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

September 28, 2021

Updated January 26, 2022.



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, as well as private employers, who have employees gainfully employed in the State of Illinois, or whose employment base of operations is 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. Examples of employees who must receive the disclosure:



• Employees who work in the state of Illinois (either at a place of business or in their own home/remote office). For example, Joey lives in Chicago, Illinois and works from home for Global Widgets, which is headquartered in Delaware, he would need to receive the disclosure.



• Employees who work in another state, but whose “base of operations” is in Illinois. For example, if Joey lives in New York City and works remotely from his home office for Global Widgets that is headquartered in Delaware, but he reports into the Chicago office of Global Widgets, he would need to receive the disclosure.



• Employees who work in Illinois but live in another state. For example, if Joey lives in Northwest Indiana but drives into Global Widgets office in Oakbrook, Illinois and works there, he needs to receive the disclosure.



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 ten 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; and

  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: 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 ten 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.



Additional guidance provided by the Illinois Department of Labor indicates that employers should not treat the fillable Excel file column as binary (yes or no answers only). Instead, employers should indicate if there is nuance to the answer. For instance, if an employer’s plan only covers 1-2 rounds of fertility treatment but the marketplace benchmark plan covers 3, the correct answer in the disclosure would be “Partially” with an explanation of the difference.



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 to 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. 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 01/26/2022.