New Illinois Laws Going into Effect on January 1, 2026

As the year closes out, we wanted to provide a final update on new laws concerning Pensions, Higher Education, and Healthcare that go into effect on January 1, 2026. 

We also wanted to remind our members that Governor Pritzker signed legislation amending regulations for individuals who return to employment with Chicago Public Schools, charter schools, or contract schools. Effective on August 15, 2025, and retroactive to July 1, 2020, the new law revises the penalty for exceeding statutory return-to-work limits from a complete suspension of pension benefits to a proportional day-for-day reduction for affected members. For every day worked beyond the allowable limit, a penalty equivalent to a full day’s pension benefit will be imposed.

The following laws will go into effect on January 1, 2026:

• Prescription Drug Affordability (P.A. 104-0027): This Act prohibits pharmacy benefit managers (PBMs) or their affiliates from engaging in "spread pricing," steering covered individuals, or improperly classifying specialty drugs to limit access. Effective January 1, 2026, PBMs must remit no less than 100% of any rebates or fees received from pharmaceutical manufacturers, wholesalers, or distributors back to the insurer or health benefit plan sponsor. Furthermore, the contract between the PBM and the insurer must allow for an annual audit of these rebate and fee records. Certain public acts, such as the State Employees Group Insurance Act and the School Code, are also amended to require coverage from specified provisions of the Illinois Insurance Code.

• Managed Care and Insurance Card Requirements (P.A. 104-0379): Effective January 1, 2026, healthcare plans must provide enrollees a yearly statement of all mandated basic health care services and benefits, highlighting newly enacted State laws.  Health benefit plans offering dental coverage are now included in the plans required to issue a health care benefit information card (which can be electronic or physical). This card must disclose whether the plan is self-insured or fully funded and subject to regulation by the Department of Insurance. 

• Downstate Firefighter Pension Payment Redirects (P.A. 104-0196): Effective January 1, 2026, while pensioners cannot generally transfer or assign their benefits, they may direct monthly payments, in writing, to an association affiliated with their fire service or for hospitalization insurance purposes. 

• Pension Code Amendments (P.A. 104-0284): Takes effect January 1, 2026, making various amendments to the Illinois Pension Code. Changes cover areas such as the calculation of final rate of earnings and survivors insurance benefits under the State Universities Article, and adding the Joliet Regional Port District to the list of participating instrumentalities in the Illinois Municipal Retirement Fund (IMRF).

• Firefighter Credit (P.A. 104-0043): Institutions of higher education are required to adopt a policy under the Act if they offer a program providing at least one course for credit hours recommended for equivalency by a national higher education association for firefighting training.  This policy must be incorporated into the institution’s credit for prior learning policies. Effective January 1, 2026.