New Requirements for Illinois Dental Practices Using Third-Party Financing Programs

BACKGROUND

Some dental practices have existing relationships with third-party financing programs or have historically assisted patients with signing up for third-party financing. In 2024, the Illinois State Dental Society and other interested parties worked with state legislators to develop legislation that implements consumer protections and limitations related to third-party financing applications. The new law focuses on transparency and disclosure requirements and seeks to limit how dental practices can facilitate third-party financing applications for patients. After the initial bill underwent significant revisions, Illinois Governor JB Pritzker signed the final bill into law on August 2, 2024, and the law became effective on January 1, 2025. Other states, such as California, have enacted similar laws.

PROHIBITIONS AND REQUIREMENTS

Under the law, dental practices, including their employees, agents, contractors, management companies, and dental service organizations (DSOs), are prohibited from facilitating or brokering third-party financing services for their patients. Specifically, dental practices may not:

• Arrange for, broker, establish, or submit a patient’s financing application to a third-party creditor, lender, or intermediary
• Complete any part of a patient’s third-party financing application
• Collect financing applications for submission to the third-party financer
• Provide patients with software, links, URLs, or QR codes that direct them to a third-party financing application that is customized with the branding of the dental practice (in other words, the third-party application cannot look like it is part of the dental practice)
• Provide patients with an electronic device, such as a tablet or a computer station, to apply for third-party financing
• Advertise, promote, or provide third-party financing materials to patients if they (i) have received any kind of sedation or nitrous oxide, (ii) are currently receiving treatment, or (iii) are currently in a treatment area, such as an exam room or surgical room, unless a separate waiting area does not exist.

However, the law does not prohibit dental practices from providing patients with general advertisements or materials. Dental practices may still do the following:

• Provide patients with third-party marketing or advertising materials that are not customized or branded for the dental practice
• Provide brochures, information, and other advertisements or promotional materials for third-party financing programs in waiting rooms
• Discuss third-party financing options with patients and provide them with paper copies of applications.

The law also includes a written notice requirement. When discussing or providing third-party financing applications to a patient, dental practices must provide a written notice that explains to the patient that they are applying for a credit card, line of credit, or loan. The Illinois Department of Financial and Professional Regulation (IDFPR) has released a printable copy of the required written notice, which dental practices can immediately start using. Dental practices may also create a copy of the notice with their own branding, but the precise language used in the law must be included in at least 14-point font for patients to review.

Violations of the law are punishable by a fine of up to $500 for the first violation and up to $1000 for each subsequent violation. The law is enforced by the IDFPR, which may take additional disciplinary action (including suspension or termination of the dentist’s license) if the dental practice otherwise commits prohibited conduct under the Illinois Dental Practice Act. The IDFPR has not promulgated regulations or guidance regarding the statute but may adopt rules at a future date.

KEY TAKEAWAYS

Dental practices and DSOs should promptly review their policies and workflows related to third-party financing applications and adjust their workflows as necessary to comply with the new law. Dental practices that have relationships with third-party financing companies should review their websites and patient-facing materials to ensure that such materials comply with the new law. For instance, if a practice’s website has a built-in, practice-branded application for third-party financing, the website should be revised to instead direct patients to the website of the third-party financer. Further, any third-party applications or promotional materials should be removed from exam rooms and treatment areas and should instead be kept at the front desk or in the waiting room.

Front desk staff should be well-trained on the notice requirement. Dental practices may consider including the notice in their new patient paperwork, but the notice must also be provided any time third-party financing is discussed, which typically occurs at checkout and may occur at multiple visits.

Notably, the law does not apply to in-house payment plans or financing programs offered directly by a dental practice. The law only applies to financing programs offered by a third party. Therefore, dental practices with their own payment plans may continue to provide patients with assistance and otherwise facilitate the completion of applications for their in-house payment plans.