867: Employees are now protected from discrimination related to reproductive health decisions. This includes choices about contraception, fertility treatments, sterilization, miscarriage management, pregnancy-related care, and more.

The definition of "family member" is broad, encompassing children, stepchildren, spouses, domestic partners, siblings, parents, in-laws, grandchildren, grandparents, and stepparents. With these protections, Illinois joins a small group of states offering employment safeguards for family caregivers.

Governor J.B. Pritzker underscored the value of these protections, saying:

"Being a caregiver is one of the most important roles a person can take on, and in Illinois, we’re making sure no one is penalized for stepping up for their loved ones."

Lt. Governor Juliana Stratton added:

"Workplace policies should reflect the realities of caregiving and the responsibilities today’s families face."

Key compliance reminder: While these laws prohibit discrimination, they do not require employers to adjust policies or provide accommodations for family responsibilities. This includes areas like leave, attendance, performance, scheduling, and benefits.

The IHRA also extends the statute of limitations for discrimination claims from 300 days to two years, giving employees more time to take legal action. Employers should update anti-discrimination policies, employee handbooks, and workplace notices to align with these changes. Training managers on these new protections is highly recommended to ensure compliance.

Jim Bennett, Director of the Illinois Department of Human Rights, highlighted the universal nature of caregiving:

"At one point or another, almost every worker will need to provide personal care to a family member in need."

Cost and Plan Design Trends for 2025

Illinois employers are bracing for a challenging year ahead as healthcare costs are set to climb again. Group coverage medical costs are projected to increase by 8% in 2025, with individual coverage rising by 7.5% and small group health insurance plans seeing an average proposed rate hike of 9.5%. These numbers reflect a sharp uptick in healthcare inflation. In fact, U.S. healthcare spending is expected to hit its highest point in 13 years, a steep rise from the 5.5% growth rate recorded in 2017. The driving forces behind these increases include market trends, unanticipated COVID-19-related expenses, and the phasing out of Medicaid expansion programs.

Among insurers, Oscar Health Plan, Inc. has proposed the largest average rate increase for individual plans at 19.9%, while Health Alliance Medical Plans, Inc. leads small group plans with a similar 19.9% average premium hike. Carle Health offered insight into these rising costs, explaining:

"Medical inflation, rising prescription drug costs, increased utilization of healthcare services, higher volumes of chronic medical conditions, coupled with an increased demand for technology and broad networks have placed considerable financial strain on those organizations."

With costs trending upward, employers are exploring new plan designs to balance premium affordability with employee satisfaction.

Premium and Cost-Sharing Increases

High-Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs)

To combat escalating premiums, many Illinois employers are adopting High-Deductible Health Plans (HDHPs) paired with Health Savings Accounts (HSAs). These plans help manage costs while giving employees greater control over their healthcare spending. For 2025, the IRS has increased the annual HSA contribution limits to $4,300 for individuals and $8,550 for families, with an additional $1,000 in catch-up contributions for those aged 55 and older. To qualify for HSA participation, employees must enroll in an HDHP with minimum deductibles of $1,650 for individuals and $3,300 for families.

One major advantage of HSAs is their flexibility – there’s no “use-it-or-lose-it” rule, allowing employees to save for long-term healthcare needs. The State of Illinois supports this effort by contributing one-third of the deductible amount to active state employees’ HSAs. However, employers must now comply with updated regulations requiring HDHPs to apply deductibles to telehealth services starting January 1, 2025, to maintain HSA eligibility.

As HDHPs and HSAs grow in popularity, telehealth is emerging as another key strategy for employers to manage costs.

Telehealth and Virtual Care Integration

Telehealth continues to gain traction as a cost-saving solution for employers. About 70% of employees now prefer virtual visits for non-emergency care, and 91% of large employer health plans include telemedicine benefits. By reducing unnecessary visits to emergency rooms and urgent care centers, telehealth helps cut costs while improving access to care. Teletherapy, in particular, has proven to be an effective and affordable way to address mental health needs, boosting employee well-being and morale.

However, integrating telehealth with HSA-eligible plans requires careful planning. The telehealth relief provision, which allowed HDHPs to offer telehealth services without affecting HSA eligibility, expired for plan years starting January 1, 2025. Without this provision, telehealth services that go beyond preventive care and are offered at no cost could disqualify plans from HSA eligibility. Employers can address this by either removing telehealth benefits for HDHP participants or assigning a fair market value cost to these services. Ensuring telehealth services are seamlessly integrated into major medical plans is crucial for compliance.

Virtual-first health plans are also gaining momentum. These plans encourage employees to consult telehealth providers before seeking in-person care, streamlining access to services. With artificial intelligence improving the personalization of virtual care, telehealth is poised to play an even bigger role in health plan designs.

For Illinois employers, keeping up with these trends is essential to managing rising healthcare costs while meeting employee expectations for convenient, accessible care. Employers seeking tailored guidance on navigating these changes can rely on Illinois Health Agents for expert advice.

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Compliance Deadlines and Penalties for 2025

With the updates to coverage and plan design, staying compliant in 2025 is a non-negotiable priority for employers in Illinois. Missing key deadlines could result in hefty penalties, so understanding the timeline and requirements is essential.

Important Compliance Deadlines

The most critical date to mark is March 31, 2025, which is the deadline for electronically filing ACA Forms 1094-C and 1095-C. The IRS has reduced the electronic filing threshold to just 10 returns, meaning more employers will need to shift away from paper submissions. If this deadline can’t be met, employers may request a 30-day extension by filing Form 8809.

