On September 8, 2015, the Department of Health and Human Services (“HHS”) issued a proposed rule on Section 1557 of the Affordable Care Act which prohibits discrimination on the basis of race, color, national origin, sex, age or disability in certain health programs and activities. Section 1557 provides that an individual shall not be subjected to discrimination on the basis of race, color, national origin, age, disability or sex, under any health program or activity which is receiving Federal financial assistance.
This proposed rule clarifies the scope of these requirements, and sets forth new standards to implement Section 1557, particularly with respect to the prohibition of discrimination on the basis of sex in health programs.
How The Proposed Rule Would Affect Employer-Sponsored Health Programs
In the health plan arena, the main impact of the rule is on health insurance carriers that sell in the Health Insurance Marketplace. Provision of insurance is a health program and these Marketplace issuers are deemed to receive federal assistance by virtue of the government’s provision of premium tax credits or cost reductions to enrollees. Once an issuer becomes subject to the rule, the requirements of the rule would apply to all of the issuer’s health-insurance related business including insurance policies not sold through the Marketplace and third-party administration of self-insured plans.
In practice, it is likely that most insurance policies already comply with most of the substantive non-discrimination requirements in the rule. One exception may be the rule’s broad prohibition on policy exclusions related to gender transition or identity. An issuer may not deny medically appropriate coverage to an individual solely because the individual identifies as transgender person. Likewise, an issuer may not use a blanket exclusion for services related to gender dysphoria or gender transition.
Employers with self-insured health plans would not normally be affected by the proposed rule unless:
- The employer itself is in the business of providing health services or insurance and receives federal financial assistance (e.g., insurance issuers and hospitals); or,
- The employer receives federal financial assistance to specifically fund employee health benefits (and then only with respect to the program funded).
Of course, this does not relieve the employer from the impact of other federal laws that prohibit discrimination.
One open question under the proposed rules is whether an insurer that is subject to Section 1557 could serve as the third party administrator for a discriminatory plan of an employer that is not subject to Section 1557.
Interested parties may submit comment by November 9, 2015.