By: HUB’s EB Compliance Team

Section 1557 of the Affordable Care Act (“ACA”) has been on a rollercoaster since the original final rules were issued back in 2016. Since then we’ve seen injunctions, vacated rules, new rules, court cases, enforcement positions, and now more new proposed rules. The new reproposed rules would both reinstate past provisions of the law and add new provisions.

A Brief Review

Section 1557 is a nondiscrimination provision of the ACA designed to prevent discrimination by health plans (among others) on the basis of race, color, national origin, sex, age, or disability. Also included were protections for individuals who speak languages other than English in the form of providing access to language assistance. These protections have largely been the focus of the changes we have seen since the 2016 final rules.

Applicability

The applicability of the 2016 final rules hinged on whether and organization operated a health program or activity that received federal financial assistance from the Department of Health and Human Services (“HHS”). Such entities were considered to be “covered entities” under Section 1557. The 2020 rules changed covered entity to mean only the specific health program or activity that received of federal financial assistance, rather than the entire organization.

HHS has now reproposed rules that would reinstate the 2016 definition of covered entity and then expand upon it. Part of the expansion would be accomplished by defining health program or activity to “include all of the operations of any entity principally engaged in the provision or administration of health projects, enterprises, ventures, or [certain] undertakings.” In other words, if an entity receives any federal financial assistance from HHS, all of its operations would subject to Section 1557’s nondiscrimination protections.

The intent is to define covered entity as expansively as possible while still tying applicability to receipt of federal financial assistance, which is similarly expanded upon. Federal financial assistance would mean “any grant, loan, credit, subsidy, contract (other than a procurement contract but including a contract of insurance), or any other arrangement by which the Federal Government provides assistance or otherwise makes assistance available” in certain forms.

Notices and Taglines

The 2016 rules required covered entities to provide initial and continuing notices of nondiscrimination of the plan as well as taglines describing the availability of language assistance to non-English speakers. The taglines were required to be provided in taglines in “at least the top 15 languages spoken by individuals with limited English proficiency of the relevant State or States.” Covered entities could use a single notice, however the taglines depend on the specific top 15 languages within the state. Thus, covered entities operating in multiple states had to ensure the correct languages were used in each state.

The 2020 rules completely repealed both of these provisions. Just as we have seen with other repealed provisions from the 2020 rules, the 2022 proposed rules would reinstate these requirements and modify them. The first expansion is the addition of “auxiliary aids and services” to the language assistance requirements. However, helpfully, the 2022 rules list the specific communications which must include the taglines, including as examples, the HIPAA Notice of Privacy Practices, application and intake forms, EOBs, and communications related to public health emergencies. The notice would also need to be provided annually, on request, and on a covered entity’s website.

This means if the rules are finalized as proposed that self-funded plan sponsors could potentially have to revert back to providing the annual notice and work with their third party administrators/administrative services only providers (“TPA”) to ensure the notices are included in all of the required communications. Any TPA that receives federal financial assistance in another part of its business would likely be subject to these rules, even if the plan sponsor is not directly subject to them.

Sex Discrimination Definition

The definition of sex discrimination or discrimination on the basis of sex has long been the most controversial piece of Section 1557. The 2022 proposed rules follow the now common theme of reinstating and expanding upon provisions of the 2016 rules that were weakened or eliminated by the 2020 rules. Consistent with the Bostock Supreme Court decision from 2020, the 2022 proposed rules would discrimination on the basis of sex to gender identity, sex stereotypes, sexual orientation, sex characteristics, including intersex traits, and pregnancy or related conditions. Including pregnancy or related conditions was likely driven by the Dobbs Supreme Court decision which increased the plausibility that health plans could discriminate against those that have terminated a pregnancy. These changes, if finalized, could impact what benefits are required to be covered under either fully-insured or self-funded plans as many carriers and TPAs would likely be considered “covered entities” under the proposed rule.

Conclusion

The 2022 proposed rules would largely reinstate and expand upon the 2016 rules. However, as the 2020 rules demonstrated, rules can change. Thus, even these 2022 proposed rules may change before they are finalized. In the meantime, employers should understand whether they or the insurer or TPA for their health plan may once again become a covered entity under Section 1557 if the rules are finalized as proposed; and if so, what these rules mean for them and their health plans. Though these rules are not final, employers with upcoming renewals should work with their insurance carriers or TPAs on any changes to their health plans that may be required.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

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Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.