Earlier this year, the Department of Health and Human Services (“HHS”) released a final rule under Section 1557 of the Affordable Care Act (“ACA”), which prohibits discrimination in health programs and activities. The 2024 final rule includes new administrative requirements for covered entities (which may include group health plans to the extent the plan receives federal financial assistance), as explained below.
How did we get here?
Section 1557 is the nondiscrimination provision of the ACA. It prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in a health program or activity that receives federal financial assistance. Although Section 1557 has been around since the ACA was enacted, its impact has depended on guidance issued through agency rulemaking, which has varied across different presidential administrations. The 2024 final rule generally reverses the final regulation previously issued in 2020 and reinstates many of the provisions in the final regulation released in 2016.
Additionally, the 2024 final rule clarifies that discrimination on the basis of sex includes (but is not limited to) discrimination on the basis of sex stereotypes, sex characteristics (including intersex traits), pregnancy or related conditions, sexual orientation, and gender identity. Earlier this year, a few different federal district courts enjoined various parts of the 2024 final rule with respect to the rule’s interpretation of the meaning of discrimination on the basis of sex, which we discuss in more detail below.
Are group health plans required to comply with the 2024 final rule?
It depends. The 2024 final rule applies to covered entities, which are defined as:
- Health programs or activities that receive direct or indirect federal financial assistance;
- Health programs or activities administered by HHS; and
- State and federally facilitated health insurance exchanges.
Accordingly, the 2024 final rule applies to group health plans that receive federal financial assistance. However, as HHS noted in the regulatory preamble, a group health plan that does not receive federal financial assistance would not become covered under Section 1557 solely by virtue of the plan sponsor’s or the third-party administrator’s receipt of federal financial assistance. (This is a departure from the 2016 final rule, where group health plans were listed as covered entities.) However, when a plan receives federal financial assistance, the plan becomes covered under the 2024 final rule.
That said, virtually all health insurance issuers and third-party administrators (“TPAs”) are likely to constitute covered entities under the 2024 final rule. As a practical result, the expectation is that group health plans may fall in line with the provisions detailed in the final rule, even if the group health plan is not technically a covered entity under the 2024 final rule.
Does the 2024 final rule impose any benefit coverage mandates on covered group health plans?
No. Although the 2024 final rule requires that covered group health plans comply with the nondiscrimination rules, the 2024 final rule does not impose specific benefit coverage mandates on health plans in furtherance of this prohibition.
What are the administrative requirements for covered plans in the 2024 final rule?
The 2024 final rule imposes a number of administrative requirements on covered plans, in addition to the core nondiscrimination requirements summarized above. Although some of these reinstate provisions of the 2016 final rule, there are new requirements. To the extent a group health plan is a covered entity on account of its receipt of federal financial assistance, the following requirements will apply, as shown in the table below:
Provision | Requirement | Effective Date |
---|---|---|
Designation of Section 1557 Coordinator | Covered group health plans with 15 or more employees must designate a “Section 1557 Coordinator” to coordinate the plan’s compliance with its responsibilities under Section 1557, including investigation of any grievances regarding noncompliance with Section 1557. | November 2, 2024 |
Notice of Nondiscrimination | Covered group health plans must issue this notice to participants, beneficiaries, and enrollees annually, upon request, and the plan must post the notice on its website, if a plan website is maintained. | November 2, 2024 |
Notice of Availability of Language Assistance Services and Auxiliary Aids and Services | Covered group health plans must issue this notice to participants, beneficiaries, enrollees, and applicants annually, upon request, and post on its website, if a plan website is maintained. The notice must be included in certain written and electronic communications (including but not limited to the annual notice of nondiscrimination, HIPAA notice of privacy practices, explanation of benefits (“EOBs”), notice of appeal and grievance rights, and communications relating to eligibility, benefits, or services that require or request a response). The notice must be translated into the 15 most prevalent non-English languages in the applicable state or states. Additional requirements are outlined in the 2024 final rule. | July 5, 2025 |
Section 1557 Policies and Procedures | Covered group health plans are required to adopt several written policies and procedures related to compliance with Section 1557 and the 2024 final rule, as summarized below: Nondiscrimination Policy Covered group health plans must implement a written nondiscrimination policy that, at minimum, provides: (i) a statement that the plan does not discriminate on the basis of race, color, national origin (including limited English proficiency and primary language), sex (including pregnancy, sexual orientation, gender identity, and sex characteristics), age, or disability; (ii) a statement that the plan provides language assistance services and appropriate auxiliary aids and services free of charge consistent with applicable law; (iii) a statement that the plan will provide reasonable modifications for individuals with disabilities; and (iv) contact information for the Section 1557 Coordinator (if required). Section 1557 Grievance Procedures Covered group health plans with 15 or more employees must implement written grievance procedures to address investigation and record retention regarding grievances relating to alleged noncompliance with Section. 1557. Language Access Procedures Covered group health plans must implement written language access procedures describing the plan’s process for providing language assistance services to individuals with limited English proficiency. Effective Communication Procedures Covered group health plans must implement written effective communication procedures describing the plan’s processes for ensuring effective communication for individuals with disabilities. Reasonable Modification Procedures Covered group health plans must implement written procedures describing the plan’s process for making reasonable modifications to its policies, practices, and procedures to avoid discrimination on the basis of disability. Note: HHS has made sample policies available at its website here. | July 5, 2025 |
Training on Section 1557 Policies and Procedures | Covered group health plans must train relevant employees on the Section 1557 Policies and Procedures and contemporaneous documentation of the employees’ completion of such trainings must be maintained for at least three calendar years. | 30 days after implementation of the Section 1557 Procedures, but in no event later than July 5, 2025* |
*Discrepancy in regulation suggests May 1, 2025 effective date might apply instead of July 5, 2025.
What is the impact of recent lawsuits on the 2024 final rule?
After the 2024 final rule was released earlier this year, several advocacy groups filed suit to enjoin enforcement of the new rule. It is somewhat unclear the extent to which those current litigations, which are primarily focused on the “discrimination of the basis of sex” provisions of the 2024 final rule, would substantively impact the enforcement of the administrative requirements summarized above. For that reason, at this time, covered group health plans may choose to focus on compliance with the items that have deadlines occurring in 2024 and continue to monitor the situation before taking further action on 2025 requirements.