The U.S. Department of Health and Human Services (HHS) Office of Civil Rights (OCR) issued a final rule to advance protections against discrimination in health care under Section 1557 of the Affordable Care Act.

Section 1557 of the Affordable Care Act is historically one of the most litgated provisions of the sprawling healthcare law. After years of uncertainty, the final rule by the HHS provides clarity for health plan sponsors. Section 1557 is notable for prohibiting discrimination on the basis of race, color, national origin, sex, age, or disability for individuals participating in:
(1) any health program or activity any part of which receives federal financial assistance from HHS;
(2) any health program or activity that HHS administers; or
(3) Health Insurance Marketplaces and all plans offered by issuers participating in those Marketplaces.

The final rule is effective as of July 5, 2024 (60 days after its publication on May 6). However, effective dates vary for certain provisions of the rule (see the table below).

Section 1557 Background

Section 1557 was originally intended to become effective on March 23, 2010 (i.e., the enactment date of health care reform), but HHS was first required to issue regulations implementing it. In May 2016, HHS issued final regulations implementing Section 1557.

The 2016 Rule applies to all health programs and activities that receive federal financial assistance and is administered by the federal government under Title I of the ACA or any entity established under Title I of the ACA (state-based marketplaces).

The 2016 Rule required covered entities to provide, in “significant communications,” notice and information regarding the availability of language assistance services in the 15 most common languages spoken by limited English proficient (LEP) persons in each state. Additionally, it required covered entities to take reasonable steps to provide meaningful access to each LEP individual eligible to be served in covered entities’ health programs and activities.

The final rule is effective as of July 5, 2024.

The 2016 Rule also prohibited discrimination based on sex, including gender identity; outlined requirements for equal program access based on sex; and explicitly prohibited discrimination in health-related insurance and other health-related coverage, including a ban on categorical exclusions of gender-transition-related care in health insurance coverage and other health-related coverage.

In June 2020, HHS reissued final regulations repealing and replacing significant portions of the 2016 Rule. The 2020 Rule rescinded the 2016 Rule’s definition of “on the basis of sex” and did not include a new definition for “on the basis of sex.” Instead, the 2020 Rule identified examples of other government entities that referred to “sex” in “binary and biological” terms and suggested that Section 1557’s prohibition on sex discrimination may not extend to gender identity discrimination.

Under the 2020 Rule, gender identity and pregnancy termination were not included in the definition of sex discrimination, and the scope of Section 1557 was narrower than the 2016 regulations (namely, health insurance issuers were generally not included).

The 2020 Rule also eliminated the requirement that covered entities send nondiscrimination notices and “tagline” translation notices in at least 15 languages for all “significant communications.” Additionally, the 2020 Rule significantly limited which entities and health care activities are subject to Section 1557 nondiscrimination protections.

The Final 2024 HHS Rule on Nondiscrimination

The final rule returns many of the requirements of the 2016 rule and expands on the 2020 final rule by:

• Requiring health insurance issuers to comply with Section 1557
• Applying Section 1557 to all program and activities administered by HHS
• Including discrimination on the basis of sexual orientation, gender identity, sex stereotypes, sex characteristics, and pregnancy or related conditions in the definition of sex discrimination
• Applying nondiscrimination requirements to telehealth services
The final rule also requires Section 1557 covered entities to notify individuals of the language assistance services and auxiliary aids they provide. Covered entities must also update policies and procedures, if necessary, and train staff to comply with the final rule. Finally, covered entities must review their patient care decision support tools and make reasonable efforts to mitigate the risk of discrimination in these tools.

Effective Date of the Final Rule

The final rule is effective as of July 5, 2024 (60 days after its publication on May 6). However, various sections of the rule were given their own effective date. An overview of these dates can be seen below:

Next Steps for Employers

As is often true regarding the Affordable Care Act, this final rule from HHS is likely to become the subject of more lawsuits. Employers should monitor all legal developments and should begin discussions with the health carriers now to coordinate compliance responsibilities. The latest updates can be found on the OCR Section 1557 webpage.

In addition to not discriminating on the basis of race, color, national origin, sex, age, or disability, health plan sponsors are also required to ensure than their plans do not discriminate in favor of highly-compensated employees. For more information, check out our blog on Basic Nondiscrimination Rules for Health & Cafeteria Plan Benefits.