HHS Issues Notification on Section 1557 Nondiscrimination Rule

Compliance, Employee Benefits

On May 10, 2021, the Department of Health and Human Services (HHS) issued a “Notification of Interpretation and Enforcement of Section 1557 of the Affordable Care Act and Title IX of the Education Amendments of 1972”. This notification outlines the Department’s intent to interpret and enforce ACA Section 1557’s prohibition on discrimination based on sex to include:

  • Discrimination on the basis of sexual orientation; and
  • Discrimination on the basis of gender identity.

HHS bases this enforcement effort on the Supreme Court’s decision in Bostock v. Clayton County, 140 S. Ct. 1731 (2020). In this case, the U.S. Supreme Court health that Title VII of the Civil Rights Act of 1964’s prohibition on employment discrimination based on sex includes discrimination based on sexual orientation and gender identity. Since this decision, two federal circuit courts have made the same conclusion in regard to Title IX of the Education Amendments of 1972’s prohibition on sex discrimination.

Based on these decisions as a whole, HHS’ Office of Civil Rights (OCR) will interpret and enforce ACA Section 1557’s prohibition on sex discrimination in the same manner. This is a departure from the interpretation of Section 1557 in previous guidance issued by HHS in June 2020 which did not include gender identity as “discrimination on the basis of sex”.

Key Takeaway

This notice from HHS changes how “discrimination on the basis of sex” will be interpreted and enforced in the employment context from previous guidance. Plan sponsors should be aware of this new interpretation and should work with health insurance carriers and third party administrators in determining whether to cover gender transition services in light of this notice.

Created: 5/2021

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