All employers with fully insured health insurance plans in Illinois face a significant change with plans renewing on January 1, 2026, and beyond. If the plan provides dependent coverage, employers will be required to offer insurance to eligible dependent parents and stepparents (“parent” or “parents”) if the parents live within the health plan’s service area.
To qualify, a parent must meet the federal IRS definition of a “qualifying relative”/dependent under IRS code, specifically:
- The parent’s gross income can’t exceed $5,050 (2025);
- The employee must provide more than half of the parent’s financial support for the year; and,
- The parent can’t be claimed as a dependent on someone else’s tax return.
Self-funded plans are excluded from this requirement. Employers with policies issued in other states, even if they have employees living and working in Illinois, are also not covered by this mandate. Premiums can be deducted pre-tax from an employee’s pay, but it’s important to note that the employer is not required to subsidize any portion of the premium, nor are employers required to offer COBRA continuation coverage to parents, which is reserved for the employee, a spouse, and dependent children. State continuation coverage in Illinois might apply, however.
Employers should start renewal conversations now with their insurance broker to understand how this change might impact them, as plan documents, open enrollment forms, and new hire materials may need to be modified. Brokers should also be able to assist with what kind of proof employers may want to require from employees that a parent they wish to cover meets these criteria.
Miller Cooper’s Client HR Services is happy to answer any questions that may arise. Contact us at chrsusers@millercooper.com.
