By: HUB’s EB Compliance Team

Almost a year to the day after proposing changes to the Affordable Care Act (“ACA”) Section 1557 Nondiscrimination Rules, the Department of Health and Human Services (“HHS”) has now finalized those rules. The two key takeaways for employers are (1) the onerous notice requirement is gone, but (2) nondiscrimination rules still generally apply.

Background

ACA Section 1557 applies various federal nondiscrimination laws to entities engaged in “health programs or activities” that receive certain “federal financial assistance.” Without getting too far into the details, the new final rules limit substantially the definitions of “health program or activity” and “federal financial assistance.” The limitations essentially make nearly all employer plans exempt from these rules.

Prior to these changes, the rules essentially applied to employer health plans because they applied to the insurance carriers or third-party administrators that administered those plans. As a result, among other requirements, employers had to:

  • Create and maintain a notice of non-discrimination
  • Include it in “significant communications” along with taglines in 15 different languages advising individuals of the availability of language assistance
  • For other communications, include similar taglines, but only in three different languages.

Notice-ably Absent

The new final rules remove the notice requirement. This is welcome news for employers that were required to create and maintain these complicated notices. In the preamble to the new final rules, HHS stated that the notices were costing employers and other entities hundreds of millions to billions of dollars, but were not, in HHS’s view, providing meaningful additional help to individuals.

(Non)Discriminating Employers

As noted above, the new final rules also significantly limit the employers that are subject to the ACA Section 1557 rules. This does not mean employers are free to discriminate.  ACA Section 1557 only applied certain existing nondiscrimination and civil rights laws to companies that engaged in certain health programs or activities. This change in the ACA Section 1557 rules does not change the underlying nondiscrimination and civil rights laws.

Nearly all of those laws already applied to employers and, by extension, their benefit plans. Therefore, while most employers that are not health care entities may no longer be subject to ACA Section 1557, they still need to comply with applicable nondiscrimination and civil rights laws. Employers should consult with counsel on any plan changes that may be seen as discriminatory.

Effective Date and Takeaways

Note that these changes are expected to become effective on August 18, 2020. Therefore, between now and then, the notice is still required.

Regardless, the elimination of the notice requirement is welcome news to employers. Employers should work to remove the notices from any communications they generate after the effective date. They should also confirm with their health insurers and TPAs that they will no longer be sending these notices.

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

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.