23 July 2019

Proposed Regulations Would Roll Back Portions of the ACA Nondiscrimination Rules

In previous Client Alerts (Transgender Health Benefits May be Required Under New Guidance, New ACA Nondiscrimination Requirements Don’t Discriminate in Their Applicability:  Are You Covered? and Court Blocks Requirement to Provide Coverage of Transgender Health Benefits) we explained the requirements of the ACA Section 1557 nondiscrimination regulations and a court order to block enforcement of a portion of the regulations interpreting prohibited sex discrimination to include discrimination on the basis of gender identity.  This interpretation was the basis for the prohibition in the regulations on blanket exclusions with respect to transgender health services in employer group health plans.  HHS has issued new proposed regulations to roll back portions of the current regulations.

The new proposed regulations just issued make three key changes:

  • Removal of gender identity protection from the current regulations;
  • Reduction of the types of employer group health plans considered “covered entities” subject to Section 1557 of the ACA; and
  • Elimination of certain onerous participant notice requirements.

Removal of Gender Identity Protection

Section 1557 of the ACA prohibits discrimination on the basis of sex.  The current regulations, issued during the Obama administration, define “sex” for this purpose to include gender identity.  As a result, blanket exclusions in employer group health plans regarding transgender health services were prohibited under the regulations.  In response to a court challenge (Franciscan Alliance, Inc. v. Burwell), the proposed regulations would remove “gender identity” from the definition of “sex” under the prohibition on discrimination under the regulations and discontinue the ban on blanket exclusions with respect to transgender health services under employer group health plans.  It is expected that the U.S. Supreme Court will consider an appeal of the case.  If the U.S. Supreme Court disagrees with the lower court, HHS could be compelled to revise its position as outlined in the proposed regulations.  In any event, even if this provision of the proposed regulations is finalized and not changed, other federal courts have held that federal employment discrimination laws protect gender identity.  In other words, there may be other legal restrictions on an employer group health plan’s ability to maintain a blanket exclusion on transgender health services.

Revised Definition of Covered Entity

Not all employer group health plans are “covered entities” subject to the current ACA Section 1557 nondiscrimination regulations.  Employer group health plans which must comply include:

  • Plans sponsored by hospitals, home health agencies, nursing homes and other health care providers receiving federal funds under Medicare Part A or Medicaid.
  • Fully insured group health plans (sponsored by an employer) where the insurer is offering coverage on an exchange.
  • Self-funded retiree group health plans where the employer/plan sponsor receives a federal retiree drug subsidy.
  • Other self-funded group health plans (sponsored by an employer) administered by an insurer offering coverage on an exchange.

The proposed regulations would remove the last category of employer group health plans considered to be a covered entity (self-funded group health plans administered by an insurer offering coverage on an exchange) from the definition of covered entity.  If this change is implemented, fewer employer group health plans will be subject to the Section 1557 nondiscrimination regulations.

Elimination of Participant Notice Requirements

The current regulations provide access to certain services for individuals with disabilities and limited English proficiency and require covered entities (including the employer group health plans described above) to provide a nondiscrimination notice in all significant publications and communications, including the covered entity’s website.  The nondiscrimination notice must include a short statement written in the top 15 non-English languages spoken by individuals with limited English proficiency in the applicable state (known as “taglines”).  For significant publications and communications that are small size (such as postcards and tri-fold brochures), the regulations permit a shorter nondiscrimination notice and only require taglines in the top two non-English languages.  Covered entities have complained about these notice requirements and they have proven to be extremely expensive.  The proposed regulations would eliminate the notice requirements going forward.

Effective Date

Unfortunately employer group health plans cannot immediately discontinue including the nondiscrimination notice and taglines in SPDs and other publications and communications.  The regulations are in proposed form.  They will not become effective until after HHS considers public comments regarding the proposed regulations and the regulations are issued in final form.

If you have any questions about this article, please contact the author or another member of the Health Care Reform Team.