ACA Section 1557.  Earlier this year, the Department of Health and Human Services (“HHS”) finalized regulations under Section 1557 of the Affordable Care Act (“Section 1557”), which prohibits discrimination in certain federally funded health programs on the basis of race, color, national origin, sex, age or disability.  Significantly, these regulations prohibit discrimination on the basis of gender identity, such that categorical coverage exclusions for services related to gender transition are prohibited.

Employers who sponsor group health plans covered by Section 1557 have until the first day of the plan year beginning on or after January 1, 2017, to ensure their benefit design is compliant with the new regulations.  The rules also include specific notice requirements that are effective October 16, 2016.

Group Health Plans Covered by Section 1557.  Section 1557 generally applies to the following group health plans:

• Plans that receive funding from HHS (e.g., retiree health plans that receive Medicare Part D subsidies);
• Plans sponsored by employers that provide or administer health services or coverage and receive funding from HHS (e.g., health plans sponsored by hospitals or nursing homes that accept Medicare and Medicaid); and
• Insured plans offered by health insurance issuers that participate in the Health Insurance Marketplaces (including the plans offered to employers outside the Marketplaces).

This means that, for self-funded plans, if neither the employer nor the plan is receiving funding from HHS, Section 1557 does not apply to the employer’s plan.  For insured plans, the insurance carrier will likely be subject to Section 1557, which means that employers may see changes to their insured plans beginning in 2017.

Nondiscrimination Requirements Under Section 1557.  Group health plans covered by Section 1557 may not discriminate against an individual based on race, color, national origin, sex, age or disability.  The significant key provisions of the new HHS regulations under Section 1557:

• Prohibit categorical coverage exclusions or limitations for gender transition-related services;
• Require covered entities with 15 or more employees to appoint a compliance coordinator and implement grievance procedures; and
• Impose certain notice requirements.  Specifically, covered entities are required to post notices of their nondiscrimination policies and taglines informing individuals that language assistance services are available.

Additional Nondiscrimination Requirements May Apply Under Other Laws.  Even if an employer’s group health plan is not subject to Section 1557, the employer may still wish to review its current plan design with respect to transgender healthcare services under existing nondiscrimination laws.

• Title VII of the Civil Rights Act.  The Equal Employment Opportunity Commission (“EEOC”) has recently challenged categorical exclusions for gender transition services in employer health plans under Title VII, claiming that the exclusions discriminate on the basis of sex.  Whether the courts will agree with the EEOC’s position on this issue remains to be seen.
• Federal Contractors.  Federal contractors are subject to Executive Order 13672, which prohibits federal contractors from offering health plans that include an exclusion for gender transition services.

Contact Information.  For more information from Mazursky Constantine, please contact Don Mazursky (404.888.8840), Kelly Meyers (404.888.8838), Emily Friedman (404.888.8871), Angela Roberts (404.888.8822) or Alex Smith (404.888.8839).  For more information from VCG Consultants, please contact Leslie Schneider (770.863.3617).