NFIB Illinois submitted a letter to the Illinois House and Senate Insurance Committees raising concerns that proposed policy changes could result in higher health insurance costs for small businesses.

Illinois regulates health insurance plans that are not subject to the federal Employee Retirement Income Security Act (ERISA). Most small employers utilize these non-ERISA health insurance plans.

Proposed regulatory changes to these non-ERISA plans could expand coverage mandates and limit cost-savings measures, resulting in higher health insurance premium costs for small businesses.

The letter to the Illinois Senate and House Insurance Committees reads:

To: The Honorable Members of the Senate & House Insurance Committees

From: Noah Finley, NFIB Illinois State Director

Date: February 18, 2025

Subject: Health Insurance Costs for Small Businesses

This year a number of bills have been introduced in the General Assembly that would expand coverage mandates for non-ERISA health-insurance plans. Some of these bills also limit cost-sharing measures for specified treatments/interventions. These changes will cost money.

More specifically they could contribute to higher premium costs for employers providing health insurance to their employees. Small businesses overwhelmingly rely upon non-ERISA health-insurance plans.

This burden will not fall equally on all employers. Larger employers—those participating in federally regulated ERISA health-insurance plans—would see no change in coverage requirements. Unfortunately for most small businesses, they are ineligible to participate in these ERISA plans and, as such, would be subject to any resulting increases in premium costs.

The cost of providing employee health insurance weighs heavily on small businesses. Last year, NFIB’s Small Business Problems & Priorities report, based upon an extensive survey of small-business owners, found that the cost of health insurance is the #1 small-business problem. Forty-one percent of respondents listed it as a “critical” problem.

In a 2023 Small Business Health Insurance Survey, 94 percent of small-business respondents indicated that it was a challenge to provide health-insurance to their employees. While sixty-three percent believed that offering health insurance was important to recruit and retain talent, many reported that they could not afford to offer it to their employees.

Small businesses face several economic headwinds at present, ranging from ongoing inflation to worker shortages. Any increase in non-ERISA health-insurance costs could detrimentally impact these small employers, making it more difficult for them to provide health insurance to their employees. In a competitive job market, raising the cost of small-employer health insurance plans makes it harder for small businesses to compete with multinational corporations that are eligible for non-impacted ERISA health-insurance.

As the committee reviews this year’s legislation, NFIB urges it to consider the impact coverage expansion and cost-sharing limitations could have on small businesses’ ability to provide health insurance to their employees.

Thank you for your support of Illinois’ small-business community.