Snapshot: The U.S. Supreme Court decision prohibiting employment discrimination against LGBTQ employees likely eviscerates recent HHS rule on Section 1557 by dropping protections based on gender identity.
On Friday, June 12, 2020, Health and Human Services (HHS) released a final rule eliminating protections based on gender identity from the Affordable Care Act’s Section 1557 non-discrimination provisions. (The regulation was accompanied by a press release and fact sheet).
Section 1557 only applies to entities that receive federal funds from HHS, like medical providers and employers receiving the Retiree Drug Subsidy.
The primary change to medical plans sponsored by Section 1557 covered entities was the elimination of any categorical exclusions for gender dysphoria treatment. However, on Monday, June 15, 2020, the U.S. Supreme Court held in a landmark decision resolving 3 cases, that Title VII of the Civil Rights Act prohibits discrimination on the basis of an individual’s sexual orientation or gender identity. Title VII applies to employers with 15 or more employees and bans discrimination on the basis of race, color, religion, sex and national origin in hiring, firing, compensation, and other terms, conditions or privileges of employment. Employment terms and conditions include employer-sponsored healthcare benefits.
Although the decision does not directly impact health plans, it will inevitably result in legal challenges to the validity of HHS’s final rule rolling back prior Section 1557 protections. For most employers no immediate changes will be required as most plans do not include categorical exclusions for gender dysphoria claims.
Employers wanting to implement additional gender dysphoria exclusions in reliance on HHS’s recent rule should discuss that with counsel. In addition, employers sponsoring plans that do not cover same-sex spouses may want to reconsider that eligibility exclusion in light of the Court’s ruling.