Earlier this year the U.S. Department of Health and Human Services (“HHS”) finalized regulations that implement Section 1557 of the Affordable Care Act (“Section 1557”). You can read our prior discussions of these regulations in our blog post and newsletter article. As the new year approaches, we wanted to take a moment to remind you that you still have time to amend your employee health plans to comply with the new regulations. The deadline to make any necessary changes is the first day of the first plan year beginning on or after January 1, 2017.

Section 1557 prohibits discrimination in certain health plan and programs on the basis sex, age, race, color, national origin, and disability. The HHS regulations implement the statute by codifying rules that apply to entities that operate health plans and programs that receive funding from or through HHS. Included in the regulations are specific requirements relating to health insurance, including provisions related to coverage for transgender individuals.

As we previously noted, the regulations may not directly apply to many employee health plans because neither the sponsoring employer nor the plan receives HHS funding. However, HHS has noted that it may refer discriminatory plans and employers to other government agencies (such as the EEOC), so it is a good idea for all plan sponsors to review their plans to see if any discriminatory provisions need to be amended or removed.

Here are some issues you may wish to consider:

  • Many plans deny coverage for any services related to gender transition. HHS has determined that such a categorical exclusion is discriminatory (although HHS declined to provide a list of services that must be covered).
  • Plans cannot contain exclusions or limitations for sex-specific services that discriminate against transgender individuals. Such discriminatory provisions may impermissibly discriminate on the basis of sex.
    • For example, if a transgender woman needs a prostate exam, a plan could not deny that service based on the individual identifying as a woman.

You still have time to amend your plan to make it compliant with Section 1557, but the deadline under the new regulations is rapidly approaching. Every plan is unique, and the changes that may be required will vary depending on the plan.