New Illinois Health Coverage Disclosure Requirement

Illinois has passed a law (available here) that imposes new disclosure requirements on employers that sponsor group health insurance. The law, known as the Consumer Coverage Disclosure Act, was enacted on August 27, 2021 and is effective immediately. While the basic obligation imposed by the Act is straightforward, the Act leaves a large number of issues unresolved regarding an employer’s obligations, as further discussed below.

What Employers are Potentially Subject to the Law?

According to the Act’s definition of employer, the Act applies to all private and public employers “for whom employees are gainfully employed in Illinois.” If such an employer “provides group health insurance coverage to its employees,” then it is required to make the disclosures required by the Act.

Open Questions:

Q. Is the term “group health insurance coverage” limited to actual insurance coverage, meaning employers that sponsor only self-insured health coverage are not required to comply?

A. It is possible the Illinois legislature was using the term in a very generic context and that the term is intended to apply to both fully insured and self-insured health coverage sponsored by an employer, but the phrase is open to interpretation.

Q. Does the term “group health insurance coverage” include any type of coverage other than medical coverage?

A. Although the term “group health insurance coverage” can include medical, dental, and vision coverage in other contexts, we believe it is limited to medical coverage in this case due to the nature of the information that must be disclosed.

Q. For private-sector employers whose health plans are subject to ERISA, is the disclosure requirement preempted by ERISA?

A. Because the disclosure obligations are imposed on employers sponsoring an ERISA plan, not the insurance carrier, ERISA preemption might apply regardless of whether the employer’s plan is fully insured or self-insured. The answer to the preemption question likely will not be known until the DOL issues an opinion on the issue or a court decides the issue. While employers whose plans are subject to ERISA have strong arguments in favor of ERISA preemption, other similar state laws have gone unchallenged.

This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.

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