Another compliance requirement involves adhering to the updated CCDA disclosure process. Employers should consult the revised CCDA guidelines to ensure all disclosure obligations are met.

Additionally, starting January 1, 2025, under SB 3208, employers must retain pay stub records for three years and ensure employees have proper access to these records.

These deadlines are part of the broader regulatory framework that employers need to navigate in the coming year.

Penalty Structures for Non-Compliance

Failing to meet compliance requirements can lead to significant financial penalties, which vary depending on the type and timing of the violation. Here’s a breakdown of potential penalties:

For Applicable Large Employers (ALEs), the most severe fines stem from ACA violations. The 4980H(a) penalty of $2,900 per full-time employee (minus the first 30 employees) is assessed when an employer fails to offer coverage to at least 95% of their full-time workforce. This amount is slightly lower than the $2,970 penalty in 2024. However, penalties are only triggered if a full-time employee receives a premium tax credit through a healthcare marketplace.

The 4980H(b) penalty, on the other hand, applies when coverage is offered but is either unaffordable or inaccurately reported. This penalty is calculated as the lesser of $2,900 per full-time employee (minus the first 30) or $362.50 multiplied by the number of employees receiving premium tax credits.

Recent federal legislation has reduced ACA reporting penalties for calendar year 2024 forms that are filed in 2025.

To stay on top of these deadlines and avoid costly mistakes, employers should use a compliance calendar to track important dates. Preparing ahead by gathering necessary documentation and updating internal policies is another key step. Partnering with third-party vendors for electronic ACA filings and seeking advice from HR professionals, legal experts, and accountants can also ensure everything is in order.

For additional guidance, Illinois Health Agents provides expert support to help employers align with these requirements and avoid penalties.

Preparing for 2025 Health Plan Changes

Major updates are coming in 2025, and employers in Illinois need to act now to stay ahead.

One key change involves pay transparency mandates for businesses with 15 or more employees. These companies must now include pay scales, benefits, bonuses, and stock options in all job postings. Additionally, amendments to the Illinois Human Rights Act expand protections, prohibiting discrimination based on "family responsibilities" or "reproductive health decisions".

Employers also need to revisit their recordkeeping and health plan selection processes. Updated requirements mean that short-term, limited-duration policies will no longer meet state standards, so finding compliant alternatives is critical. Failing to align with these mandates could result in penalties.

To help navigate these changes, Illinois Health Agents offers a range of services. They assist with employee education, employer contribution strategies, and annual review meetings to ensure compliance with the Affordable Care Act (ACA) and other reforms. They also provide support for SPD/Wrap document implementation and Section 125 compliance, both of which are now more important than ever.

Their online platform, Ease, simplifies administrative tasks like employee onboarding and payroll integration. With an "EXCELLENT" rating from 127 reviews, clients frequently highlight the agency’s expertise in managing these complex transitions.

Deadlines are approaching fast. The Benefit Choice Open Enrollment period runs from May 1, 2025, to June 2, 2025, with changes taking effect on July 1, 2025. Employers should begin preparing now, especially for transitions like the discontinuation of Health Alliance as an insurance option.

Taking action early can help avoid disruptions and penalties as these new regulations take effect.

FAQs

What does the ban on short-term health insurance policies mean for Illinois employers and their employees in 2025?

Starting January 1, 2025, Illinois will no longer allow short-term limited-duration health insurance policies. These plans, known for their lower costs and less extensive coverage, will no longer be an option for employers or employees. This shift means more people may turn to employer-sponsored health plans or ACA-compliant plans, which generally offer broader coverage but often come with higher premiums.

For employers, this change could drive up the cost of providing health benefits, potentially straining budgets and influencing employee satisfaction. On the employee side, fewer affordable insurance options may make it crucial for companies to evaluate group health plans that balance comprehensive coverage with cost-effectiveness.

What do Illinois employers need to do to meet the new Consumer Coverage Disclosure Act (CCDA) requirements for 2025?

Updated Illinois Consumer Coverage Disclosure Act (CCDA) Requirements for 2025

Employers in Illinois need to take specific steps to align with the Illinois Consumer Coverage Disclosure Act (CCDA) updates for 2025. Here’s what you need to know:

• Provide a written comparison: Employers must give employees a written comparison of their group health plan benefits against Illinois’s essential health benefits (EHBs). This comparison must be shared annually, when new employees are hired, and upon employee request.
• Use the 2025 model disclosure form: The Illinois Department of Labor (IDOL) has issued a 2025 model disclosure form. Using this form ensures your disclosures are clear and compliant.
• Maintain records: Keep copies of these disclosures for at least one year. This documentation is crucial in case of an audit.

By following these guidelines, your organization can stay compliant with the CCDA and avoid any penalties.

What can Illinois employers do to address the expected 8% increase in group health insurance premiums for 2025 while keeping employees happy?

Illinois employers are facing an expected 8% increase in group health insurance premiums for 2025. To tackle this challenge while keeping employees satisfied, they can explore value-based care models. These models aim to improve health outcomes while keeping costs in check. For instance, employers might offer tiered provider networks or implement value-based drug plans to manage expenses more effectively.

Another key strategy is focusing on clear communication about health benefits. Encouraging employees to use preventive care services not only helps control costs but also shows a genuine investment in their well-being. This approach can enhance morale and foster trust. Additionally, involving employees in health plan decisions and maintaining transparency can create a supportive workplace atmosphere, helping to ease concerns about rising premiums.

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• Group Health Insurance: Guide for Illinois Employers
• Open Enrollment 2025 Deadlines in Illinois
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• Illinois ACA Updates: H.B. 579 and H.B. 2296