Legal Alert: How Do Your Benefits Compare? An Employer’s Essential Responsibility to IL Employees– Providing Employees a Comparison of Essential Health Benefits

Updated November 11, 2021.

On August 27, 2021, Illinois Governor J.B. Pritzker signed the Consumer Coverage Disclosure Act (SB 1905).

Who? This law applies to all employers, including the state; state departments, agencies, municipalities, and school districts; and private employers who have employees gainfully employed in the State of Illinois and provide group health coverage to those in-state employees (“Covered Employers”). It does not matter if the health plan is fully insured, self-funded, grandfathered, grand mothered or level-funded. This requirement applies to Illinois-based employees, not employers, so an employer based in another state would still be responsible for compliance if they have employees in Illinois who are eligible for the group health plan.

What? Covered employers must give all Illinois-based employees who are eligible (or presumably will be eligible) for health insurance under that group health plan an easy-to-understand comparison between the group health plan’s essential health benefits (EHBs) offerings and the EHBs that are required in the state-regulated individual market. EHBs include 10 categories of items and services:

  1. Ambulatory patient services;
  2. Emergency services;
  3. Hospitalization;
  4. Maternity and newborn care;
  5. Mental health and substance use disorder services including behavioral health treatment;
  6. Prescription drugs;
  7. Rehabilitative and habilitative services and devices;
  8. Laboratory services;
  9. Preventive and wellness services and chronic disease management; 
  10. Pediatric services, including oral and vision care.

Tip: Transparency is the reason behind SB 1905. Employees need to know how their employer plan stacks up against the state-mandated coverage in the individual market.

Considerations for some employers: While this is an employer responsibility, SB 1905 impacts covered employers sponsoring self-insured (including level-funded) plans or small grandfathered plans the most. These group health plans do not have to cover all 10 EHBs. Moreover, if they choose to cover a particular EHB category, they can benchmark their coverage against another state’s benchmark plan, picking and choosing whichever state has the most favorable benefits and coverage for that category. The Illinois rule requires only disclosure about these EHBs, not any specific coverage.

The Illinois Department of Labor has a template which an employer may use to inform employees of benefits included (or not included) in their group health plan. It is also available in a fillable Excel file from the IDOL. Employers are permitted to provide the information in another format, so long as it is easily understood and provides information on all the required EHBs and whether or not they are covered under the plan. The state also has a short FAQ for employers.

When? Covered employers must give employees this information upon hire, annually and when requested. It may be sent to employees via email or posted on the employer’s website that employees regularly access.

Tip: Covered Employers should work with their carriers or TPAs if they have questions about an EHB as it relates to their plan. Some carriers might provide a completed template to their clients, but others might not. Remember, this is an employer obligation. While SB 1905 requires (1) Illinois-based employees who (2) are eligible for the group health plan receive the comparison, it may be a best practice to place the disclosure in all new hire packets, open enrollment materials, as well as post on the intranet.

Are there penalties? The Illinois Department of Labor is charged with enforcement, and the penalties are steep. The IDOL may request documentation demonstrating that the covered employer met its disclosure requirements going back up to one year. Covered employers face a maximum penalty of $1,000 for the first offense, up to $3,000 for the second offense and up to $5,000 for subsequent offenses. The penalties may be mitigated based on good faith efforts and the nature of the violation.

Tip: Covered employers should document this practice and maintain the disclosure for at least two years (or until we know how the DOL’s one-year clock is run).

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc. Updated as of 11/16/2021.