New Requirements Related to Essential Health Benefits for Employers with Illinois Employees

On August 27, 2021, SB 1905, better known as the Illinois Consumer Coverage Disclosure Act (CCDA), was signed into law. The CCDA went into effect immediately and requires Employers to disclose to their employees who are “gainfully employed” in the State of Illinois with an easily digestible comparison of their group health plan’s coverage in contrast to the Essential Health Benefits (EHBs) required by the Illinois Department of Insurance (IDOI).

As noted, this disclosure requirement is an Employer’s obligation and not a plan obligation. An “Employer”, as defined by the CCDA, is taken to include “an individual, partnership, corporation, association, business, trust, person, or entity for whom employees are gainfully employed in Illinois and includes the State of Illinois, any State officer, department or agency, any unit of local government, and any school district.” Employers should also work closely with their carriers and/or TPAs to determine the best path forward for compliance if they are unsure.

The disclosure must be made upon hire, annually thereafter, and upon request from an employee. As a matter of standard practice, Employers will likely find it most effective to include this additional information alongside their other new hire and open enrollment materials. The disclosure can be provided via hand delivery to employees directly, through email, or can be posted on a website/Intranet portal that is regularly accessed by employees. There is no requirement to mail this information to employees’ home addresses. Although the law does not get into the particulars surrounding this aspect, many have speculated that providing the disclosure with either the summary of benefits (SBC) or summary plan description (SPD) will also suffice.

Employers will be tasked with proving that each employee received the disclosure and will need to maintain records of their individual receipt of the necessary information for a period of one year, with the Illinois Department of Labor (IDOL) serving as the enforcement agency for these matters. An Employer may be subject to fines of up to $5,000 for a failure to comply. While a good faith effort to comply combined with the nature and extent of the violation may help to mitigate the severity of any assessed penalty amounts, the IDOL has the power to levy civil penalties as follows:

(1) For an employer with fewer than 4 employees: a

penalty not to exceed $500 for a first offense; a penalty

not to exceed $1,000 for a second offense; and a penalty

not to exceed $3,000 for a third or subsequent offense.

(2) For an employer with 4 or more employees: a

penalty not to exceed $1,000 for a first offense; a

penalty not to exceed $3,000 for a second offense; and a

penalty not to exceed $5,000 for a third or subsequent

offense.

 

Since the term “group health insured coverage” is not defined in the CCDA, the IDOL is taking the position that the Act applies to all Employers providing group health coverage, including both fully insured and self-insured plans. 

The IDOL FAQs can be found here and the IDOL has also released this template. Employers may use the template for the disclosure if they choose, although this exact format is not required.  

Employers should make all good faith efforts to comply.