The U.S. Department of Health and Human Services (HHS) has rescinded the guidance issued in May 2021 concerning the interpretation and enforcement of Affordable Care Act (ACA) Section 1557. The recission is effective immediately to reduce regulatory burden.
In its 2021 Guidance, HHS announced that it would construe Section 1557’s prohibition on discrimination “on the basis of sex” to include sexual orientation and gender identity. HHS issued final regulations in 2020 repealing some portions of prior Section 1557 regulations, including the removal of gender identity and sex stereotyping from its nondiscrimination rules. However, in 2022, two federal trial courts blocked the removal of these provisions from the HHS final regulations, and one of the two courts also blocked enforcement of the regulations’ Title IX religious exemption. Ultimately, a 2024 federal appellate court decision vacated the decision on technical grounds.
In 2024, HHS also issued final Section 1557 regulations supporting its interpretation of sex discrimination as inclusive of discrimination based on gender identity. However, ongoing litigation has prevented the implementation of that portion of the Section 1557 regulations. As a result, HHS guidance may be subject to change; therefore, plan sponsors, insurers, and third-party administrators should closely monitor these issues for further developments.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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