Health insurance provider Carle Health announced on Tuesday that its subsidiaries, Health Alliance and FirstCarolinaCare, will cease operating all lines of business except Medicare Advantage by January 1, 2026. The decision will leave approximately 187,000 Health Alliance members needing new insurance coverage. Carle Health cited financial strain from challenges such as inflation, rising prescription drug costs, increased utilization of healthcare services, and higher volumes of chronic medical conditions as reasons for the closure.
“In recent years, the health insurance industry has changed dramatically, particularly for provider-owned insurers,” a spokesperson for Carle Health said. Health Alliance, based in Champaign, Illinois, employs over 600 people and offers individual and employer group plans, individual and group Medicare Advantage plans, and Medicare Supplement plans. The company has communicated with employees about transitioning to other positions within the organization.
Discontinuing most insurance plans
State legislators expressed concern about the impact on employees and the thousands of locals who rely on Health Alliance. “My office will stand by to help in any way we can in job training and recruitment efforts for the impacted employees,” said State Senator Chapin Rose, R-Mahomet. “Continuity of care and access to trusted physicians must be the priority as thousands of local members will now be forced to find a new insurance carrier.”
The Champaign Unit 4 school district, which offers insurance to its workforce through Health Alliance, assured employees that their health insurance plan remains in full effect until June 30, 2025, and they do not anticipate disruption to benefits due to this decision. Clay Dean, CEO of First Mid Insurance Group, estimated that about 3,000 customers will be impacted, including 2,000 on Medicare Advantage plans. “We will probably have more certainty in June due to how Medicare works, as far as who the players are going to be in certain geographic areas like Champaign County,” he said.
Health Alliance and FirstCarolinaCare will continue operations throughout 2025 to support claims processing and meet ongoing business needs, regulatory mandates, and contractual obligations. Membership information will remain available through the end of the year.
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