June 2025
Deanna Sizemore, Associate Director, Benefits Compliance
On May 13, 2025, the Department of Health and Human Services (“HHS”) issued a nonenforcement announcement regarding specific aspects of certain final rules promulgated under Section 1557 of the Affordable Care Act (“ACA”) and Title IX of the Education Amendments of 1972,[SH1] effective immediately.
This announcement indicates that HHS’ Office of Civil Rights (“OCR”) will not enforce certain provisions of the rule, particularly those related to sex-based discrimination related to gender identity and pregnancy status, including abortion, primarily due to ongoing litigation and various court orders. The announcement affects employer obligations outlined in the 2024 rulemaking. The HHS nonenforcement statement relates to the following specific employer requirements, as detailed in the 2024 Section 1557 final rulemaking:
- § 92.7 Designate a Section 1557 Coordinator;
- § 92.8 Review and Update Nondiscrimination Policies and Procedures;
- § 92.9 Train Relevant Employees;
- § 92.10 Distribute and Post Notice of Nondiscrimination;
- § 92.11 Notice of Availability of Language Assistance Services and Auxiliary Aids and Service;
- § 92.207(b)(1)-(6) Review Health Plan Design for Discriminatory Exclusions in health insurance coverage and other health-related coverage (benefit design changes); and,
- § 92.210(b)-(c) Use of patient care decision support tools.
Employer Action Items
Employer Action Items (based on the New Rule’s Requirements, subject to legal challenges and nonenforcement announcements):
- Take Caution Prior to Amendment of Section 1557 Compliance Practices. While this development demonstrates HHS’ current views on this issue, it does not affect compliance obligations existing under current final rulemaking, legislation, or judicial authority.
- Consult with Experienced Advisors. Employers are encouraged to consult with experienced legal counsel to assess their specific obligations, as well as the applicable law and enforcement status reflective of their particular jurisdiction(s) and considering both current and future regulatory guidance.
- Stay Informed. Employers are encouraged to remain diligent and informed respecting the evolution of Section 1557 rulemaking. Unfortunately, Section 1557 has become highly politically charged, so employers should anticipate significant modifications to the current Section 1557 related requirements, as espoused under the 2024 Final Rule.
Summary
Section 1557 of the ACA makes it unlawful for health care providers, including doctors’ practices and hospitals that receive Federal financial assistance, to refuse to treat—or to otherwise discriminate against—an individual on the basis on their race, color, national origin, sex, age or disability. It imposes similar requirements on health insurance issuers that receive Federal financial assistance and the health insurance Marketplaces.
Section 1557 applies to “covered entities,” which generally include:
- Health programs or activities that receive federal financial assistance (e.g., Medicare, Medicaid, CHIP, or ACA Marketplace plans). This can include almost all practicing physicians and many healthcare providers;
- Health programs or activities administered by HHS; and,
- State and federally facilitated health insurance exchanges.
Even if an organization is not a direct healthcare provider, if its group health plan is administered by an insurance carrier that receives federal financial assistance for any part of its business (e.g., Medicare Part B payments), the plan may be indirectly impacted by these rules.
Section 1557 of the ACA has been in effect since its enactment in 2010, as enforced by OCR. Published rules and agency issued guidance implementing Section 1557 have been the subject of numerous lawsuits, dating back to the initial publication of a Final Rule in 2016. In June 2020, the U.S. Supreme Court ruled in Bostock v. Clayton County that sex-based employment discrimination related to gender identity or sexual orientation violates federal law. On May 10, 2021, HHS announced it would interpret and enforce Section 1557’s prohibition on sex discrimination to include discrimination based on sexual orientation and gender identity, consistent with the Supreme Court’s Bostock holding. At the time, HHS stated that the interpretation would guide the OCR in processing complaints and conducting investigations but noted that the interpretation would not determine the outcome in any particular case, or set of facts, in and of itself.
HHS later issued a new final rule under Section 1557, effective July 5, 2024, with some provisions having later applicability dates (e.g., plan years beginning on or after January 1, 2025, for certain plan design changes). The 2024 Final Rule expanded protections and clarified interpretations, particularly regarding sex discrimination to include sexual orientation, gender identity, sex characteristics (including intersex traits), and pregnancy status or related conditions (including termination of pregnancy).
On May 14, 2025, and made effective immediately, HHS rescinded its interpretive and enforcement guidance related to Section 1557 that was issued on May 10, 2021. According to HHS, the rescission is part of an agency-wide initiative to reduce regulatory burdens in accordance with the Trump administration’s policies; consequently, the prior agency guidance no longer represents the prevailing opinions of the current Administration.
[SH1]Is it just one “Final Rule” that was issued by HHS in 2024? Should we reference Title IX?
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