Section 1557

Earlier this month, the Department of Health and Human Services (HHS) issued a final rule and fact sheet under Section 1557 of the Affordable Care Act’s (ACA), which prohibits certain entities from discriminating against individuals on the basis of race, color, national origin, sex, age or disability. The final nondiscrimination rules clarify who is subject to the requirements, change sex discrimination applicability and eliminate the former taglines requirement. Highlights of the rule include the following:

  • Section 1557 does not apply to an employer’s self-insured health plan.
  • It applies to an employer’s fully-insured health plan only if the plan receives federal financial assistance from HHS or operates a program that is principally engaged in the business of providing health care.
  • Termination of pregnancy, sex stereotyping and gender identity are no longer protected against discrimination due to the removal of the definition of “on the basis of sex”.
  • The requirement to include taglines in certain health plan communications was removed. Initially, they were required to help individuals with limited English proficiency.

Title VII

Interestingly, only days later, the U.S. Supreme Court ruled that Title VII of the Civil Rights Act protects employees against discrimination on the basis of their sexual orientation and gender identity in Bostock v. Clayton County, Georgia. Specifically, the opinion relays that an employer that fires an individual for being gay or transgender violates Title VII.

Next Steps

​The different outcomes in the above-stated guidance relating to sex discrimination leads one to question whether Section 1557’s final rule will be subject to challenge. In the meantime, employers must determine whether Section 1557 applies to them and their health plan, and if so, be aware of the recent changes for compliance with the final rule.

In terms of the U.S. Supreme Court’s Title VII opinion, all employers should review their handbooks, policies and other material to be consistent with and communicate to employees and managers – the prohibition of discrimination on the basis of sexual orientation, gender identity and transgender status. Additionally, a cautious employer may want to proactively eliminate existing general health plan exclusions for gender dysphoria and gender identity disorder services to avoid a Title VII issue.

Our bulletins below contain additional information. 

Read Our Bulletin on Title VII Read Our Bulletin on ACA Section 1557