An Overview of Major State Law Changes in Health Insurance for 2025

During their 2024 legislative session, many states passed laws impacting employer group health insurance. With the start of the new year, these laws are now in effect. Read the roundup below to see where things currently stand.

California

Large employers (100 or more employees) are required to cover the diagnosis and treatment of infertility, including in vitro fertilization (IVF). This includes a maximum of 3 completed oocyte retrievals and unlimited embryo transfers.

Additionally, the definition of infertility has been broadened, including LGBTQ+ individuals, who can also receive treatment. Religious employers, as defined by California law, are exempt. The law applies to all policies issued, amended, or renewed on or after July 1, 2025.

California's law does not impose this coverage mandate on small group plans or self-funded ERISA plans. However, the law prohibits health carriers and disability insurers, for both larger group and small group plans, from placing different conditions or coverage limitations on fertility medications and services compared to other treatments unrelated to infertility.

Colorado

Colorado passed the “Cover All Coloradans” Act, which expands Medicaid in the state by allowing any pregnant or postpartum people and children age 18 and under to qualify for Health First Colorado, regardless of immigration status.

Idaho

Idaho passed a law increasing transparency requirements for pharmacy benefit managers (PBMs). PBMs must disclose if they own, control, or are affiliated with a pharmacy and must provide explanations each time a drug is moved to a higher cost formulary. The law also requires PBMs to report any changes they pay to pharmacies on behalf of insurers.

Illinois

The biggest change last year was the Healthcare Protection Act. The Act bans the practice of “step therapy”, which requires participants to use lower-cost drugs before permitting a more expensive treatment. It also eliminates the prior authorization requirement for in-patient mental health care, increases transparency requirements about prior authorization in insurance coverage advertisements, and prohibits the sale of health plans that do not comply with the Affordable Care Act.

Other major changes include:

• HB 3639 sets a price limit on epinephrine. A two-pack of epinephrine injectors must be $60 or less.
• SB 3203 sets a price limit on inhalers, which can now cost no more than $25 for a 30-day supply.
• SB 2697 requires fully insured health plans to cover genetic cancer screening and testing for high-risk patients.
• HB 2350 requires fully insured health plans to cover annual prostate cancer screenings, cervical smears or Pap smears regardless of gender.
• HB 2443 requires all fully insured health plans to cover medically necessary hearing instruments and related services for all participants. Previously the law only required this coverage for persons under age 18.
• HB 5142 requires fully insured health plans to cover all service performed by doulas or licensed midwives.

Minnesota

Beginning in 2025, all fully insured Minnesota health plans provide coverage for abortion and abortion-related services. HF4053 says that any plan issued or renewed in 2025 must cover these services with no added costs through co-payments, coinsurance, or deductibles. Participants in qualified HDHP plans may still have to pay towards their deductible to keep HSA eligibility.

Employers with religious objections may choose to cover only some of these benefits. However, insurers must still cover, allow any participants to receive, and provide separate payments for these services. Objection employers must file for religious exemption with the health carrier and notify employees of which services are not covered.

HF 2607 requires fully insured plans cover physical or mental health services for medically necessary gender-affirming care. The law states that gender-affirming care is medically necessary as long as it meets professional standards, guidelines, or medical practices.

HF 2680 puts a cap on patient co-pays for prescription drugs that treat chronic diseases. The law requires that individuals pay no more than $25 per one-month supply of prescription drugs that treat diseases like diabetes, asthma, and allergies requiring epinephrine auto-injectors. The law also puts a $50 monthly cap for all related medical supplies (syringes, insulin pens and pumps, glucometers, etc.).

As a reminder, self-funded and level-funded plans are generally exempt from state insurance law. Fully insured plans should be ready to comply. Contact your insurance carrier to ensure compliance with these new requirements.

Make sure you're up to date with federal law changes as well by checking out the webinar New Year, New Laws: What Federal HR Regulations are Changing in 2025?