Sarah Borders, CEBS June 3, 2024 8 min read

HHS Publishes ACA Section 1557 Final Rules

On May 6, 2024, HHS published final rules on ACA Section 1557. Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in specified health programs or activities, including those that receive financial assistance from the federal government.

Who this applies to:

  • Entities that:
    • provide healthcare or health insurance coverage, conduct health and clinical research, or provide health education to healthcare professionals; and
    • receive Federal financial assistance payments through Medicaid, Medicare, CHIP, and/or the Health Insurance Marketplace.
  • Health Insurers, TPAs, PBMs, and telehealth providers are expressly included as covered entities in the rule.

Go Deeper:

This iteration of the final rules is the latest in a series of rules that were put in place during the last two presidential administrations. Notably, the 2024 final rules:

  • Expand the definition of “covered entity” to again include insurers and TPAs and clarifies that services provided through telehealth are also subject to Section 1557;
  • Confirm that discrimination on the basis of sex includes discrimination based on sexual orientation, gender identity, sex stereotypes, sex characteristics, and pregnancy or related conditions;
  • Require covered entities to provide ‘meaningful access’ by communicating with participants in different languages and in ways necessary to ensure disabled participants may access care, and mandate policies and staff training be implemented to effectuate this requirement;
  • Require covered entities to take reasonable steps to ensure that ‘patient care decision support tools’ are not discriminatory in their application;
  • Allow exemptions based on religious freedom/rights whether or not the entity chooses to claim an express ‘approval’ from the Office of Civil Rights; and
  • Require covered entities to provide annual notices on nondiscrimination and on the availability of documents in the 15 most prevalent non-English languages within 120 days of the effective date (Nov 4, 2024). Resources for Covered Entities can be found here:

Although group health plans were not included as covered entities in the rules, the vast majority of employer-sponsored health plans will be administered in accordance with the rules because of their application to insurers, carriers, and TPAs.
Fully insured plans will likely only be provided insured products that comply with the rules since insurers are expressly subject to Section 1557.
Self-funded plans will also likely be designed to comply with the rules if the TPA is one that receives any federal assistance funds. While self-funded plan sponsors may be given the opportunity to amend their plans in a way that might be discriminatory under Section 1557, they should consult with legal counsel before doing so.
Specifically, any plan sponsor who desires to limit coverage provided to participants with gender dysphoria should keep these rules in mind. While Section 1557 and the rules do not expressly require that plans cover all services for participants with gender dysphoria, restrictions on coverage must be viewed through the lens of how similar services are covered under the plan for participants with other diagnoses.
Although Section 1557 might not apply to some plan sponsors, courts have recently held that blanket exclusions of health services for transgender participants would violate Title VII of the Civil Rights Act. Due to the risk of litigation, employers seeking to impose such exclusions or claim an exemption based on religious freedom must consult with legal counsel.

Conclusion for Employers

The rule takes effect beginning 60 days after the rule was published on May 6, 2024 (July 5, 2024). Certain requirements have effective dates that come at a later time.
Although the rule has already been challenged in court, many insurers and TPAs have begun to take steps to comply. Employer plan sponsors should consult with legal counsel with any concerns about how the rule impacts their specific plan and if they intend to exclude certain transgender treatments.
Fact Sheet:


Sarah Borders, CEBS

Principal, Benefits Compliance Solutions. Sarah has spent the last 15 years in the employee benefits industry, has numerous designations and serves on NAHU’s Employer Working Group Subcommittee and is an active board member of Austin AHU. She recently stepped down as Vice President of Benefits Compliance at one of the nation's largest brokerage firms to start her own compliance consulting practice. Her designations include an active license with the Texas Department of Insurance, CEBS (Certified Employee Benefits Specialist), Certified Health Care Reform Professional, HIPAA certification and Health Care Service Associate. She holds an MBA from Texas A&M Corpus Christi and a BA from University of Incarnate Word. Her consulting firm, Benefits Compliance Solutions, partners with employers to identify unknown risks and avoid hundreds of thousands of dollars in fines and lawsuits from failure to comply with their healthplan obligations.