State of Illinois Set to Require Health Coverage for Parents in 2026

Set to go into effect on January 1, 2026, Illinois House Bill 5258 will amend the Illinois Insurance Code, the Health Maintenance Organization Act, and the Limited Health Service Organization Act to mandate that fully insured health plans in the state of Illinois include insurance coverage for dependent parents. This will consist of both parents and stepparents of an insured individual* when a plan offers coverage for dependents if the parent or stepparent lives within the service area of the accident and health insurance policy and meets the definition of a “qualifying relative” under 26 U.S. Code § 152(d).

*Illinois House Bill 5258 does not extend to the parents/stepparents of an insured individual’s spouse.

Understandably, employers are concerned about the potential impact this change may have on their plans. Although, this rule sounds broad on its face, the requirement will apply only to health insurance policies issued, amended, delivered, or renewed in Illinois on or after January 1, 2026. Employers that maintain insurance policies in other states are not affected.

Regarding the qualifying relative test, the IRS outlines several underlying requirements that must be met to be considered as such, which include certain stipulations surrounding the gross income of the parent or stepparent, the level of financial support provided to them by the insured individual, and the specific relationship involved (cannot be a qualifying child of the insured themselves or another taxpayer). This is of course in addition to living in the plan’s service area, as mentioned previously. If a parent or stepparent does indeed meet the definition of a qualifying relative, they will be considered a federal tax dependent and pre-tax payroll contributions will be allowed for their premium contributions.

Of significance here, qualifying relatives are not considered to be qualifying beneficiaries under COBRA so would not be automatically eligible for continuation coverage under federal law. There may, however, be some form of relief under Illinois Continuation Law (Illinois State mini-COBRA) in limited situations.  

As noted above, this requirement is applicable only to fully insured health plans and not self-funded plans. Further, specialized health care service plans, Medicare supplement insurance, hospital-only policies, accident-only policies, and specified disease insurance policies that reimburse for hospital, medical, or surgical expenses are also exempt from the reach of House Bill 5258. As implemented, employers that maintain insurance policies outside of Illinois are not required to comply with the requirements regardless of whether they have employees who live and/or work in the State of Illinois.

Employers will want to work closely with their carriers as it pertains to enrollment of these individuals and will need to determine their administrative strategy, i.e., requiring an attestation form or affidavit from an employee prior to enrolling a dependent parent or stepparent onto their plan. Employers will also want to clearly articulate the requisite income limits and level of support associated with eligibility and enrollment.