Carle Health plans to close down most of its Health Alliance insurance plans by the end of the year.
The Urbana-based hospital system announced Tuesday that both Health Alliance and its sister company FirstCarolinaCare will cease operations at the start of 2026.
The organization said its provider-owned subsidiaries have struggled to remain “financially viable” due to a changing landscape for health insurance — including medical inflation as well as increases in prescription drug costs and those experiencing chronic medical conditions.
“We recognize that in today’s health insurance environment, our health plans no longer successfully compete and Carle Health must effectively utilize our resources to meet the changing needs of customers,” said Carle Health President and CEO James Leonard in a statement.
Health Alliance insurance plans first launched in 1980, as CarleCare HMO. It changed its name to Health Alliance in 1989.
More than 240,000 people are insured through the company based in Champaign. Carle said Health Alliance and FirstCarolinaCare, based in North Carolina, will continue processing claims for its members through the end of 2025.
Brittany Simon, a spokesperson for Health Alliance, said the two companies have a combined total of more than 600 employees.
She added that the companies will continue to offer their existing Medicare Advantage insurance plans.
“Carle Health is evaluating options for the Medicare Advantage line of business,” Simon said. “Right now, we’re focused on continuing our coverage for members, and we are committed to providing that high level experience that they’re used to today.”