Effective January 1, 2026, Illinois will require certain health insurance policies to expand dependent eligibility to include qualifying parents or stepparents of the insured. House Bill 5258, recently signed into law, amends the Illinois Insurance Code to broaden the definition of dependents for plans that already offer dependent coverage. The amendment is intended to improve access to care and family support for aging dependents.
Key Provisions
- Expanded Dependent Eligibility. For policies issued, renewed, amended, or delivered on or after January 1, 2026, any plan offering dependent coverage must also cover the insured’s parent or stepparent if that individual qualifies as a dependent under federal tax law and resides within the plan’s service area. Notably, coverage does not extend to the parents or stepparents of an insured individual’s spouse.
- Exempted Plans. The new requirements apply only to fully insured plans. Self-funded (self-insured) plans are exempt due to ERISA preemption. Other exemptions include Medicare supplement policies, hospital-only plans, accident-only coverage, disease-specific policies, and other limited-scope or specialized health service plans.
- Qualified for Coverage. To qualify for coverage, a parent or stepparent must meet the IRS definition of a qualifying relative, which includes requirements related to income, financial support, relationship status, and residency within the plan’s service area. If eligible, they may be treated as a federal tax dependent, allowing pre-tax payroll contributions for their premiums.
Next Steps for Employers
Employers offering fully insured health plans should review current plan design and confirm whether coverage changes will be required. Coordination with insurance carriers or third-party administrators will be important to determine applicability and ensure timely implementation.
Employee communication materials and summary plan descriptions should be updated to reflect any changes in dependent eligibility. Employers offering exempt plans should confirm their status under the law and retain supporting documentation as appropriate.
