United States: ACA Isn't Over Yet: New Section 1557 Nondiscrimination Rules

While the fate of the Affordable Care Act (ACA) remains to be seen, in 2016 the Department of Health and Human Services (HHS) published a final rule implementing ACA Section 1557 nondiscrimination provisions which covered entities need to continue to be mindful of in 2017 (and, possibly, beyond). The final rule prohibits discrimination on the basis of race, color, national origin, sex, age or disability in certain health programs and activities and imposes obligations on covered entities.

The final rule was effective on July18, 2016. However, to the extent the rule requires changes to the design of a benefit plan (e.g., changes to covered benefits) those changes were not required until the first day of the plan year beginning on or after January 1, 2017 (January 1, 2017 for a calendar year plan).

Who Must Comply?
The following are "covered entities" subject to Section 1557 rules:

  • Any "health program or activity" that receives "federal financial assistance" from HHS;
  • Any health program or activity that HHS administers (e.g., CMS, National Institutes of Health, Substance Abuse and Mental Health Services Administration, Health Resources and Services Administration); or
  • Any health program or activity administered by federal or state-run health insurance marketplaces.

A "covered entity" is liable for compliance of "an employee health benefit program" it offers to "its employees and/or their dependents" if:

  • The employer is principally engaged in providing or administering health services, health insurance coverage; or other health coverage (e.g., a hospital);
  • The employer receives federal financial assistance, a primary objective of which is to fund the employee health benefit program (e.g., a company which sponsors a retiree prescription drug plan and receives Medicare Part D subsidies); or
  • The employer is not principally engaged in providing or administering health services or insurance, but operates a health program or activity (that is not an employee health benefit program) that receives federal financial assistance.

Section 1557 Compliance.
In order to assist with compliance, here is a general ACA Section 1557 self-compliance checklist:

  • Do not discriminate with respect to benefit design or coverage on the basis of race, color, national origin, age, disability and sex (with sex discrimination defined broadly to include discrimination based on an individual's sex, pregnancy, childbirth or related medical condition, gender identity, sex stereotyping (but not sexual orientation)). It should be noted, however, that under a December 31, 2016 nationwide injunction issued by a U.S. District Court judge in the Northern District of Texas, HHS is not allowed to enforce the prohibition in the regulations against sex discrimination in the context of gender identity or termination of pregnancy.
  • Do not deny or limit health services that are ordinarily or exclusively available to individuals of one sex on the basis of their gender identity or identification as transgender (although HHS is enjoined from enforcing this under the nationwide injunction discussed above).
  • Although the regulations do not mandate coverage for gender transition, they prohibit having a categorical exclusion for all health services related to gender transition. The nationwide injunction only extends to HHS and not to other agencies such as the EEOC.
  • Adopt grievance procedures that allow for resolution of complaints received. A model grievance procedure is available at http://www.hhs.gov/sites/default/files/section1557-sample-grievance-procedure.pdf.
  • Designate at least one employee to coordinate compliance with and investigate complaints of noncompliance with the requirements of Section 1557.
  • Provide meaningful access to health programs and activities to individuals with limited English proficiency (LEP) and disabilities.
  • Provide free qualified interpreters and translated documents.
  • Ensure that all newly constructed or altered facilities are accessible to individuals with disabilities.
  • Modify policies, practices and procedures when such modifications are necessary to ensure individuals with disabilities have equal opportunity to participate in and benefit from health programs and activities (e.g., allow paper-based enrollment if an individual with a visual impairment cannot view the enrollment material on the website).
  • Ensure effective communication with those with disabilities (e.g., materials in large print, screen reader software, having text telephone services (TTYs), assistive listening services, braille materials).
  • Development of a language access plan is encouraged by the regulations, but not required.
  • Post a nondiscrimination notice on the company website, assessable from the home page (required as of October 16, 2016). An HHS model notice is available at http://www.hhs.gov/sites/default/files/sample-ce-notice-english.pdf.
  • Provide the nondiscrimination notice on an ongoing basis in "significant publications or communications" that are not small in size.
  • Post taglines (short statements written in non-English languages informing individuals of the availability of the entity's language assistance services) on the company website in the top 15 languages spoken by individuals with limited English proficiency in the state or states in which the company operates. For a national employer, the top 15 languages are Spanish, Chinese, Vietnamese, Korean, Tagalog, Russian, Arabic, French Creole, Portuguese, French, Cantonese, Mandarin, Polish, Japanese and Italian. HHS created model taglines in 64 non-English languages.
  • Include the 15 taglines in all significant publications that are not small in size.
  • Small significant publications (brochures, postcards, etc.) must include a nondiscrimination statement and at least two taglines. A sample nondiscrimination statement is provided in the final regulations.
  • Provide notice to HHS assuring compliance with Section 1557 when applying for federal financial assistance. HHS Form 690, Assurance of Compliance, includes a statement that the entity submitting the form is operating its health programs and activities in compliance with Section 1557 and will continue to do so while it receives federal financial assistance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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