Employers with Illinois Employees Must Provide a Comparison of their Health Plan with State-Required Essential Health Benefits

By: HUB’s EB Compliance Team

In late August, Illinois Governor, J.B. Pritzker, signed the Consumer Coverage Disclosure Act (“CCDA”). This new law, which became effective immediately, requires employers to disclose to group health plan participants, an easy-to-understand comparison of the group health plan’s coverage to the Essential Health Benefits required by the Illinois Department of Insurance for individual and small group (99 or fewer) health insurance coverage. Disclosing this information provides group health plan participants the ability to compare the employer’s group health plan’s coverage to the state-mandated coverage of 10 categories of medical items and services that would be available if they bought an individual policy.

Who is subject to the Illinois Consumer Coverage Disclosure law?

The CCDA defines “Employer” to mean an individual, partnership, corporation, association, business, trust, person, or entity for whom employees are gainfully employed in Illinois. This definition of “Employer” includes the State, State departments, agencies, municipalities, and school districts, as well as private employers, who have employees in-state and provide group health coverage to those employees (“Covered Employers”). Since the disclosure obligation is imposed on employers rather than plans, it is unclear whether federal ERISA preemption limits Illinois from imposing this disclosure requirement on self-insured plans. Illinois certainly has the right to impose such a disclosure requirement on fully-insured employers with employees enrolled in plans written in Illinois. Illinois’ ability to impose this requirement on self-insured employers is less clear.

While this is an employer obligation, Covered Employers should work with their carriers or TPAs to set up the comparison disclosure. Some Illinois carriers believe they Certificate of Coverage satisfies the disclosure requirements while others are still contemplating what support they can provide to their group health plan clients. The Illinois Department of Insurance is tasked with providing information on the essential health insurance benefits available under individual plans. This information will be used to prepare the disclosure. To date, the Illinois Department of Insurance has not issued any information to support this requirement.

When is the information to be disclosed to employees?

Covered Employers must give employees this information upon hire, annually, and when requested. Therefore, for employers with employees in the state of Illinois, this becomes another new hire and open enrollment disclosure. It may be sent to employees via email or posted on the employer’s website that employees regularly access or by in-hand or mail delivery. While the statute does not say this, sending this new disclosure along with the summary of benefits and coverage would seem to make sense from a timing perspective.

Who is the enforcement agency and what are the penalties?

The Illinois Department of Labor (“IDOL”) is charged with enforcement. The IDOL may request documentation demonstrating that the Covered Employer met its disclosure requirements going back up to one year. Upon finding a violation, the IDOL shall issue a notice to show cause giving the employer 30-days to comply. A failure to meet the disclosure requirements may result in a penalty by the IDOL, based on whether the Covered Employer has fewer than 4 employees or 4 or more employees. Covered Employers with 4 or more employees 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 a third or subsequent offense (the levels for employers with fewer than 4 employees are $500, $1,000, and $3,000). The penalties may be mitigated based on good faith efforts to comply and the nature of the violation. An employer may apply for and obtain judicial review of any order by the IDOL.

Next Steps

While the law is new and the availability of carrier/TPA support uncertain, employers should make good faith efforts to make the comparative disclosure satisfy an IDOL inspection and to avoid the imposition of penalties. The ability to provide the disclosure by email or on a website is helpful. Employers with Illinois employees that have not traditionally used electronic disclosure methods may want to consider adopting them, even if only for this disclosure, to avoid the cost of mailing them. However, even with electronic disclosure, employers should consider maintaining records that the disclosure was sent or made available.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory. 

NOTICE OF DISCLAIMER 

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.