Section 1557, Unsettled and Unresolved

Section 1557, Unsettled and Unresolved

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A recent court decision sheds light on the unsettled nature of how Section 1557 should be applied. This Section of the Affordable Care Act (ACA) provides for open access to health coverage, programs and activities by all individuals. Individuals cannot be discriminated against or prohibited from participating in health-related programs or denied health coverage on the basis of race, color, national origin, sex, age, or disability.  These regulations generally apply to insurers and third-party administrators that receive federal funding, as well as self-funded employers that receive federal funding. These rules do not apply to employers sponsoring self-funded plans as long as the employer does not receive federal funding, which may include Medicare Part D retiree drug subsidies. Section 1557 has had a tortured past with regulations being issued, withdrawn and then reissued again most recently in 2022.Further, there is significant and ongoing litigation challenging aspects of this law. It will be very helpful to have these regulations finalized. One of the most challenging parts of the regulations relates to the meaning of discrimination on the basis of sex.

In C.P., by and through his parents, Patricia Pritchard and Nolle Pritchard; and Patricia Pritchard vs. Blue Cross Blue Shield of Illinois, Case No. 3:20-ccv-06145-RJB, the U.S. District Court for the Western District of Washington State offers its take on Section 1557.In this case, a transgender youth began receiving treatment for gender dysphoria. The plan determined the treatment would no longer be covered and the parents sued alleging a violation of Section 1557, among other things. The court determined that the Third-Party Administrator (TPA) is subject to Section 1557 even though it does not receive federal funds on behalf of the plan in question. The fact that this TPA, the insurer, received federal funds for other purposes makes the TPA subject to Section 1557 according to this court. It would be most helpful if regulations could clarify this point. In the meantime, employers will need to use their best judgment on how to comply with Section 1557 in consultation with service providers and legal counsel.


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Section 1557, Unsettled and Unresolvedhttps://www.cbiz.com/Portals/0/Images/Health Care Law.jpg?ver=YniGuow9D9i-O4pjWPhlEQ%3d%3dA recent court decision sheds light on the unsettled nature of how Section 1557 should be applied.2023-02-07T20:00:00-05:00A recent court decision sheds light on the unsettled natureof how Section 1557 should be applied.Regulatory, Compliance, & LegislativeEmployee Benefits ComplianceNo